Darren J. Guttenberg

Private equity giant Brookfield Asset Management, advised by Gibson Dunn & Crutcher LLP, on Monday unveiled plans to acquire Latham & Watkins LLP-led Peakstone Realty Trust in a $1.2 billion take-private transaction. Under the terms of the agreement, a Brookfield private real estate fund will acquire all of Peakstone's outstanding shares for $21 per share in cash, according to a Monday statement. The purchase price represents a 34% premium to Peakstone's closing share price on Friday, the last full day of trading before the announcement. Once the deal closes, Peakstone will delist its shares from the New York Stock Exchange and become a private company. "We are pleased to enter into this agreement with Brookfield, which will deliver significant value to Peakstone shareholders. Following an offer from Brookfield, our board of trustees evaluated the proposed transaction with the assistance of external advisers and determined that it achieves the best value and other terms reasonably available for shareholders and is in the best interests of the company," Peakstone CEO Michael Escalante said. "This transaction recognizes the value of our industrial portfolio and the progress we have made expanding our [industrial outdoor storage] platform." Peakstone is an industrial real estate investment trust that focuses on the industrial outdoor storage sector. Its portfolio includes 76 industrial properties, including 60 industrial outdoor storage properties and 16 traditional industrial properties, according to the statement. Last year, Peakstone completed the disposition of all of its office properties, marking its transformation into an industrial-only real estate investment trust, the statement said. "This acquisition is an exciting opportunity to expand Brookfield's industrial real estate platform with Peakstone's high-quality and well-diversified portfolio, which will benefit from strong long-term fundamentals for the warehouse and [industrial outdoor storage] sectors," Lowell Baron, CEO of Brookfield's real estate business, said. The deal includes a 30-day "go-shop" period set to expire March 4, in which Peakstone may actively solicit and consider other acquisition proposals, the statement said. The deal is expected to close by the end of the second quarter of 2026, subject to customary closing conditions. The Gibson Dunn team advising Brookfield includes partners Drew Flowers, Brian Scrivani and David Perechocky. The Latham team advising Peakstone was led by partners Julian Kleindorfer, Brad Helms, Darren Guttenberg and Lewis Kneib. Sterlington PLLC advised Peakstone's management team, with a team led by partners Jeremy Goldstein and Christopher Harrison and including partners Kristy Fields and Michael Gilligan.

Feb 2

2 min

Acadia Healthcare Co. Inc. and plaintiffs in a securities class action accusing the company of misleading investors about the strength of its United Kingdom operations have reached a settlement in principle, avoiding a trial that was set for later this month. According to an order signed by U.S. District Judge William L. Campbell Jr. on Friday, the jury trial previously set for Nov. 18 has now been canceled, and all deadlines are vacated. The plaintiffs plan to file a motion for preliminary approval of the settlement within 30 days, according to the settlement notice also filed on Friday. Last month, Judge Campbell granted a partial summary judgment motion filed by investors that focused solely on the issue of reliance, or whether there was a causal connection between the defendants' alleged misrepresentation and the investors' injury. Shortly after, Acadia filed a motion to certify the order for immediate appeal and for a stay of the proceedings. Acadia had also filed a cross-motion for summary judgment, arguing that the safe harbor provision of the Private Securities Litigation Reform Act bars the suit's claims related to projected earnings at Acadia's U.K. facilities in 2017 and that the suit lacks evidence of loss causation. The litigation, which dates back to 2018, alleges that in an effort to support a flow of referrals that would fill beds at its inpatient and outpatient residential treatment facilities, "Acadia consistently and repeatedly represented to the public and investors that it provided high-quality patient care." "In reality, and in stark contrast to defendants' public statements, Acadia's tactic of acquiring facilities and then systemically cutting staff generated alarming incidents of abuse, neglect and, on several occasions, death," the investors said. The defendants argued that an outside investment adviser for the lead plaintiff, the Chicago Laborers' Pension Fund, knew of certain risks before purchasing Acadia stock during the class period, did not think the company was engaged in fraud after reviewing the alleged corrective disclosures, and did not sell its stock after related financial guidance was issued. However, Judge Campbell said last month when granting partial summary judgment that the defendants do not explain "how the foregoing shows or supports an inference that the investment advisor would have bought or sold Acadia stock even if it had been aware that the stock's price was tainted by fraud. Nor can the court think of any reason." On whether the defendants had actual knowledge that the challenged statements were false or misleading when made, the judge said circumstantial evidence in the suit including that the defendants made unreasonable performance expectations, ignored monthly results and forecasts, and sold millions of dollars' worth of Acadia stock months before lowering projected earnings guidance, is sufficient to raise a genuine dispute of fact concerning whether the defendants acted with scienter. Representatives for the parties did not immediately respond to requests for comment Monday. The investors are represented by Christopher M. Wood, Jerry E. Martin, Darren J. Robbins, Sam S. Sheldon, Darryl J. Alvarado, J. Marco Janoski Gray, Ting H. Liu and T. Alex B. Folkerth of Robbins Geller Rudman & Dowd LLP, Justin J. Lannoye of Dowd Bloch Bennett Cervone Auerbach & Yokich, and Michael Bauman of Pitta LLP. The defendants are represented by Steven A. Riley, Milton S. McGee III and Elizabeth O. Gonser of Riley & Jacobson PLC, and David L. Balser, Jessica P. Corley, Lisa R. Bugni and Brandon R. Keel of King & Spalding LLP. The case is St. Clair County Employees' Retirement System v. Acadia Healthcare Co. Inc. et al., case number 3:18-cv-00988, in the U.S. District Court for the Middle District of Tennessee.

