Piedmont Office Realty Trust, Inc. ("Piedmont" or the Company) is a real estate investment trust (REIT).
The original action was commenced in the United States District Court for the Northern District of Georgia against nominal Defendant Piedmont and certain individual Defendants, on behalf of: (a) a Class of all persons who were entitled to tender their shares pursuant to the Tender Offer Statement on Schedule TO under Section 14(d)(1) or 13(e)(1) of the Exchange Act, filed by Lex-Win Acquisition, LLC ("Lex-Win") on May 25, 2007, as Amended or Supplemented, and who suffered harm as a result of the actions complained of herein ("Tender Offer Class"); and (b) on behalf of a Class of all persons who are entitled to vote on the Final Proxy that was disseminated to investors, pursuant to Section 14(a) of the Exchange Act on October 16, 2007.
The Complaint in this companion suit charges Defendants with violations of the federal securities laws, including Sections 14(a) and 14(e) of the Securities Exchange Act of 1934 and Rules 14a-9 and 14e-2(b) promulgated thereunder. In addition, by virtue of the Defendants' conduct, the Complaint alleges that Defendants have also breached their fiduciary duties owed to the proposed Classes.
Specifically, the Complaint alleges, among other things, that:
(1) On May 23, 2007, Piedmont filed a Form S-11 Registration Statement with the SEC announcing the Company's intention to apply to list its stock on the New York Stock Exchange ("Listing") and to conduct an underwritten offering of up to $345 million of its stock ("Underwritten Offering"). The Listing and Underwritten Offering have not yet occurred.
(2) In response to a Tender Offer Statement on Schedule TO under Section 14(d)(1) or 13(e)(1) of the Exchange Act filed on May 25, 2007 by Lex-Win, an unaffiliated third party sought to purchase approximately 5.2% of the outstanding shares of Piedmont at $9.00 net per share, on June 8, 2007 ("May 25 Lex-Win Tender Offer"), Piedmont filed a Schedule 14D-9 Solicitation/Recommendation Statement under Section 14(d)(4) of the Securities Exchange Act of 1934 ("Schedule 14D-9") responding to the Lex-Win Tender Offer and recommending that the Company's stockholders reject the May 25 Lex-Win Tender Offer and not tender their shares to the offerers. The recommendation to reject the May 25 Lex-Win Tender Offer was largely based on "the current business plan in effect for the future of the Company as disclosed in the May 23 Registration, including a potential listing of its shares of common stock on a national exchange" and "the Board's belief that the timing of the Offer is intended to take advantage of any potential increase in the value of the Company's shares associated with a possible listing and trading of the Company's shares on a national exchange."
(3) In response to Lex-Win's supplement to its May 25 Tender Offer increasing the offer price to $9.30 per share and increasing the number of shares sought to 9.3% of the outstanding shares of the Company ("Revised Tender Offer"), on June 18, 2007 Piedmont filed with the SEC its Amendment No. 1 to its Schedule 14D-9, responding to the Revised Offer and recommending to Piedmont shareholders that they reject the Revised Offer ("Amended Response"). The Amended Response omitted any reference to the May 23 Registration Statement or the potential listing as reasons for recommending against the Revised Tender Offer.
(4) On July 20, 2007, the Lex-Win Tender Offer (collectively, the May 25 Lex-Win Tender Offer and Revised Tender Offer are referred to as "Lex-Win Tender Offer") expired. During the time that the Lex-Win Tender Offer was open and pending, the individual Defendants knew or wrongfully disregarded that the listing of Piedmont's stock on a national securities exchange was highly unlikely. As of June 18, when the Company filed its Amended Response to the Revised Tender Offer, completely eliminating any reference to the May 23 Registration Statement or the prospective listing in providing the reasons for its recommendation against tendering, the Board had already determined that the Underwritten Offering and listing were not likely to occur. The Board failed to supplement or amend its 14D-9 Solicitation/Recommendation Statement to disclose this material fact that would have been important to an investor in determining whether to tender their shares.
