It was big news on Wall Street and around the world. On Feb. 15, German stock exchange Deutsche Börse A.G. and NYSE Euronext Inc., the operator of the New York Stock Exchange, announced their intention to merge through an all-stock deal valued at nearly $10 billion. The newly formed Dutch holding company would become the largest futures exchange in the world.

Critics of the deal lamented the overseas migration of the New York Stock Exchange ownership — a symbol of American capitalism dating to 1792. But NYSE Euronext shareholders saw even bigger problems: namely, that they would be saddled with undervalued stock and would lack a majority stake in the newly formed company.

Among the unhappy shareholders was the Greater Pennsylvania Carpenters’ Pension Fund, which quickly turned to its longtime legal counsel at business litigation firm Labaton Sucharow.

“It was quickly revealed that the ownership of this new holding company would be 60% the Deutsche Börse shareholders and 40% the New York Stock Exchange shareholders,” said Christine Azar, a partner in Labaton’s Delaware office and the head of its corporate governance and shareholders’ rights practice. “One of the first questions that came up was, ‘Was it really a merger of equals?’ ”

The Labaton attorneys and their clients didn’t think so. Ten days after the merger announcement, Azar and Labaton partner Michael Stocker filed a class action in Delaware against NYSE Euronext, its board members and Deutsche Börse. The complaint alleged that Deutsche Börse’s proposed stock purchase price of $37.60 was “grossly inadequate.” The suit also contended that the structure of the deal, which was designed to prevent offers from other bidders, was unfair to the shareholders and that the NYSE Euronext directors had negotiated “substantial benefits to themselves.” (New York Stock Exchange Chief Executive Officer Duncan Niederauer was to become the head of the new company.)

“The New York Stock Exchange is an extremely important entity,” Stocker said. “We and our clients felt that to not open it up to a bidding war was problematic.”

Additional shareholder suits followed in Delaware and New York, and the cases were eventually consolidated. Labaton was named co-lead counsel along with attorneys from Grant & Eisenhofer and Robbins Geller Rudman & Dowd.


The following months were a whirlwind of discovery and depositions. The plaintiffs’ team knew that the size of the deal and the involvement of regulators in numerous countries would slow the pace somewhat, but they still had to push quickly. Azar traveled to London and Amsterdam to take depositions, and also deposed Niederauer. In the meantime, The Nasdaq OMX Group Inc. made an unsolicited $11.3 million bid for the New York Stock Exchange, further complicating the discovery process.

“Our belief that the New York Stock Exchange really was favoring a transaction with Deutsche Börse over some other entities was confirmed,” Azar said. “Once that deal was kind of nailed down, they just wanted it to go forward.”

Structuring a settlement was no easy task either, considering that the attorneys had to devise a structure that would pass muster with regulators in the United States, Germany and the Netherlands, as well as the various shareholders. They settled on a special dividends framework early on, but negotiating the details took time.

On June 24, a settlement was reached in which shareholders would receive a special dividend of 2 euros per share, equivalent to more than $900 million, one of the largest such settlements to date.

“We were satisfied with the outcome,” Azar said. “The primary factor [in the success of the suit] was pursuing this extremely hard. Insisting on every bit of discovery. Pushing, pushing, pushing. Wachtell, Lipton, [Rosen & Katz] represented the New York Stock Exchange board. They’re an extremely good firm and they fight the hard fight. Never letting go and pushing really kept the litigation moving forward and going in the direction we wanted it to.”


The case was hardly the only high-profile litigation Labaton Sucharow has handled in recent years. The firm’s clients include a wide array of pension funds and financial institutions including Amalgamated Bank, SunTrust Banks Inc. and Anglo Irish Bank Corp. Ltd., said Chairman Lawrence Sucharow. He sees the firm as the Whole Foods of the securities litigation world — meaning that it pays close attention to the size and quality of the cases it takes on. It’s not Wal-Mart, focusing on the sheer volume of cases it brings, he said.

“I think our relationship with clients is what differentiates us,” Sucharow said. “These are large, institutional clients, and we pay a lot of attention to them. We view our clients as our partners, and we’re not in it for a quick hit. Most of out clients have been with us for a long time.”

The firm claimed more than $2.2 billion in settlements in 2010. The sheer number of cases hasn’t grown, Sucharow said, but their size has. The financial crisis of 2008 prompted some larger financial institutions to get off the litigation sidelines and sue to recover losses, he said.

In related class actions brought by investors in two mutual funds operated by OppenheimerFunds Inc., Labaton took the lead counsel role. Those cases settled in May for $100 million after Labaton attorneys argued that the funds’ recklessness resulted in investor losses.

Two months earlier, the 92-attorney firm helped to secure a $150.5 million settlement on behalf of client the Mineworkers’ Pension Scheme and other investors in a case that has become known as “India’s Enron.” Auditors and certain directors at Satyam Computer Services Ltd. overstated the company’s earnings by as much as $1.5 billion, artificially inflating the price of its securities.

Labaton helped to secure a series of antitrust settlements now totaling $451 million on behalf of plaintiffs who purchased air freight shipping services. The plaintiffs alleged that a series of airlines unlawfully inflated air-shipping rates between 2000 and 2006. And it has pending litigation against some of the biggest players in the financial crisis, including the Goldman Sachs Group Inc., The Bear Stearns Cos., Morgan Stanley and the Federal National Mortgage Association, best known as Fannie Mae.

Karen Sloan can be contacted at