Latham Secures Dismissal With Prejudice of Stockholder Class Action Complaint for Switch, Inc. Challenging US$11 Billion Take-Private Transaction
A Southern-California Latham securities litigation team earned a significant victory for the former members of the board of directors of Switch, Inc., a Nevada-based data center operator and developer, by securing a complete dismissal with prejudice of a stockholder’s class action complaint in Nevada state court.
Following the announcement of a Latham-led US$11 billion take-private transaction whereby DigitalBridge Group Inc. and an affiliate of IFM Investors Pty Ltd. acquired all outstanding common shares of Switch, the plaintiff filed a class action complaint seeking damages and alleging that Switch’s former board of directors breached their fiduciary duties in approving merger, and that DigitalBridge and IFM aided and abetted such breaches. After the merger closed on December 6, 2022, plaintiff filed an amended complaint attempting to add additional allegations in support of his theory.
Latham moved to dismiss, arguing that the lawsuit was a flawed attempt to second-guess the sound business judgment of Switch’s board. Specifically, Latham detailed the robust and careful process the board undertook, including its establishment of a fully empowered special committee consisting only of independent and disinterested directors, a fulsome auction process that resulted in special committee negotiating an all-time high price for Switch stock, the engagement of world-class advisors, and the approval of the merger by an overwhelming majority of disinterested stockholders.
On July 18, 2023, the court held an extensive oral argument. Following the argument, in ruling from the bench, Nevada state court judge Susan Johnson granted defendants’ motion to dismiss in full and with prejudice, denying the plaintiff leave to further amend his complaint, followed by a detailed order of dismissal with prejudice on July 31, 2023.
The Latham team representing the former directors of Switch in the Nevada state court litigation was led by partner Josh Hamilton, who argued the motion to dismiss, with incredible efforts from associates Ryan Walsh, and Max Shapiro. The underlying deal was led by corporate partners Charles Ruck and Daniel Rees, with critical contributions from associates Brian Umanoff, Tiana Baghdikian, Jack McKay, Jack Vanderford, Allison Blair, and Erik Jensen.