Valuation and damages issues play a big part in most civil actions and experts who know the relevant case law in their area of practice are more effective and attractive to attorneys, business owners, and financial executives.
BVR’s unique platform, BVLaw, analyzes cases from many legal areas, including statutory fair value determinations, divorce, economic damages and lost profits, patent infringement, federal and state tax issues, bankruptcy, and more. We cover cases arising in state courts as well as in federal courts, including the U.S. Tax Court, the Federal Circuit, and the Delaware Court of Chancery and Supreme Court.
At year-end, Sylvia Golden, BVR’s executive legal editor, provides a roundup of the key business valuation and damages cases. Here are her choices for 2018. Some of the courts’ decisions have changed the legal landscape and are must-know cases. Other rulings are confined to the specific case, but they contain important lessons for appraisers of how to, and, more often, how not to, perform as a financial expert.
- Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd., 2017 Del. LEXIS 518 (Dec. 14, 2017) (Dell II)
Embracing the efficient market hypothesis, Delaware’s high court says the deal price often is a more reliable indicator of fair value than the calculation of a single analyst. It finds the trial court’s decision not to give any weight to the deal price is an abuse of discretion.
- Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., 2018 Del. Ch. LEXIS 52 (Feb. 15, 2018); Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., 2018 Del. Ch. LEXIS 160 (May 21, 2018)
The Court of Chancery says the high court’s Dell and DFC Global “changed things” and uses the unaffected market price, a price below the deal price minus synergies, as the most reliable indicator of fair value.
- In re Appraisal of AOL, Inc., 2018 Del. Ch. LEXIS 63 (Feb. 23, 2018)
The court uses this statutory appraisal decision, centering on Verizon’s acquisition of AOL, to introduce the “Dell Compliant” test as a way of determining whether the deal price represents a reliable indicator of fair value. Here, the court declines to rely on the deal price.
- Mesirov v. Enbridge Energy Co., 2018 Del. Ch. LEXIS 294 (Aug. 29, 2018)
Allowing an aiding and abetting claim to go forward, the Court of Chancery says the plaintiff shareholders alleged sufficient facts to show in their pleadings that the financial advisor ignored several valuation metrics that indicated the buying entity was overpaying.
- Acosta v. Vinoskey, 2018 U.S. Dist. LEXIS 64094 (April 17, 2018)
In this ESOP litigation, the trial court says the DOL’s financial expert used unreliable methods to support the government’s overpayment and loss in stock value claims; because the DOL lacks expert testimony to support the latter claim, the court strikes it.
- Weinman v. Crowley (In re Blair), 2018 Bank. LEXIS 2281 (Aug. 2, 2018)
In a Chapter 7 bankruptcy, the trustee’s fraud claims fail because the trustee’s solvency expert lacked the facts and data necessary put into practice his chosen methodology. In unsparing detail, the court enumerates the ways in which the solvency opinion was unreliable under Daubert.
- Finjan, Inc. v. Blue Coat Sys (Finjan II), 2018 U.S. App. LEXIS 601 (Jan. 10, 2018)
The Federal Circuit uses this infringement case involving patents related to computer security to make clear that using the smallest salable unit of an infringing multicomponent product may not meet the apportionment requirement where that unit itself has multiple components and/or functions.
- Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 2018 U.S. App. LEXIS 26842 (July 3, 2018)
In striking down a large jury award, the Federal Circuit explains the high bar a patent holder must meet to base damages on the entire market value rule where the accused product has valuable features beyond the patented feature.
- Herbert v. Joubert, 2018 Va. App. LEXIS 222 (Aug. 14, 2018)
In this divorce case centering on appreciation, the court explains the legal burden the parties must meet to show, or dispute, that any appreciation in the value of separate property represents a marital asset; further, the court discusses the multipart analysis a valuation expert must perform to particularize the portion that qualifies as marital property.
- Jensen v. Jensen, 2018 Mich. App. LEXIS 40 (Jan. 9, 2018)
In reviewing this divorce case centering on the owner spouse’s S corporation, the Michigan Court of Appeals resolves an issue of first impression in this jurisdiction—whether the net income the company generated but did not distribute to the owner during the marriage is marital property.
For a detailed analysis of the above cases, and a host of other not-to-be-missed cases, as well as the courts’ opinions, be sure to subscribe to BVLaw.
Sylvia Golden, Esq., is executive legal editor at Business Valuation Resources. She received her J.D. from the University of California, Berkeley, School of Law and is an active member of the State Bar of California.