Grant D. Goodhart III

Associate

EDUCATION
  • University of Pittsburgh
    B.A. 2012, magna cum laude
  • Temple University Beasley School of Law
    J.D. 2015, cum laude
ADMISSIONS
  • Pennsylvania
  • New Jersey
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Grant D. Goodhart, an associate of the Firm, concentrates his practice in the areas of merger and acquisition litigation and shareholder derivative actions. Through his practice, Grant helps institutional and individual shareholders obtain significant financial recoveries and corporate governance reforms

Grant graduated from Temple University Beasley School of Law in 2015. While in law school, Grant interned as a law clerk to the Hon. Thomas C. Branca of the Montgomery County Court of Common Pleas, the Hon. Anne E. Lazarus of the Pennsylvania Superior Court, and U.S. Magistrate Judge Lynne A. Sitarski of the U.S. District Court for the Eastern District of Pennsylvania. Grant also served as the Executive Articles Editor for the Temple International and Comparative Law Journal.

Experience
Ongoing Cases
  • On January 27, 2021, Vice Chancellor Joseph R. Slights III of the Delaware Court of Chancery issued an opinion in In re CBS Corporation Stockholder Class Action and Derivative Litigation, Consolidated C.A. No. 2020-0111-JRS, sustaining all but one of the claims asserted by Co-Lead Counsel KTMC on behalf of our client, Co-Lead Plaintiff Bucks County Employees Retirement Fund.  In the 157-page opinion, which contains references to a wide array of Delaware case law and legal scholarship, as well as such diverse sources as Rolling Stone magazine, Game of Thrones author George R.R. Martin, and Greek mythology, Vice Chancellor Slights holds that the stockholder plaintiffs adequately pled their claims against CBS’s (now known as ViacomCBS) Board Chair and controlling stockholder Shari Redstone, other members of the CBS board of directors, and former CBS President Joseph Ianniello challenging their conduct in connection with the December 2019 merger of CBS and Viacom, Inc., also controlled by Ms. Redstone. 

    Plaintiffs alleged that the merger of CBS and Viacom (referred to as the “Merger”) was the culmination of a years-long effort by Shari Redstone to combine the two companies in order to save the floundering Viacom, despite the lack of economic merit of the Merger and the opposition of CBS directors and stockholders alike.  Plaintiffs alleged that Shari Redstone wrested control of NAI (the holding company that controls CBS and Viacom) from her ailing father Sumner Redstone, and twice previously attempted to merge CBS and Viacom and failed.  The first time she was rebuked by the CBS board of directors, after which she publicly proclaimed that “the merger would get done even if [she had] to use a different process.” 

    Two years later, Ms. Redstone was back at it, attempting to force a CBS-Viacom merger.  This time the CBS board was so concerned that Ms. Redstone would force a merger over their objections, that they took the “extraordinary” measure of attempting to dilute Ms. Redstone’s control of CBS to protect CBS and its stockholders from her influence.  After hard-fought, expedited litigation, a settlement was reached that resulted in the CBS board turning over, and the addition of six new directors hand-picked by Ms. Redstone.  Importantly, Ms. Redstone and NAI also agreed that they would not propose that CBS and Viacom merge for a period of two years following the settlement.

    In spite of the settlement’s prohibitions, Plaintiffs allege that Ms. Redstone and NAI pushed forward.  Only four months after the settlement Shari Redstone caused the new CBS board—whom she had largely hand-picked—to form a committee to evaluate a merger with one primary target: Viacom.  Ms. Redstone sidelined carry-over directors who opposed her, enticed CBS’s acting CEO Joseph Ianniello (who previously opposed the Merger) to support her with hefty compensation packages, and worked to impose her views on an ultimate tie up through Ianniello’s newfound support.  As controlling stockholders of CBS, NAI and Ms. Redstone decided not to give CBS’s minority stockholders any say on the Merger—such as by permitting them to vote—and instead pushed the Merger through on deal terms that benefitted NAI and Viacom to the detriment of CBS and its stockholders in violation of their fiduciary duties.

