On August 4, 2015, Judge James L. Gale of the North Carolina Business Court granted a motion to dismiss a putative class action lawsuit brought against Cravath client British American Tobacco p.l.c. (“BAT”) in connection with the $27.6 billion acquisition of Lorillard Inc. by Reynolds American, Inc.
Plaintiff, on behalf of a purported class of Reynolds shareholders, claimed that BAT, as Reynolds’s largest shareholder with 42% ownership, breached fiduciary duties allegedly owed to other shareholders by causing the transaction to be structured in ways that unduly benefitted BAT. In dismissing the suit, Judge Gale concluded that BAT did not exercise sufficient control over Reynolds to owe the remaining shareholders any fiduciary duty, citing BAT’s minority stake and provisions in a Governance Agreement between BAT and Reynolds that prevented BAT from controlling Reynolds’s board of directors.
The Cravath team included partner Gary A. Bornstein and associates Carrie R. Bierman, Brent M. Byars and Michael J. Zaken. The case is Dr. Robert Corwin as Trustee for the Beatrice Corwin Living Irrevocable Trust v. British American Tobacco plc, et al., No. 14 CVS 8130 (N.C. Super.).