(5) On October 16, 2007, Piedmont filed a Schedule 14A Proxy Statement pursuant to Section 14(a) of the Exchange Act ("Final Proxy"), stating that it was delaying the listing and seeking shareholder approval of an extension of the Charter-mandated Liquidity Deadline from January 30, 2008 to July 30, 2009, and to provide the board of directors with the discretionary authority to extend the Liquidity Deadline further from July 30, 2009 to January 30, 2011, without further shareholder action. The Complaint asserts that the Final Proxy is false and misleading because, among other things, it states that a recent decline in the REIT market and the so-called credit crunch were the reasons for the proposed extension. In fact, these economic conditions are not only misrepresented, but they are nothing but a subterfuge since the Director Defendants had abandoned the idea of a 2007 listing by the time they filed their June 18 Amended Response to the Lex-Win Tender Offer.
(6) The Individual Defendants owe fiduciary duties to the Classes, which were breached by: (a) failing to recommend that in light of the unlikelihood of a timely listing and the absence of other viable liquidity options, the Lex-Win Tender Offer constituted a reasonable and prudent exit strategy that shareholders should seriously consider as a liquidity option; (b) failing, in the Schedule 14D-9, to fully inform the stockholders about the likelihood of a liquidity event and utilizing their fiduciary position to recommend against tendering shares in order to retain control over the Company; (c) failing to determine whether the extension of the Liquidity Deadline is in the best interest of the shareholders; (d) placing their own personal self-interests above the Class members' best interests, and by seeking to conceal their fiduciary failures by means of a false and misleading Final Proxy and related proxy materials; and (e) by disseminating materially false and misleading proxy materials.
NOTE: Plaintiff is filing this action as a companion to its case pending in the United States District Court for the Northern District of Georgia captioned In Re Wells Real Estate Investment Trust, Inc. Securities Litigation, Case No. 1:07-cv-00862-CAP (N.D. Ga.), which alleges violations of the federal securities laws and breaches of fiduciary duty by Wells REIT and certain of its affiliates, officers and directors in connection with Wells REIT's proxy statement that was filed with the SEC on February 26, 2007 ("Proxy") seeking shareholder approval to merge affiliates of the Company (the "Advisor") into Wells REIT for $175 million worth of the Company's stock ("Internalization"). Plaintiff was appointed lead Plaintiff in the already pending litigation, and the law firms of Chimicles & Tikellis LLP, Labaton Sucharow LLP and Chitwood Harley Harnes LLP were appointed as lead Counsel.
On May 2, 2008, the Court granted the motion to appoint Washtenaw County Employees Retirement System as lead Plaintiff and the law firms of Chimicles & Tikellis, Labaton Sucharow LLP and Chitwood Harley Harnes LLP as co-lead Counsel. Further, the Court consolidated all actions under In Re: Piedmont Office Trust Inc. Securities Litigation; Civil Action No. 1:07-CV-02660-CAP. On May 19, 2008, the Plaintiff filed an Amended Complaint. The Defendants responded by filing a motion to dismiss the Amended Complaint.
On March 30, 2009, the Court granted in part and denied in part the motion to dismiss. According to the Order, Counts III through IV are dismissed in their entirety, the portion of Count I related to valuation information is dismissed and the portions of Count II as stated in the order are dismissed.
The Plaintiff were given 20 days to file an amended Complaint and, on April 20, 2009, the lead Plaintiffs filed a Second Amended Complaint. On June 10, 2009, the Plaintiffs filed a motion to certify the class. The parties soon after engaged in discovery proceedings. On March 10, 2010, the motion to certify the class was granted. The Defendants filed a Notice of Appeal as to the order which granted the motion to certify the class.
On June 29, 2011, the Court entered the certified copy of the Judgment of the U.S. Court of Appeal, which affirmed in part and vacating and remanding the decision of the District Court re the certification of the class.
On September 27, 2011, a Redacted Third Amended Complaint was filed. A motion to dismiss was filed on October 21, 2011. On August 27, 2012, the Court issued an Order granting the Defendants' motion to dismiss. The clerk was directed to close this civil action.
On September 26, 2012, the Plaintiffs filed a Notice of Appeal, appealing to the United States Court of Appeals for the Eleventh Circuit from the August 27, 2012 Order on Defendants' motion to dismiss.
On December 31, 2012, the Parties entered into a Stipulation of Settlement. On January 2, 2013, the Court issued an Order preliminarily approving the Settlement.
On April 18, 2013, the Court issued a Final Judgment and ordered this case dismissed with prejudice.
