Court says hedge fund's mistake cost it chance to sue over failed Perrigo takeover
A three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia said Sculptor Master Fund Ltd and a related fund were barred from opting out of the investor class action more than three years after a deadline came and went.
'Sculptor had the opportunity to opt out early in this litigation, but it failed to do so. Having made that mistake, it has to live with the consequences,' wrote, opens new tab Circuit Judge Cheryl Ann Krause, joined by Circuit Judges Paul Matey and Peter Phipps.
The hedge fund had argued that its intent to pursue its own lawsuit was clear in the record of the litigation in the federal court in New Jersey. The panel upheld a lower judge's ruling against Sculptor.
Sculptor and a lawyer representing it at law firm Quinn Emanuel did not immediately respond to requests for comment, and neither did Perrigo.
Grand Rapids, Michigan-based Perrigo settled the shareholder class action for $97 million last year, resolving claims that it made misrepresentations and omissions between 2015 and 2017 in connection with a failed $26 billion takeover bid by drugmaker Mylan.
Perrigo has denied any wrongdoing.
Sculptor held about 2.6 million shares of Perrigo stock, owning 5 percent of the company, court records show.
Class action rules can require companies or individuals to formally opt out of settlements if they want to try to sue individually to seek a better deal or a win at trial.
A former lawyer for Sculptor in the case said in a court declaration that her firm, King & Spalding, did not receive the class action notice explaining the process for exclusion.
Still, the attorney said she had asked an associate at the firm to mail a formal opt-out letter to exclude Sculptor from the class action. The attorney said she was unable to determine whether the letter was mailed or whether it was lost en route.
In addition to arguing that the record in the case showed it clearly intended to opt out, Sculptor also told the court that its actions could be deemed 'excusable neglect.'
Perrigo countered in a court filing that Sculptor 'had ample knowledge of a class action and were represented by sophisticated legal counsel.'
The appeals court said Sculptor "bears the burden of its former counsel's mistakes."
The case is Perrigo Institutional Investor Group et al v. Joseph C. Papa et al, 3rd U.S. Circuit Court of Appeals, No. 24-2861.
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