Nov 10

3 min

Rivian Automotive Inc. investors asked a California federal judge Thursday to greenlight a $250 million settlement resolving their claims that the company underpriced its electric vehicles and misrepresented its profitability ahead of a blockbuster 2021 initial public offering, just one day before a summary judgment hearing. Rivian Automotive Inc. on Thursday said that resolving a lawsuit that alleges it misrepresented its profitability will enable it "to focus its resources on the launch of its mass market R2 vehicle in the first half of 2026." (Matthias Balk/picture-alliance/dpa/AP Images) In a motion for preliminary approval, the investors told the court that Rivian, its executives and board directors have agreed to pay $250 million in cash to settle the lawsuit, which claims Rivian miscalculated how much it actually cost to build its electric vehicles and knew before its November 2021 initial public offering that it would have to increase the vehicles' retail prices by nearly 20% to make up for the losses. Rivian announced price hikes in March 2022, and the investors say they were left holding the bag when Rivian's stock took a beating. The investors tell the court Thursday that the settlement "is an excellent result" for the pair of classes, which include investors who bought Rivian stock between Nov. 10, 2021, and March 10, 2022. "While plaintiffs and their counsel believe the classes' claims against defendants are meritorious and supported by substantial evidence developed during discovery, they also recognize the significant risks they faced, including that the court would grant, in whole or in part, defendants' summary judgment motion, or that a trial of the action could have precluded any recovery for the classes," the motion states. "The settlement amount represents a substantial percentage of the classes' potential recoverable damages as estimated by plaintiffs' damages expert," it adds. A hearing on the Rivian defendants' summary judgment bid was scheduled for Friday. In a statement Thursday, Rivian denied the allegations in the suit, noting that the settlement is not an admission of wrongdoing. But the company said resolving the litigation will enable it "to focus its resources on the launch of its mass market R2 vehicle in the first half of 2026." The company added it will pay the settlement, if approved, through a combination of directors' and officers' liability insurance, about $67 million, and cash, about $183 million. Rivian, which counts Amazon.com Inc. as its largest shareholder, in November 2021 priced an upsized $11.9 billion IPO, which was the largest IPO of 2021. The operative complaint contends that Rivian had been struggling with bringing its so-called bill of materials costs down for years before the IPO without success. The bill of materials refers to the total amount for parts and materials to build each vehicle. Rivian announced March 1, 2022, that it would raise the price of its R1T pickup truck from roughly $67,500 to approximately $79,500, and the price of its R1S SUV would be bumped up from roughly $70,000 to approximately $84,500. Rivian said at the time that the price hikes would apply to all future orders as well as existing preorders because of "inflationary pressure on the cost of supplier components and raw materials across the world." Rivian's stock price fell from $67.56 per share Feb. 28, 2022, to close at $53.56 per share March 2, 2022. Amid fierce customer backlash, Rivian promptly walked back the price increase for customers with preorders placed before March 1, 2022. The EV-maker said it would honor the original configured price for anyone with a Rivian preorder as of the March 1, 2022, pricing announcement. Within weeks, the company's stock price fell to $35.83 per share March 14, 2022, according to the suit. In the motion for preliminary approval of the settlement Thursday, the investors say that after the defendants moved for summary judgment in July, the parties reengaged with a mediator to try to reach a settlement. On Sept. 19, "following hard-fought, arm's-length negotiations," the parties agreed to the mediator's recommendation to resolve the dispute for $250 million, the motion states. The investors say the deal represents a "meaningful percentage" of the classes' damages, noting that their expert had estimated aggregate damages to range from about $1.87 billion to about $2.04 billion. "If defendants had one of more of the alleged corrective disclosures dismissed at summary judgment, or in proving that plaintiffs had not adequately disaggregated the price impact of any confounding information, damages would be reduced if not eliminated," the motion says. The settlement represents about 12.3% to 13.4% of the potential damages, according to the investors. Class counsel says it will seek no more than 24% of the settlement fund for legal fees, which they note is below the 25% benchmark in the Ninth Circuit. The investors are represented by Sharan Nirmul, Darren J. Check, Richard A. Russo Jr., David A. Bocian and Jennifer L. Joost of Kessler Topaz Meltzer & Check LLP, and Stephen G. Larson and Paul A. Rigali of Larson LLP. Rivian, its executives and board directors are represented by Boris Feldman, Doru Gavril, Eunice Leong and Rebecca Lockert of Freshfields LLP. The case is Charles Larry Crews Jr. v. Rivian Automotive Inc. et al., case number 2:22-cv-01524, in the U.S. District Court for the Central District of California.

