THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT. THE COURT HAS MADE NO FINDINGS WITH RESPECT TO THE FOLLOWING MATTERS AND THESE RECITATIONS SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY OF THE CLAIMS OR DEFENSES RAISED BY ANY OF THE PARTIES.
On August 22, 2019, Pivotal and VMware entered into a definitive agreement and plan of merger for VMware to acquire Pivotal in a transaction pursuant to which Pivotal stockholders would receive $15.00 in exchange for each of their shares of Class A common stock (the “Acquisition”).
On November 7, 2019, Plaintiff served Pivotal with a corporate books and records demand pursuant to Section 220 of the Delaware General Corporation Law (the “Section 220 Demand”) to investigate, among other things, alleged breaches of fiduciary duty in connection with the Acquisition. Following negotiations, Pivotal produced to Plaintiff certain nonpublic Board-level and senior officer-level corporate books and records regarding the Acquisition.
On November 27, 2019, Pivotal filed a Schedule 14A with the U.S. Securities and Exchange Commission providing Pivotal stockholders with information concerning the Acquisition and recommending that stockholders approve the Acquisition by the affirmative vote of at least a majority of the outstanding shares of Class A common stock not owned by VMware or any of its affiliates.
On December 27, 2019, Pivotal convened a special meeting of its stockholders to vote on the Acquisition. Approximately 92.6% of holders of Pivotal’s outstanding Class A shares that were present at the meeting (excluding any shares held by VMware or any of its affiliates), representing 66 percent of all of the unaffiliated holders of Pivotal Class A Stock, approved the Acquisition.
On December 30, 2019, the Acquisition closed.
On June 4, 2020, Plaintiff filed the Complaint against Dell, Michael Dell, VMware, Robert Mee, and Cynthia Gaylor, alleging, among other things, that Defendants and Former Defendant breached fiduciary duties to the Company’s public stockholders, and, in the alternative, that VMware aided and abetted those breaches of fiduciary duties, in connection with the Acquisition and that, as a consequence thereof, the Company’s public stockholders suffered damages.
In particular, the Complaint alleged that, by controlling, influencing, and/or causing Pivotal to enter into the Acquisition on terms that were unfair to Pivotal’s minority stockholders, (i) Dell, M. Dell, and VMware, as Pivotal’s controlling stockholders, breached their fiduciary duties; (2) M. Dell and Mee, in their capacity as directors, breached their fiduciary duties; and (3) Mee and Gaylor, in their capacity as officers, breached their fiduciary duties. In particular, the Complaint alleged that the Defendants took advantage of a drop in Pivotal’s stock price to enable VMware to acquire Pivotal at an artificially low price.
The Complaint further alleged that VMware aided and abetted breaches of fiduciary duty by allegedly coercing the members of a special committee of the Pivotal board of directors with the prospect of retribution by VMware against Pivotal’s business, and colluding with other Defendants to announce a deal before Pivotal’s stock price could reflect its Q2 2020 financial results.
On June 16 and 17, 2020, Plaintiff served her First Requests for the Production of Discovery Materials, and on June 23, 2020, her First Sets of Interrogatories on Defendants and the Former Defendant.
On July 1 and 6, 2020, Defendants and the Former Defendant filed motions to dismiss the Complaint (the “Motions to Dismiss”). The Motions to Dismiss vigorously disputed the Plaintiff’s claims and allegations in the Complaint.
Among other things, the Motions to Dismiss argued that the Complaint failed to state a claim as a matter of law because, inter alia, (i) the process leading to the Acquisition employed sufficient protections for Pivotal’s minority stockholders; (ii) the Acquisition was approved by an independent and disinterested special committee of Pivotal directors; (iii) the Acquisition was approved by a majority of Pivotal stockholders unaffiliated with Defendants; (iv) the price and process for the Acquisition were fair; and (v) Dell and M. Dell did not exercise any control to influence the Acquisition. The Motions to Dismiss also argued that the aiding and abetting claim against VMware failed because there was no viable primary claim for breaches of fiduciary duty or any facts alleged that show that VMware knowingly participated in any such alleged breaches. Plaintiff vigorously disputed each of these claims, including in her answering brief opposing the Motions to Dismiss filed on December 9, 2020.
