Akin Litigators Secure Victory for Eastman Kodak Company in Multiple Shareholder Derivative and Purported Class Actions

(New York) – Akin Gump litigation partners Neal Marder and Steve Baldini received a Litigator of the Week Shout Out for achieving a victory for their client, Eastman Kodak Company, on September 27, 2022. The Honorable Elizabeth A. Wolford of the W.D.N.Y. granted in full Kodak’s and the individual defendants’ joint motion to dismiss the consolidated putative securities class actions, without leave for plaintiffs to replead.   

Separate putative securities class actions were filed in the D.N.J. and S.D.N.Y. in late 2020 that were ultimately consolidated in the W.D.N.Y. in June 2021. After the lead plaintiffs were appointed, they filed a consolidated amended complaint on behalf of a putative class of Kodak shareholders, asserting claims against Kodak and certain current and former officers and directors arising out of events surrounding a letter of interest (“LOI”) entered into between Kodak and the U.S. International Development Finance Corporation (“DFC”) in July 2020, discussing a contemplated loan of $765 million from DFC to Kodak to support the conversion of Kodak’s manufacturing facilities to produce certain chemical ingredients used in pharmaceutical products. Specifically, the plaintiffs asserted (i) a claim under Section 10(b) and Rule 10b-5(b) alleging that Kodak and its CEO made misrepresentations regarding the certainty of Kodak obtaining the loan, and omitted that the week the LOI was announced certain officers were granted stock options which plaintiffs alleged were improperly “spring-loaded,” (ii) a claim under Section 10(b) and Rule 10b-5(a) and (c) alleging that the defendants engaged in a deceptive or manipulative scheme through the alleged misrepresentations and omission relating to the options grants, and (iii) a claim under Section 20(a) for control person liability against the individual defendants.

The Akin team led the motion to dismiss briefing and Mr. Marder and counsel Stephanie Lindemuth led the lengthy oral argument on the motion, facilitated by other top defense firms representing the individual defendants. In granting the motion in its entirety, Judge Wolford adopted substantially all the defendants’ arguments. The Court held that not one of the alleged misrepresentations or the purported omission of the stock options grants were actionable under federal securities laws. The Court further held that the plaintiffs failed to allege an actionable scheme liability claim because it was improperly based entirely on the inactionable misrepresentations and omission from the Rule 10b-5(b) claim and failed to allege with particularity any additional or actionable deceptive or manipulative conduct on which to base the claim. Due to the dismissal of the primary liability claims, the Court also dismissed the secondary control person liability claim against the individual defendants.

Messrs. Marder and Baldini are the lead attorneys on this case. The Akin Gump team also included counsel Stephanie Lindemuth, Josh Rubin and Sina Safvati, and associate Lillian Rand. This is the same team that obtained a dismissal with prejudice of a purported direct stockholder class action filed in New York Supreme Court in May of this year. 

Akin Gump Strauss Hauer & Feld LLP is a leading international law firm with more than 900 lawyers in offices throughout the United States, Europe, Asia and the Middle East.