    In the end, Plaintiffs allege that the Merger forced the poorly performing Viacom on CBS and destroyed value for CBS and its stockholders for NAI’s benefit.  Plaintiffs brought both direct class and stockholder derivative claims in the Delaware Court of Chancery in the Spring of 2020, and alleged that the current ViacomCBS board was conflicted and, therefore, not able to entertain a stockholder demand to initiate litigation against the board and NAI.  In its opinion, the Court credited nearly all of Plaintiffs’ allegations and held that the transaction was a “conflicted controller transaction” where Shari Redstone “engineered the Merger to bail out Viacom for the benefit of NAI, and thereby extracted a non-ratable benefit from the transaction.”  Vice Chancellor Slights noted in response to Defendants’ arguments that “A sinking ship remains a sinking ship, regardless of its proximity (spatial or temporal) from rock-bottom; and Plaintiffs have satisfactorily pled Ms. Redstone believed Viacom needed to be rescued at the time of the Merger.”

    With respect to Plaintiffs’ class claims, the Court ruled that sufficient to survive were Plaintiffs’ claims that “Ms. Redstone coerced Ianniello and the CBS Board into playing roles in the dramedy that culminated in the Merger, where CBS ostensibly played the role of acquirer” despite that what “really happened” was that “Ms. Redstone, desperate to combine Viacom and CBS, and viewing Viacom as the entity that would emerge from the Merger as superior, caused CBS to be subjugated by Viacom’s Board and management in a combined company that would henceforth be known as ViacomCBS.”

    The case will now proceed to discovery, with a trial expected to be set for some time in mid- to late-2022.

  • Kessler Topaz recently defeated efforts to dismiss litigation regarding Delek US Holdings, Inc. (“Delek”) and its 2017 squeeze-out of the public investors in Alon USA Energy, Inc. (“Alon”).

    Delek had become Alon’s controlling stockholder in 2015 when it purchased 48% of Alon’s common shares in a block sale from Alon’s then largest shareholder, Alon Israel. In that sale, Delek paid approximately $16.99 per Alon share. Ordinarily, Delaware law would prohibit Delek from acquiring the rest of Alon for a period of three years once Delek acquired an ownership stake that large. But instead, Alon’s board of directors approved the sale and shortened the statutory period from three years to one year. During that one year period, Delek was contractually required to not seek to acquire the remaining shares of Alon stock. However, after the merger of Alon into Delek was announced on January 3, 2017, the proxy revealed that almost immediately upon Delek’s block purchase of Alon stock, discussions ensued regarding a potential combination of the two companies.

    In fact, the proxy demonstrated that Alon’s board of directors immediately formed a special committee to evaluate an eventual combination of Alon and Delek. For months, the chairman of that special committee chased Delek for a deal, repeatedly bidding against itself. Ultimately, a merger was agreed to at an exchange ratio of 0.504 shares of Delek stock for each share of Alon stock, reflecting a value of $12.13 per Alon share, a significant discount to what Delek had paid for its initial stake.

    Believing the terms of the merger were the result of an unfair process and undervalued Alon’s common stock, Kessler Topaz initiated litigation alongside Delaware co-counsel in 2017. Defendants moved to dismiss the action in July 2018.

    The Court of Chancery denied defendants’ motions to dismiss on June 28, 2019. Nearly all of the claims asserted by Kessler Topaz survived. Also, because substantive merger negotiations began in the one-year period where Delek was contractually required to not seek to acquire the remaining shares of Alon stock, the Court of Chancery sustained plaintiffs’ statutory claims that the merger was invalid under Delaware law. This case is now set to move forward into discovery where Kessler Topaz will seek to prove that the merger was unfair for all of Alon’s former minority shareholders.