On July 20, 2020, Defendant VMware objected and responded to Plaintiff’s First Request for the Production of Discovery Materials.
On August 13, 2020, Defendants Dell, M. Dell, and Mee, and Former Defendant Gaylor objected and responded to Plaintiff’s First Requests for Production of Discovery Materials.
On August 14, 2020, the Court granted the Parties’ Stipulation and Order for Consolidation, Appointment of Lead Plaintiff and Lead Counsel, and Coordination, consolidating this Action with Howarth v. Dell Technologies Inc. et al, C.A. No. 2020‑0583‑KSJM, appointing Plaintiff as lead plaintiff and Co-Lead Counsel as lead counsel, and coordinating this Action with HBK Master Fund L.P. et al. v. Pivotal Software, Inc., C.A. No. 2020‑0165‑KSJM.
On December 29, 2020, Defendants and the Former Defendant served their First Requests for Production of Documents and First Set of Interrogatories on Plaintiff.
On January 28, 2021 and August 4, 2021, Plaintiff responded to Defendants’ and the Former Defendant’s First Request for Production of Documents and First Set of Interrogatories, respectively.
On March 23, 2021, the Court entered the Order Governing the Case Schedule setting a trial to commence on July 6, 2022 in Wilmington, Delaware.
Following full briefing of the Motions to Dismiss, on April 27, 2021, the Court heard oral argument on the Motions to Dismiss.
On April 30, June 3, and August 4, 2021, Defendants and the Former Defendant responded to Plaintiff’s First Set of Interrogatories.
On June 29, 2021, the Court entered its ruling denying Defendants’ Motions to Dismiss with respect to Defendants VMware, Dell, M. Dell, and Mee, while granting Former Defendant Gaylor’s Motion to Dismiss.
Over the next ten months, the Parties conducted extensive fact and expert discovery, in which the Parties produced over 55,500 documents, consisting of over 471,000 pages; conducted 21 depositions (including of the Parties’ respective expert witnesses); and exchanged opening and rebuttal expert reports. Plaintiff obtained fact discovery from 15 third parties, who produced roughly 48,000 additional documents, consisting of nearly 311,000 pages. In all, more than 103,000 documents were produced in the litigation.
On November 4, 2021, the Court entered the Stipulation and Order Regarding Class Certification (the “Class Certification Order”), certifying the Class (as defined in paragraph 32 below), appointing Plaintiff as the representative for the Class, and appointing Bernstein Litowitz Berger & Grossmann LLP and Block & Leviton LLP as Co‑Lead Counsel for the Class.
On January 24, 2022, the parties to the Action participated in a full-day mediation conducted by Robert A. Meyer of JAMS, Inc. However, the parties were unable to agree to settlement terms at that time.
Immediately following the mediation and through early May 2022, the parties to the Action conducted additional extensive arm’s-length negotiations facilitated by Mr. Meyer while they continued to litigate the case and prepare for trial. Just two months before trial was set to begin, the parties reached an agreement in principle to settle the claims asserted against Defendants in the Action for $42,500,000.00 (the “Settlement Amount”) in cash, subject to Court approval. The settlement in principle was memorialized in a term sheet executed on May 2, 2022 (the “Term Sheet”).
On May 4, 2022, the Parties informed the Court that the Parties had reached an agreement-in-principle to fully resolve the Action.
On May 17, 2022, the Court entered the Stipulation and Order Granting Stay, staying the Action until further order of the Court and vacating as to the Action all dates and provisions in the Amended Stipulation and Order Governing the Case Schedule dated October 26, 2021.
After additional negotiations regarding the specific terms of their agreement, the Parties entered into the Stipulation on June 2, 2022. The Stipulation, which reflects the final and binding agreement between the Parties on the terms and conditions of the Settlement and supersedes the Term Sheet, can be viewed at www.PivotalSoftwareStockholdersLitigation.com.
On June 13, 2022, the Court entered a Scheduling Order directing that notice of the Settlement be provided to potential Class Members, and scheduling the Settlement Hearing to, among other things, consider whether to grant final approval to the Settlement.