Much Shelist Secures Victory at Trial for Vita Foods Board Members in Shareholder Lawsuit
Shareholder Claims against Prominent Chicago Business Executives Dismissed with Prejudice in Cook County Circuit Court
Chicago-based law firm Much Shelist announced today that it secured a victory after a six-day trial for a group of board members of Vita Foods Products, Inc., (Vita Foods) in a lawsuit originally brought by previous shareholders of the company. The case, which was originally filed and dismissed in the U.S. District Court for the Northern District of Illinois, was re-filed and proceeded to trial in the Circuit Court of Cook County.
Chicago-based Vita Foods, a national seafood and gourmet sauces and condiments distributor, suffered substantial financial losses beginning in the early 2000s. In 2008, board member Howard Bedford presented the Board of Directors with an offer to purchase all remaining shares that he and former CEO/Chairman Stephen Rubin did not own at $0.30 per share in an effort to take the company private. The Board of Directors created a Special Committee comprised of independent board members to evaluate the offer and consider any other offers available in the market. During the evaluation process, Rubin withdrew his participation in the effort to take Vita Foods private, and he and the remaining shareholders sold their shares for $1.05 per share.
In the lawsuit, a group of shareholders led by Rubin, charged members of the Vita Foods Board of Directors—Howard E. Bedford, Clifford K. Bolen, David S. Lipson, Edward P. Dolanski, Robert C. Douglas II and David T. Allen—with a breach of their fiduciary duty during the 2009 sale of the company’s shares. In order to have complied with their fiduciary duty, the Board of Directors must have made reasonable efforts to secure the highest price realistically available given the market value of the company at the time.
Ultimately, based on the evidence adduced at trial, Circuit Court Judge Thomas L. Hogan found that all six defendants fulfilled their duties to the shareholders of Vita Foods, and he dismissed all claims against them with prejudice.
“The defendants fulfilled their fiduciary duty in this case,” said Steven P. Blonder, lead counsel for Bedford, et. al., and a principal at Much Shelist. “Not only did these directors ensure an independent analysis of the buyout, they also undertook a reasonable effort to secure the highest possible price for the company at the time. This is a solid victory for a group of distinguished and seasoned business leaders.”