April 20, 2012

Jenner & Block obtained a significant victory for long-time client Nuveen Investments and nine trustees of several Nuveen closed-end funds when Judge Richard J. Billik, Jr. of the Chancery Division of the Circuit Court of Cook County dismissed a $68 million breach of fiduciary duty and aiding and abetting breach of fiduciary duty case against Nuveen and the nine trustees.  The judge dismissed the claim on March 2, 2012, and the opinion was issued on March 7, 2012.

In this case, an activist investment fund and its various affiliates brought claims on behalf of a class of investors in four Florida-based Nuveen funds, alleging that the merger of those Florida funds into three Nuveen-sponsored national funds constituted a breach of fiduciary duty because the plaintiff investors in the funds allegedly would have fared better if the Florida funds had been liquidated instead of merged.  The plaintiff sued Nuveen and the trustees in four different venues – Florida state court, federal court in the District of Massachusetts, federal court in the Northern District of Illinois, and then the Circuit Court of Cook County.

The plaintiff first sued in Florida state court to enjoin the mergers in 2009, but then voluntarily dismissed that action and sued the trustees in federal court in the District of Massachusetts, where the plaintiff quickly voluntarily dismissed its action again.  The plaintiff then re-filed its case in the District of Massachusetts, and the Jenner & Block team successfully argued that the Massachusetts court lacked personal jurisdiction over the defendants.  As a result, the case was transferred to the Northern District of Illinois.  Upon transfer, the Jenner & Block team learned additional facts about the plaintiff entity that called into question whether the case belonged in federal court on diversity grounds, leading them to brief complex subject matter jurisdiction issues.  On the eve of the court’s ruling on the question of whether it had diversity jurisdiction, the plaintiff again voluntarily dismissed the case and re-filed nearly identical claims in the Circuit Court of Cook County.

Once in Illinois state court, the Jenner & Block team again briefed a motion to dismiss arguing that the plaintiff’s complaint was in violation of the single-refiling rule, that the claims should have been brought derivatively instead of directly as class claims, and that the plaintiff had failed to allege sufficient facts to overcome the protections of the business judgment rule.  Last month, the court entertained lengthy arguments on that motion and last Friday, Judge Billik spent more than an hour reading his findings into the record.  He adopted each of Jenner & Block’s arguments and dismissed the claims on the three separate and independent grounds that were argued in the briefs.

Jenner & Block partners J. Kevin McCall and Suzanne J. Prysak represented Nuveen Investments in this matter.

The case name is Western Investments Hedged Partners L.P. v. Robert P. Bremner, et al.