A Manhattan Supreme Court judge has rejected class certification and a proposed settlement in a shareholder lawsuit over Xerox Corp.’s planned tie-up with Japanese multinational photography firm Fujifilm Holdings Corp., saying the deal was unfair to Xerox investors.

The proposed settlement, announced last May, came as a win for activist investors Carl Icahn and Darwin Deason, who agreed to drop claims in a consolidated class action in exchange for the resignation of Xerox’s CEO and five other board members.