    Kessler Topaz recently defeated efforts to dismiss litigation regarding Delek US Holdings, Inc. (“Delek”) and its 2017 squeeze-out of the public investors in Alon USA Energy, Inc. (“Alon”).

    Delek had become Alon’s controlling stockholder in 2015 when it purchased 48% of Alon’s common shares in a block sale from Alon’s then largest shareholder, Alon Israel. In that sale, Delek paid approximately $16.99 per Alon share. Ordinarily, Delaware law would prohibit Delek from acquiring the rest of Alon for a period of three years once Delek acquired an ownership stake that large. But instead, Alon’s board of directors approved the sale and shortened the statutory period from three years to one year. During that one year period, Delek was contractually required to not seek to acquire the remaining shares of Alon stock. However, after the merger of Alon into Delek was announced on January 3, 2017, the proxy revealed that almost immediately upon Delek’s block purchase of Alon stock, discussions ensued regarding a potential combination of the two companies.

    In fact, the proxy demonstrated that Alon’s board of directors immediately formed a special committee to evaluate an eventual combination of Alon and Delek. For months, the chairman of that special committee chased Delek for a deal, repeatedly bidding against itself. Ultimately, a merger was agreed to at an exchange ratio of 0.504 shares of Delek stock for each share of Alon stock, reflecting a value of $12.13 per Alon share, a significant discount to what Delek had paid for its initial stake.

    Believing the terms of the merger were the result of an unfair process and undervalued Alon’s common stock, Kessler Topaz initiated litigation alongside Delaware co-counsel in 2017. Defendants moved to dismiss the action in July 2018.

    The Court of Chancery denied defendants’ motions to dismiss on June 28, 2019. Nearly all of the claims asserted by Kessler Topaz survived. Also, because substantive merger negotiations began in the one-year period where Delek was contractually required to not seek to acquire the remaining shares of Alon stock, the Court of Chancery sustained plaintiffs’ statutory claims that the merger was invalid under Delaware law. This case is now set to move forward into discovery where Kessler Topaz will seek to prove that the merger was unfair for all of Alon’s former minority shareholders.

Representative Outcomes
  • This shareholder derivative action challenged a conflicted “roll up” REIT transaction orchestrated by Glade M. Knight and his son Justin Knight.

    The proposed transaction paid the Knights millions of dollars while paying public stockholders less than they had invested in the company. The case was brought under Virginia law, and settled just ten days before trial, with stockholders receiving an additional $32 million in merger consideration.

  • Just one day before trial was set to commence over a proposed reclassification of Facebook's stock structure that KTMC challenged as harming the company's public stockholders, Facebook abandoned the proposal.

    The trial sought a permanent injunction to prevent the reclassification, in lieu of damages. By agreement, the proposal had been on hold pending the outcome of the trial. By abandoning the reclassification, Facebook essentially granted the stockholders everything they could have accomplished by winning at trial.

    As background, in 2010 Mark Zuckerberg signed the "Giving Pledge," which committed him to give away half of his wealth during his lifetime or at his death. He was widely quoted saying that he intended to start donating his wealth immediately.

    Facebook went public in 2012 with two classes of stock: class B with 10 votes per share, and class A with 1 vote per share. Public stockholders owned class A shares, while only select insiders were permitted to own the class B shares. Zuckerberg controlled Facebook from the IPO onward by owning most of the high-vote class B shares.

    Facebook's charter made clear at the IPO that if Zuckerberg sold or gave away more than a certain percentage of his shares he would fall below 50.1% of Facebook's voting control. The Giving Pledge, when read alongside Facebook's charter, made it clear that Facebook would not be a controlled company forever.

    In 2015, Zuckerberg owned 15% of Facebook's economics, but though his class B shares controlled 53% of the vote. He wanted to expand his philanthropy. He knew that he could only give away approximately $6 billion in Facebook stock without his voting control dropping below 50.1%.