Oct 23

4 min

A California federal judge has thrown out a proposed investor class action against PG&E officers, directors and underwriters that blamed stockholder losses following deadly wildfires on previous statements by PG&E officials about the utility's safety practices, but said they could try a fifth time. In his Tuesday order, U.S. District Judge Edward J. Davila granted motions from the defendants to escape the operative complaint, saying the investors didn't show that a Pacific Gas and Electric Co. officer made the allegedly false statements, nor even that the statements were indeed false. The judge noted that the plaintiffs had pointed the finger at PG&E's former deputy general counsel and chief ethics and compliance officer Julie Kane as the officer who "controlled and authorized all of PG&E's statements regarding compliance." Out of 19 allegedly false or misleading statements, she reviewed and signed off on 12, and was responsible for overseeing PG&E's compliance program and reporting, the suit claims. An officer may only be held liable for fraud under Section 10(b) of the Securities Exchange Act if they made the statements at issue, the judge said. The complaint doesn't sufficiently plead that, he said. "To be sure, Kane's high-level position as CECO and her oversight over the utility's compliance program strongly suggest that she had a significant role in all PG&E compliance matters," the judge stated. "But oversight does not necessarily entail control over the content of every statement regarding compliance or their delivery." In addition, it appears that Kane's compliance responsibilities were focused on internal reporting, Judge Davila said. "Even assuming Kane had external reporting duties, the court cannot readily infer that those duties extend to making all of PG&E's compliance-related statements," he said. After finding that the operative complaint failed to adequately allege that Kane made the bulk of the statements at issue, the judge followed with an analysis of the alleged misstatements, finding that the plaintiffs didn't sufficiently plead that the majority were false or misleading. To start, he said, the investors didn't adequately plead that statements made by PG&E officials about the utility "doubling" its vegetation management spending were false. The plaintiffs also said PG&E falsely assured the public that it complied with safety regulations, when it knew it was violating those laws, according to Judge Davila. He said courts routinely find general statements about a continued or heightened focus on compliance efforts to be examples of "inactionable corporate optimism," because they are not detailed factual assertions. One statement, about implementing additional precautionary measures to reduce wildfire threats, was nothing more than "inactionable puffery," the judge said. Similarly, statements by former PG&E CEOs Tony Earley and Geisha Williams to shareholders that the utility had "continued to demonstrate leadership and commitment on safety" could also be seen as puffery, the judge said. The operative complaint also insufficiently pled falsity as to some statements related to a state regulatory requirement that PG&E develop a protocol for deenergizing power lines when conditions could lead to extreme fire, the decision says. The suit claims that before a 2018 fire in Butte County, PG&E didn't execute the protocol that it said it had established. Based on the evidence before the court, the judge said, "the more likely explanation" is that PG&E did not believe the criteria had been met to enact the protocol. "Even if hindsight has revealed that determination to be incorrect, the securities laws do not permit plaintiffs to allege falsity based on PG&E's business judgment," Judge Davila said. In another example, related to California's 2017 North Bay Fires, the plaintiffs claimed that now-retired senior vice president of electric operations Pat Hogan made a bogus statement in 2015 to a California Senate committee when he said PG&E