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In re Dole Food Co., Inc. Stockholder Litigation

Court of Chancery of Delaware

February 15, 2017

IN RE DOLE FOOD COMPANY, INC. STOCKHOLDER LITIGATION

          Submitted: February 2, 2017

          Stuart M. Grant, Nathan A. Cook, Kimberly A. Evans, Michael T. Manuel, GRANT & EISENHOFER, P.A., Wilmington, Delaware; Randall J. Baron, A. Rick Atwood, Jr., David T. Wissbroecker, Edward M. Gergosian, Maxwell Huffman, ROBBINS GELLER RUDMAN & DOWD LLP, San Diego, California; Marc A. Topaz, Lee D. Rudy, Michael C. Wagner, Justin O. Reliford, KESSLER TOPAZ MELTZER & CHECK, LLP, Radnor, Pennsylvania; Class Counsel.

          J. Clayton Athey, PRICKETT, JONES & ELLIOTT, P.A., Wilmington, Delaware; Counsel for Defendants David H. Murdock and DFC Holdings, LLC.

          Bruce L. Silverstein, Elena C. Norman, James M. Yoch, Jr., YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Counsel for Dole Food Company, Inc.

          MEMORANDUM OPINION

          LASTER, Vice Chancellor.

          On November 1, 2013, Dole Food Company, Inc. ("Dole" or the "Company") completed a going-private transaction structured as a single-step merger. The merger consideration of $13.50 per share was distributed to Dole's stockholders of record, including Cede & Co., the nominee of the Depository Trust Company ("DTC"). In turn, DTC distributed the merger consideration to its participant members based on the information about their positions that was reflected in DTC's centralized ledger.

         The plaintiffs sued Dole's fiduciaries on behalf of a class comprising the holders of shares of Dole common stock who were unaffiliated with the defendants. In December 2015, the parties settled the case for consideration of $2.74 per share plus interest.

         The stipulation provided for the settlement proceeds to be distributed to class members through a traditional claims process. There were 36, 793, 758 shares in the class. At the conclusion of the claims process, however, claimants had submitted facially valid claims for 49, 164, 415 shares.

         Despite diligent efforts, the settlement administrator and class counsel could not resolve the discrepancy. Class counsel moved to modify the allocation procedure to authorize the settlement proceeds to be distributed to class members using the same payment mechanism used to distribute the merger consideration. This decision grants their motion.

         I. FACTUAL BACKGROUND

         Pursuant to a Stipulation and Agreement of Settlement dated December 7, 2015, the plaintiffs agreed to settle the claims they were pursuing against the defendants in return for a payment of $2.74 per share plus interest. The stipulation defined the class as follows:

[A]ll record holders and beneficial owners of common stock of Dole during the period commencing June 11, 2013 and ending November 1, 2013, together with their successors and assigns. Excluded from the Class are Defendants, and each of their affiliates, legal representatives, heirs, successors in interest, transferees and assigns. Also excluded from the Class are [ten petitioners in the related appraisal action (the "Appraisal Petitioners")], except to the extent any such Appraisal Petitioners owned shares of Dole common stock at the Closing that were not the subject of a perfected appraisal demand.

         Dkt. 750, ¶ 1(d). The parties stipulated in the pre-trial order that holders of 54, 084, 157 shares of Dole common stock were unaffiliated with the defendants. Dkt. 648, ¶ 6. For purposes of the class definition, holders of 17, 290, 399 shares were "Appraisal Petitioners." Dkt. 787 at 1.n.2. The class therefore comprised holders of 36, 793, 758 shares.

         On February 10, 2016, the court approved the settlement. The stipulated form of final order provided that the "Settlement Administrator shall make distributions to Settlement Payment Recipients in the manner and subject to the conditions set forth in the Stipulation." Dkt. 780, ¶ 18.

         The defendants paid the settlement amount on March 28, 2016. Including interest, the total payment was $115, 793, 059.57. Counsel deducted from this amount the awards that the court approved for attorneys' fees and expenses.

         A.B. Data served as the Settlement Administrator. Beginning on December 11, 2015, A.B. Data mailed notices and claim forms to potential class members, brokers, and other nominees. In total, A.B. Data mailed 24, 322 notice packets. A.B. Data disseminated a summary notice via PR Newswire and published the summary notice in the Investor Business Daily. The notices instructed class members to submit claims to A.B. Data by April 11, 2016. A.B. Data set up a telephone hotline and a website to assist potential class members.

         In total, A.B. Data received 4, 662 claims: (i) 874 from paper filers and (ii) 3, 788 from e-filers. Paper filers are typically individuals or small holders who submit claims by mailing back the claims forms and providing hard copies of supporting documents. E-filers are typically institutional investors. They may be involved in hundreds or thousands of transactions during the class period, and they submit their claims using a computerized system.

         After uploading the paper claims and merging them with the electronic claims to create a single database, A.B. Data reviewed the claims for deficiencies. A.B. Data identified deficiencies for 411 paper claims and 2, 547 electronic claims. A.B. Data mailed letters to the paper filers that identified the deficiencies and asked for additional information. A.B. Data mailed letters to the e-filers that instructed them to review an Excel spreadsheet that A.B. Data emailed separately with details about their deficiencies. If a claimant cured a deficiency, then A.B. Data updated its database.

         At the conclusion of the claims process, claimants had submitted facially eligible claims for 49, 164, 415 shares. That figure ...


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