    He asked Facebook's lawyers to recommend a plan for him. They recommended that Facebook issue a third class of stock, class C shares, with no voting rights, and distribute these shares via dividend to all class A and class B stockholders. This would allow Zuckerberg to sell all of his class C shares first without any effect on his voting control.

    Facebook formed a "Special Committee" of independent directors to negotiate the terms of this "reclassification" of Facebook's stock structure with Zuckerberg. The Committee included Marc Andreeson, who was Zuckerberg's longtime friend and mentor. It also included Susan Desmond-Hellman, the CEO of the Gates Foundation, who we alleged was unlikely to stand in the way of Zuckerberg becoming one of the world's biggest philanthropists.

    In the middle of his negotiations with the Special Committee, Zuckerberg made another public pledge, at the same time he and his wife Priscilla Chan announced the birth of their first child. They announced that they were forming a charitable vehicle, called the "Chan-Zuckerberg Initiative" (CZI) and that they intended to give away 99% of their wealth during their lifetime.

    The Special Committee ultimately agreed to the reclassification, after negotiating certain governance restrictions on Zuckerberg's ability to leave the company while retaining voting control. We alleged that these restrictions were largely meaningless. For example, Zuckerberg was permitted to take unlimited leaves of absence to work for the government. He could also significantly reduce his role at Facebook while still controlling the company.

    At the time the negotiations were complete, the reclassification allowed Zuckerberg to give away approximately $35 billion in Facebook stock without his voting power falling below 50.1%. At that point Zuckerberg would own just 4% of Facebook while being its controlling stockholder.

    We alleged that the reclassification would have caused an economic harm to Facebook's public stockholders. Unlike a typical dividend, which has no economic effect on the overall value of the company, the nonvoting C shares were expected to trade at a 2-5% discount to the voting class A shares. A dividend of class C shares would thus leave A stockholders with a "bundle" of one class A share, plus 2 class C shares, and that bundle would be worth less than the original class A share. Recent similar transactions also make clear that companies lose value when a controlling stockholder increases the "wedge" between his economic ownership and voting control. Overall, we predicted that the reclassification would cause an overall harm of more than $10 billion to the class A stockholders.

    The reclassification was also terrible from a corporate governance perspective. We never argued that Zuckerberg wasn't doing a good job as Facebook's CEO right now. But public stockholders never signed on to have Zuckerberg control the company for life. Indeed at the time of the IPO that was nobody's expectation. Moreover, as Zuckerberg donates more of his money to CZI, one would assume his attention would drift to CZI as well. Nobody wants a controlling stockholder whose attention is elsewhere. And with Zuckerberg firmly in control of the company, stockholders would have no recourse against him if he started to shirk his responsibilities or make bad decisions.

    We sought an injunction in this case to stop the reclassification from going forward. Facebook already put it up to a vote last year, where it was approved, but only because Zuckerberg voted his shares in favor of it. The public stockholders who voted cast 80% of their votes against the reclassification.

    By abandoning the reclassification, Zuckerberg can still give away as much stock as he wants. But if he gives away more than a certain amount, now he stands to lose control. Facebook's stock price has gone up a lot since 2015, so Zuckerberg can now give away approximately $10 billion before losing control (up from $6 billion). But then he either has to stop (unlikely, in light of his public pledges), or voluntarily give up control. There is evidence that non-controlled companies typically outperform controlled companies.

    KTMC believes that this litigation created an enormous benefit for Facebook's public class A stockholders. By forcing Zuckerberg to abandon the reclassification, KTMC avoided a multi-billion dollar harm. We also preserved investors' expectations about how Facebook would be governed and when it would eventually cease to be a controlled company.

    KTMC represented Sjunde AP-Fonden ("AP7"), a Swedish national pension fund which held more than 2 million shares of Facebook class A stock, in the litigation. AP7 was certified as a class representative, and KTMC was certified as co-lead counsel in the case. The litigation at KTMC was led by KTMC attorneys Lee Rudy, Eric Zagar, J. Daniel Albert, Grant Goodhart, and Matt Benedict.