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Kessler Topaz Takes Dole's Controlling Stockholder and Deutsche Bank to Trial

April 1, 2015

Representing one of the firm’s institutional clients and serving as co-lead Class Counsel, Kessler Topaz lawyers, in February and March 2015, conducted a nine-day trial before a Vice Chancellor of the Delaware Court of Chancery, on behalf of Dole Food Company’s former public stockholders. 

David Murdock, Dole’s long-time controlling stockholder, bought out the public stockholders for $13.50 per share in a 2013 take-private deal. Kessler Topaz brought suit in the summer of 2013 on behalf of the City of Providence, Rhode Island, for itself and on behalf of other public stockholders of Dole. In the case, we contend, generally, that the buyout was the result of a process that was unfair to the public stockholders and resulted in an unfair price, evidencing Murdock’s breaches of his fiduciary duty of loyalty owed to Dole’s public stockholders. We also contend that Deutsche Bank — which has historically served as a lender and financial advisor to both Dole and Murdock — aided and abetted Murdock’s breaches of fiduciary duties by, among other things, helping to design Murdock’s buyout while representing Dole in a strategic review that resulted in a sale of Dole assets and a substantial reduction in Dole’s debt.  

Accordingly our case against Deutsche Bank involves the conflicts of interest that Deutsche Bank faced in advising both Dole with respect to financing and strategic transactions and Murdock on his buyout of Dole’s public stockholders. With respect to Murdock, we sought to prove that he paid an unfairly low price for the public stockholders’ Dole shares and that the process through which he engineered and effected his buyout did not adequately protect the public stockholders’ interests.

The trial was the culmination of nearly two years of hard-fought, multi-faceted litigation. After the Court determined in 2013 that the buyout transaction could close without impacting the stockholders’ right to seek damages in a trial, Kessler Topaz and its co-counsel sought and reviewed hundreds of thousands of pages of defendants’ documents and took the sworn depositions of more than 20 individuals. Additionally, our case was litigated, and ultimately tried, alongside statutory appraisal actions, in which several former Dole stockholders refused to accept the $13.50 per share buyout price and opted, instead, to seek a court-determined “fair value” for their Dole shares. Plaintiffs opposed and defeated defendants’ efforts to have the case thrown out before trial, while achieving unopposed class certification for Dole’s former stockholders. 

Because of how Delaware law operates, it was the defendants’ burden at trial to prove that the transaction was procedurally and financially — i.e., “entirely” — fair to the former Dole stockholders. Yet, the plaintiffs still had the burden to prove the aiding and abetting claims against Deutsche Bank as well as show the class’ entitlement to a specific damages award. 

The Court heard live trial testimony from 12 witnesses, including Mr. Murdock, Dole executives, former Dole directors and advisors, financial experts, and four representatives of Deutsche Bank. More than 2,000 documents were put into evidence as well. Excepting only our financial expert, whom we called to testify on the issue of damages, all of the other witnesses were called by the defendants. Because of the burdens of proof and the Court’s reluctance to require a single witness to be called to the stand multiple times during a trial, unlike many trials where one side presents its case and then another party takes its turn, each party in this case was looking to prove its case at all times through the trial.

Kessler Topaz lawyers cross-examined four of the 11 defense witnesses and provided substantial assistance during co-counsel’s cross examinations. Reflecting their deep preparation for trial, the Kessler Topaz trial team was repeatedly able to find documents in the midst of testimony that tended to prove the factual points that the plaintiffs were looking to make for the Court.  

Following trial, Kessler Topaz and its co-counsel have presented the Court with in-depth post-trial briefs, summarizing the law and the facts as proved at trial, and the defendants have done the same. In the end, plaintiffs contend that Murdock massively underpaid for the former public stockholders’ Dole shares, while the defendants contend that Murdock actually overpaid the former public stockholders. The Court will hear final arguments on July 2, 2015, and issue its decision and verdict, likely by October 2015. Regardless of the outcome, this case shows the firm’s willingness and ability to litigate cases through trial if necessary to achieve benefits for public company stockholders. 

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