was "just about done with" implementing a program that disabled power switches in areas at high risk for wildfires. That statement was a prediction, the judge noted. "That the recloser program had not been completed prior to the North Bay Fires in 2017, which were caused by an operative recloser, does not render false the statement made two years prior," the decision states. This consolidated action includes claims from lead plaintiff the Public Employees Retirement Association of New Mexico and named plaintiff New York County, on behalf of the County of York Retirement Fund, City of Warren Police and Retirement System and Mid-Jersey Trucking Industry & Local No. 701 Pension Fund. In January 2014, California declared a state of emergency due to drought, and the California Public Utilities Commission ordered PG&E to manage vegetation around its power lines to mitigate the wildfire risk created by the drought, Judge Davila noted. "That risk was realized in September 2015 when the Butte Fire burned nearly 71,000 acres, destroyed more than 921 buildings, and caused two deaths," he said. In April 2016, the California Department of Forestry and Fire Protection issued a press release concluding that the Butte Fire was caused by PG&E's safety violations. Then, in October 2017, the North Bay Fire blazed across nine counties, destroying almost 8,900 buildings and killing 44 people. Cal Fire determined that 11 of the fires were caused by the utility's violations of state safety regulations, the judge noted. One year later, the Butte County Camp Fire burned more than 153,000 acres and led to the deaths of 85 people, according to the decision. Shortly after the plaintiffs filed their consolidated class action and second amended consolidated class action in November and December 2018, PG&E commenced voluntary Chapter 11 bankruptcy proceedings in the Northern District of California in January 2019. Those proceedings triggered an automatic stay of the investors' lawsuit as to PG&E, Tuesday's decision underscores. In September 2022, the court stayed the action, citing the overlap with the bankruptcy proceedings. That stay order was vacated by the Ninth Circuit, renewing the motions to dismiss. After PG&E filed for Chapter 11, the bankruptcy court ordered it to proceed in alternative dispute resolution with the proposed class members who sued it. In February 2020, the CPUC slapped PG&A with $2.137 billion in penalties, the largest it had ever assessed, for the bankrupt utility's role in igniting the wildfires. A PG&E spokesperson told Law360 on Wednesday that the company "is currently considering the impact the district court ruling will have on the ongoing securities claims asserted against PG&E in the bankruptcy." Representatives for the other parties did not respond to requests for comment Wednesday. The proposed class and lead plaintiff Public Employees Retirement Association of New Mexico are represented by Thomas G. Hoffman, Jr., Thomas A. Dubbs and Michael P. Canty of Labaton Keller Sucharow LLP, and James M. Wagstaffe of Adamski Moroski Madden Cumberland & Green LLP. The Securities Act plaintiffs are represented by Willow E. Radcliffe, Kenneth J. Black, Hadiya K. Deshmukh, Hailey S. Zanutto, Darren J. Robbins and Alexandra S. Bernay of Robbins Geller Rudman & Dowd LLP, and Thomas C. Michaud of VanOverbeke Michaud & Timmony PC PG&E is represented by Michael J. Reiss and James E. Brandt of Latham & Watkins LLP. The PG&E officers are represented by Steven S. Scholes, Paul M.G. Helms, Jason D. Strabo and Caitlyn M. Campbell of McDermott Will & Schulte LLP. The PG&E directors are represented by Stephen P. Blake, Jonathan K. Youngwood and Nicholas S. Goldin of Simpson Thacher & Bartlett LLP. The PG&E underwriters are represented by Neal A. Potischman, Charles S. Duggan, Dana M. Seshens and Craig T. Cagney of Davis Polk & Wardwell LLP. The case is In re: PG&E Corp. Securities Litigation, case number 5:18-cv-03509, in the U.S. District Court for the Northern District of California.

