Susan Muck, Fenwick & West litigation partner and chair of the securities enforcement practice, was profiled by Law360 as a Securities MVP for 2014. The profile highlighted her major victories including a settlement of a large securities class action case and a key decision by the U.S. Court of Appeals for the Ninth Circuit. In that decision, the Ninth Circuit found that a company’s announcement of an internal investigation is not sufficient to establish loss causation because the announcement does not, by itself, reveal fraud.
The Ninth Circuit decision was a hugely important finding, Muck told Law360, because it gives company executives some relief from the worry that an announcement of an internal inquiry will result in an immediate shareholder lawsuit.
“From a common-sense standpoint, that kind of disclosure itself shouldn’t be the basis of any class action,” Muck said, noting that most internal investigations do not find fraud.
Muck and her team had expected the appellate court to affirm the lower court’s dismissal of the case, but not decide on the broader issue.
“We were surprised by the decision,” she told Law360, “But we were obviously pleased.”
In the profile, Muck also discussed the high-stakes litigation she resolved for Diamond Foods Inc., the company behind Kettle potato chips and Pop-Secret popcorn. Diamond had been hit with a shareholder class action after it failed to seal a deal to acquire the Pringles potato chip brand.
Because Diamond's financial situation was already precarious, the settlement required extra ingenuity. Muck's strategy focused on the cash-and-equity settlement approach she had more often seen earlier in her 30-year career.
After several negotiation sessions, the plaintiffs agreed to accept $11 million in cash and 4.45 million shares of the company’s stock—shares that have soared in value since the settlement was reached.
"The marketplace really seemed to like the deal," Muck commented. Law360 noted that investors also seemed to like a parallel agreement Muck reached with the Securities and Exchange Commission resolving claims against Diamond.
“It is very satisfying,” Muck said, regarding her work. “If you’re going to work this hard, it has to be rewarding. Otherwise, you wouldn’t do it.”
The full profile is available here.