Averbach v. Arch

In Averbach v. Arch (2013 WL 5531396 [Mass Super Ct, Aug. 27, 2013, No. SUCV 201102502]), a shareholder derivative action involving claims substantially similar to those here, the plaintiff alleged that the trustees and Van Kampen Asset Management, the Adviser to the trust, breached their fiduciary duties to the common shareholders by redeeming ARPS at liquidation value. In particular, the plaintiff claimed that the decisions to redeem the ARPS were made to preserve the business relationships that the Adviser and its Morgan Stanley affiliates had with ARPS holders and broker-dealers, and that the trustees were under pressure from Morgan Stanley, which would have had to acquire the ARPS pursuant to a settlement with the government, if the trustees had not redeemed them. The Court dismissed the action under the business judgment rule, holding that the trustees were independent and that a special litigation committee had undertaken a "fairly comprehensive inquiry." In making the latter finding, the Court noted that the committee "interviewed numerous witnesses, reviewed thousands of pages of documents, obtained expert reports, and met several times to discuss its investigation and findings. It provided a detailed account of the circumstances surrounding the redemptions and thoroughly explained why it believed litigation was not in the fund's best interest." (Id.)