Court dismisses Essendant Class Action Suit

Court Dismisses Essendant Class Action Suit

(JANUARY 2, 2020) A US court has dismissed a class action lawsuit brought against Essendant’s former board of directors and Sycamore Partners over allegations of breaches of fiduciary duty.

At the end of October 2018, Essendant shareholders filed a class action complaint in a Delaware court alleging the company’s board had failed to obtain the highest reasonable value for the wholesaler by agreeing to be acquired by Staples’ owner Sycamore Partners. The complaint also alleged Sycamore and Staples had aided and abetted the Essendant board in these fiduciary breaches. A later amendment added a claim against Sycamore for breaching its fiduciary duties as a controlling shareholder in Essendant and against the Essendant board for aiding and abetting Sycamore’s alleged breach.

In April 2019, the defendants moved to dismiss the claims. In his ruling made at the start of this week, Joseph Slights, Vice Chancellor at the Delaware Court of Chancery, sided with the defendants on all counts.

The class action ruling does not affect a separate lawsuit filed against Essendant by Genuine Parts. This complaint is also being heard in the Delaware Court of Chancery, and a motion by Essendant to dismiss was rejected by Slights last September. - (OPI)