Groupon Litigation Follow-Up

News Brief

By Cydney Posner

With regard to the email from last week discussing the Groupon litigation (article of 5/30/13), it now appears that the parties have agreed to withdraw the motion for a preliminary injunction as well as the plan proposal, and to confer regarding a schedule for the lawsuit and the resolution of the issues presented by plaintiffs' complaint. Interestingly, the opening brief (attached below) presents more of a litigation threat than was apparent from the initial discussions of the case in the press: in the brief, the plaintiffs go beyond arguing that the ratification of the prior grant requires a separate vote and contend that there are really "three fundamentally separate matters" requiring separate votes: ratification of the prior grant and each of the two amendments to the plan (increase of shares and increase of individual limit). Whether the plaintiffs view the ratification issue as a necessary or practical trigger remains to be seen, but, on balance, it appears that we could see more challenges to ordinary plan amendment proposals in the future. Until we have further insight into this development, companies may want to take that risk into account when they are deciding how to structure their proxy plan proposals. This issue (and the slippery slope involved in addressing it) will be discussed at the next public companies group meeting this Tuesday

Opening brief.pdf

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