A judge’s ruling in a Delaware district court on Wednesday has paved the way for shareholders, led by billionaire investor Kirk Kerkorian, to pursue a multi-billion dollar class-action suit against DaimlerChrysler AG, Dow Jones reported on Thursday.
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Judge Joseph J. Farnan in Wilmington, Delaware, gave the suit class-action certification, which lawyers say puts shareholders in a stronger position if the parties decide to settle the suit. The judge excluded non-US Chrysler shareholders from the class action certification, the news agency noted, adding that a December 1 trial date was set for the suit, which began in 2000.
Dow Jones noted that the group of former Chrysler shareholders claims that DaimlerBenz AG and its chief executive, Juergen Schrempp, planned and executed a takeover of Chrysler in 1998, although the company called the deal a “merger of equals.”
Chrysler shareholders as a group would have received $5 billion to $10 billion more as a premium for giving up control to Daimler had the companies had a takeover agreement, they say, Dow Jones noted. The class action and some individual suits will seek to recoup that money.
Dow Jones said the suit began after a story in the Financial Times quoted Schrempp saying that he had always planned a takeover but that Chrysler would agree only to a merger.
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According to the news agency, Michael Schell, lawyer for DaimlerChrysler, on Thursday called the judge’s certification of the class action “routine.” The company believes the suit has no merit, he said.
The car maker has a motion for a summary judgment from the court, which would force a quick decision on the suit, Dow Jones said. “We would expect that motion to go before the court by [autumn] or sooner,” Schell reportedly said.
According to Dow Jones, Schell said DaimlerChrysler believes the suit is baseless because the transaction was a merger of equals. As well, he contended that shareholders suffered no damages and that the suit came after a one-year statute of limitations expired on litigation related to the merger.
Dow Jones noted that, in addition to the class action suit, Kerkorian and other investors have filed individual claims against DaimlerChrysler.
Richard Bemporad, lawyer for an institutional investor, Glickenhaus & Co., told the news agency that his client and some other investors are pursuing separate suits because they also are seeking punitive damages for fraud.
