Berman Tabacco represented plaintiff Norfolk County Retirement System in this derivative action on behalf of Sinclair Broadcast Corporation, Inc. (“Sinclair”) which was before the Honorable Catherine C. Blake in the United States District Court for the District of Maryland.
Plaintiffs alleged that Sinclair’s controlling shareholders and Board breached their fiduciary duties by knowingly and intentionally misleading the U.S. Department of Justice and U.S. Federal Communications Commission in their review of a proposed merger between Sinclair and Tribune Media Company (“Tribune”). This allegedly resulted in the cancellation of the merger, which has cost Sinclair hundreds of millions of dollars to date.
The case has settled and provides far-reaching corporate governance benefits to Sinclair and its shareholders, including substantial controls over how the Company interacts with its regulators and oversight over related-party transactions. The settlement requires the Company to create two new Board committees and hire a Chief Compliance Officer. The settlement further provides in excess of $25 million in recovery for the Company, a significant portion of which will come from executive chairman David D. Smith repaying $4.36 million in stock awards. The Court granted final approval on November 20, 2020. In its final approval order, the Court noted that “[i]n this case, plaintiffs’ counsel secured an excellent settlement that includes significant corporate governance reforms that would not have resulted from a trial on the merits.”