Legal News

Rev Up Revlon! Lawsuit Filed Over Disney/Marvel Deal

By Ashby Jones

Well, that didn’t take long.

The morning’s papers were practically giddy with Monday’s news of Disney’s $4 billion acquisition of Marvel Entertainment (if for no other reason, they got to splash cool comic-book art up on their pages). Disney paid a hefty premium for they parent company of Spidey, X-Men, and the Incredible hulk — about 29 percent, according to the WSJ. Leading the deal: Dewey & LeBoeuf’s Mort Pierce for Disney (who, legend has it, bills 3300 hours, at least when the times are good); Paul Hastings’s Carl Sanchez for Marvel.

But now, no sooner than the ink has dried on the deal, comes a lawsuit. According to Bloomberg, a Marvel shareholder sued in the Delaware Chancery Court alleging that Marvel directors failed to conduct an appropriate sales process. The plaintiff, shareholder Christine Vlatos, is seeking a court order barring the deal as well as unspecified damages. (Complaint not available.) Marvel did not immediately return a call to Bloomberg.

So what might Ms. Vlatos have to prove in order to hold up the deal? We checked in with Eric Chiapinelli, the dean of the law school at Creighton University, an expert on the law of corporations, and a very solid member of the LB Bow Tie club.

“It sounds like a Revlon claim,” said Chiapinelli, referring to the 1986 Delaware Supreme Court decision Revlon v. MacAndrews & Forbes Holdings. “Under Revlon, directors have a duty to try to get the best price for their shareholders. They don’t have to get the best price, necessarily, just an obligation to try to get the best price.”

So what, exactly, does that mean? Chiapinelli says the Delaware Supreme Court has been “very careful” not to make a checklist of what directors have to do in order to show that they tried to get the best price. “It’s very loose. It seems they don’t want to make directors jump through a whole bunch of administrative red tape, on the one hand, and provide too easy a safe-harbor on the other.”

Do plaintiffs ever win these types of suits? “Not very often,” says Chiapinelli. But, he adds, if the pleadings are sufficient, sometimes a court can order a defendant to turn over “books and records.” And that, he adds, “can help a lawsuit along.”

As they say at the end of comic books. . . stay tuned.

Full post as published by Law Blog - WSJ.com on September 01, 2009 (boomark / email).