Pomerantz LLP Appointed Lead Counsel in McDermott International Securities Litigation

On June 5, 2019, Pomerantz LLP was appointed Lead Counsel in a securities class action lawsuit filed against McDermott International.

A Texas federal judge ruled Wednesday that Pomerantz and Wolf Popper will each serve as lead counsel for separate sets of securities claims against McDermott International Inc. related to its acquisition of Chicago Bridge and Iron NV.

U.S. District Judge Alfred H. Bennett’s order consolidated a pair of investor suits filed in the wake of McDermott’s October announcement that it needed to revise the estimated value of projects acquired from CB&I months earlier by $744 million, causing the engineering and construction company’s stock price to drop 40% from the day before and 60% from its May 10 merger-date price of $20.70 per share.

Filed on Nov. 15, the first suit alleged that from Jan. 24, 2018, to the October announcement, McDermott violated Section 10(b) of the Securities Exchange Act of 1934 by misleading investors about material problems with the integration of CB&I’s business and the likelihood that its projects would incur higher-than-expected costs.

The Public Employees Retirement System of Mississippi asserted similar allegations in January, but unlike its predecessor, the pension fund’s proposed class action alleged violations of Section 14(a) of the Exchange Act against the company for filing a “materially false and misleading” proxy statement filed ahead of the merger.

The March proxy statement failed to alert investors that certain CB&I projects would incur substantially higher costs than were being publicly represented, meaning the value of these projects would be materially affected, the pension fund said. It seeks to certify a class of “persons and entities that held McDermott common stock as of April 4, 2018, and had the right to vote on the Chicago Bridge & Iron Company NV merger.”

Reviewing both cases, Judge Bennett ordered that they be consolidated under the first-filed suit and that any subsequent and “substantially similar securities class actions” be folded in as well.

The judge also granted unopposed motions appointing the Nova Scotia Health Employees’ Pension Plan and the Mississippi pension fund as lead plaintiffs in the case, with the former handling Section 10(b) claims and the latter handling Section (14a) claims.

According to the Mississippi fund, Judge Bennett had outlined this consolidation plan at a February hearing on competing lead plaintiff motions in the first-filed case.

A hearing on competing lead plaintiff motions in the first-filed case was planned for Wednesday, but the Nova Scotia pension fund said Monday that its competitors had since dropped out, leaving only it and its counsel of choice, Pomerantz LLP, to lead the Section 10(b) claims, with Houston-based Briscoe Law Firm PLLC serving as liaison counsel.

The Mississippi pension fund’s counsel choice, Wolf Popper LLP, will handle the Section 14(a) claims.

Counsel for McDermott, which had sought consolidation of the cases in February, and the two lead counsel teams did not immediately respond to requests for comment.

The Nova Scotia pension fund is represented by Matthew L. Tuccillo, Jeremy A. Lieberman, J. Alexander Hood II and Patrick V. Dahlstrom of Pomerantz LLP and Willie C. Briscoe of The Briscoe Law Firm PLLC.

The Mississippi pension fund is represented by Jeffrey W. Chambers, Chet B. Waldman, Robert C. Finkel and Matthew Insley-Pruitt of Wolf Popper LLP.

McDermott is represented by David D. Sterling and Amy Pharr Hefley of Baker Botts LLP.

The case is Edwards v. McDermott International Inc. et al., case number 4:18-cv-04330, in the U.S. District Court for the Southern District of Texas.

Read more at: https://www.law360.com/mergersacquisitions/articles/1166531