Oct 1

6 min

UnitedHealth and its executives have asked a Minnesota federal judge to toss a proposed securities class action accusing it of, among many things, not disclosing that the U.S. Department of Justice had reopened an antitrust investigation into the health insurer, saying the complaint consists of unsupported "scattershot allegations." In the motion filed Tuesday, UnitedHealth said the 208-page complaint by the California Public Employees' Retirement System offers only "parroted bad news coverage and length," but no actionable misrepresentations regarding the DOJ's revived investigation into UnitedHealth's acquisition of healthcare payment technology company Change Healthcare. "It is black-letter law that a decline in a company's stock price following a negative event — including after purported misconduct is revealed — does not alone constitute securities fraud," UnitedHealth said. The merger ultimately proceeded after the DOJ lost a high-profile bench trial during which a Washington, D.C., federal judge said UnitedHealth was sufficiently committed to preventing the sharing of data across its segments. "Plaintiff piggybacks on DOJ's highly publicized (and ultimately failed) antitrust action in 2022 to block UnitedHealth's Change acquisition," UnitedHealth said. The insurer also denied the suit's other allegations, including that it misdiagnosed patients in its Medicare Advantage program. Under the program, the government pays insurers a set fee per patient based on each individual's predicted health status, according to the motion. The suit alleged UnitedHealth used its "HouseCalls program" to dispatch nurse practitioners to members' homes to perform physical assessments in search of new diagnoses, even if they were not medically supported. UnitedHealth said, however, that the complaint does not show the program was not valuable to seniors, or that it never resulted in legitimate diagnoses. "Plaintiff relies on cherry-picked allegations from press reports about these visits and a [DOJ] civil investigation into those allegations," UnitedHealth said. "Such thin allegations do not state a claim for securities fraud." The suit's individual defendants include former UnitedHealth CEO Andrew Witty and current Chairman Stephen Hemsley, who have said the insider trading claims against them are also baseless because they do not allege any material nonpublic information that allegedly motivated stock sales. UnitedHealth's former CEO Brian Thompson, who was shot and killed in New York City last December, is also accused in the suit of having sold more than 21% of his UnitedHealth shares for $211 million in proceeds during the class period running between March 14, 2022, and February 27, 2024. A motion to substitute Thompson's estate has not been filed, according to Wednesday's motion. Counsel for the defendants declined to comment on Wednesday. Counsel for the investors did not immediately respond to a request for comment. California Public Employees' Retirement System is represented by Tim F. Sullivan of Tim Sullivan PLLC, and Darren J. Robbins, Sam S. Sheldon, Laurie L. Largent, Robert R. Henssler Jr., Matthew I. Alpert, Jeffrey J. Stein and Jack Abbey Gephart of Robbins Geller Rudman & Dowd LLP. UnitedHealth, Witty and Hemsley are represented by Robert J. Giuffra Jr., Matthew J. Porpora, Jeffrey T. Scott, Morgan L. Ratner, Jacob E. Cohen and Rishabh Bhandari of Sullivan & Cromwell LLP, and Peter C. Magnuson, Matthew Kilby, Jeffrey P. Justman and Anderson C. Tuggle of Faegre Drinker Biddle & Reath LLP. The case is California Public Employees' Retirement System v. UnitedHealth Group Inc. et al., case number 0:24-cv-01743, in the U.S. District Court for the District of Minnesota.

Sep 24

3 min