MONTH-IN-BRIEF (Feb 2019)
M&A Law
Court Rejects Xerox’s Bid to Dismiss Federal Merger Suit
By Ericka Simpson Conner
Fujifilm Holdings Corporation (“Fuji”) scored a victory recently when the U.S. District Court for the Southern District of New York (the “Court”) denied Xerox Corporation’s (“Xerox”) request to dismiss Fuji’s lawsuit seeking $1 billion. Xerox backed out of the planned merger between the companies due to pressure from activist investors, Carl Icahn and Darwin Deason. Xerox argued Fuji was forum shopping and state court was a more convenient forum. The Court, however, disagreed, ruling Xerox’s forum argument was a direct contradiction of forum selection provisions in the Fuji transaction documents. Additionally, Xerox claimed the company had the right to terminate the transaction because Fuji failed to deliver a copy of their joint venture’s audited financial statements by an agreed upon deadline. However, the Court noted the parties had thirty days to cure any default once notified and dismissed Xerox’s argument. All of Fuji’s claims were allowed to move forward, including breach of the covenant of good faith and fair dealing claim, which is often dismissed by courts when an underlying written contract is in dispute.
