April 24, 2019

A Big Week for Anti-Climaxes

Well, so much for two of my biggest stories – first, Rent-A-Center had the temerity to settle its reverse breakup fee claim on Monday without consulting me, and then, yesterday, the SCOTUS dismissed the Emulex case.

Rent-A-Center’s claim for a $126.5 million reverse termination fee arising out of its decision to terminate its merger agreement with affiliates of Vintage Capital had the potential to make some interesting law on a topic that Delaware courts haven’t spent much time on.  Instead, the company opted to accept a $92.5 million settlement from Vintage to resolve the matter.

Meanwhile, back at the Supreme Court, the Emulex case – in which the existence of an implied private right of action under Section 14(e) of the Exchange Act was potentially at issue – was dismissed after oral arguments had already been heard. Why?  SCOTUSblog reports that the reason was procedural:

Although the Supreme Court in earlier years routinely found private rights of action to be “implied” in the text of the federal securities laws, the court this century has viewed that practice as intruding on the authority of Congress to define the causes of action that federal courts can consider.

The problem, though, is that Emulex did not raise that argument in the lower courts. Several of the justices (most notably Justice Sonia Sotomayor) suggested that a decision considering the broad question – whether there should be a private right of action at all – would reward the defendants for not presenting that question to the lower courts. Today’s dismissal allows the court to postpone consideration of the broader question until it has been presented squarely.

So, the bottom line is that I’m left with nothing to write about. Sometimes, it’s hard out there for an M&A blogger.  I’ll see you tomorrow – I’m going back to bed.

John Jenkins