Shareholder Suit Over United Rentals Deal Nixed

Shareholder Suit Over United Rentals Deal Nixed - 3/12/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Shareholder Suit Over United Rentals Deal Nixed
Jacqueline Bell

Securities Law 360. March 12, 2009
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EXCERPT: A federal court has dismissed a proposed securities fraud class action related to a 2007 buyout deal gone bad between United Rentals Inc. and Cerberus Capital Management LP, saying the plaintiffs failed to meet the pleading standards established by the Private Securities Litigation Reform Act. In a ruling issued Tuesday, Judge Janet C. Hall of the U.S. District Court of the District of Connecticut said the plaintiffs – shareholders of United Rentals – had failed to adequately allege that the defendants knowingly made misstatements or omissions in connection with the merger, as required by the PSLRA. Judge Hall granted the defendants' motions to dismiss the case, but noted that since it was the first time the court has dismissed the plaintiffs' claims, the plaintiffs could seek to reopen the case and replead their claims. Under the PSLRA, a complaint alleging securities fraud must meet heightened pleading requirements, stating facts that give rise to a strong inference that the defendant acted with the intent to deceive, manipulate or defraud, the judge said, noting that the plaintiffs had not met those requirements for its claims against United Rentals and Cerberus. The judge said the plaintiffs have 30 days to ask the court to reopen the case. The United Rentals shareholders first filed the putative securities fraud class action in 2007 against United Rentals and Cerberus, and several directors and officers of the two companies, alleging that they had misrepresented and omitted material facts in connection with a proposed acquisition of United Rentals by Cerberus. Those misrepresentations led to significant losses for shareholders when the merger failed to go through and the stock price of United Rentals plunged, the shareholders said.

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