Top Defense Verdict: Kingoschu Family Partners LLC v. Public Storage

Irell & Manella LLP defeated a class action brought against client Public Storage by five former limited partners who claimed the defendants offered them a below-value payout following a merger to consolidate several partnerships.

Los Angeles Superior Court Judge Jane L. Johnson ruled in favor of the defendants in May 2016 after a bench trial and dismissed the class action, which sought $41 million in damages. Kingoschu Family Partners LLC v. Public Storage, EC056309 (C.D. Cal., filed July 19, 2011).

The court ruled that California's business judgment rule applied in favor of the defendants, who entered into the merger agreement in good faith. The court also determined that even if the business judgment rule did not apply, it would still find that the defendants had not breached their fiduciary duty to the limited partners.

Furthermore, Johnson also ruled that even if the plaintiffs' had proven there was a breach of fiduciary duties, their case would not have prevailed because they failed to prove that the limited partners were damaged.

"We had structured the post-trial brief by saying this is why they should take nothing, and here's a second and third thing," said Craig Varnen, the lead counsel for Irell. "[Judge Johnson] adopted that structure for her ruling saying, 'this is why I'm ruling for Public Storage, but even if I hadn't ruled for them on this ground, here's another one.' It made it almost appellate proof so they didn't appeal it."

Varnen said that in his 25 years of work as a securities litigator he's never seen a post-closing merger case go to trial in California. He noted that litigation involving limited partners is usually filed in Delaware, but in recent years the courts have become less favorable to plaintiffs, which has caused some to seek venues in other states.

Wessel	Briggs

? Eli Wolfe