Berman Tabacco recently secured a positive ruling permitting two shareholder derivative suits to proceed against Sinclair Broadcast Group.
Berman Tabacco represents Norfolk County Retirement System in a derivative action on behalf of Sinclair alleging that Sinclair’s controlling shareholders and Board breached their fiduciary duties by knowingly and intentionally misleading the DOJ and FCC in their review of a proposed merger between Sinclair and Tribune Media Company, breaching the terms of a merger agreement with Tribune Media Company. This allegedly resulted in the cancellation of the merger, which has already cost the company hundreds of millions of dollars.
Norfolk’s lawsuit seeks reforms to Sinclair’s corporate governance and internal procedures, restitution and disgorgement from Sinclair’s officers and directors, declaratory and equitable relief, and damages for Sinclair, as well as other forms of relief.
On December 9, 2019, Judge Catherine C. Blake of the United States District Court for the District of Maryland denied Defendants’ Motion to Dismiss or Stay without prejudice, permitting limited discovery on the issue of the formation and membership of Sinclair’s special litigation committee and its scope of authority at different points in the investigation. In so ruling, the Court noted that the “unresolved questions surrounding the composition and scope of authority of the [special litigation committee] certainly do not ‘instill confidence.’”
According to Boston Partner Nathaniel L. Orenstein, the Sinclair team lead for Berman Tabacco, “We are very encouraged by the Court’s ruling and share the Court’s concerns about Sinclair’s supposed special litigation committee.”
The case is Norfolk County Retirement System v. Smith (Sinclair Broadcast Group Derivative Action), No. 18-cv-03952 (D. Md.). The litigation team includes Leslie R. Stern and Nathaniel L. Orenstein from Berman Tabacco’s Boston office and A. Chowning Poppler of the firm’s San Francisco office.