Damages analysis in the Delaware Court of Chancery

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CRA and Vice President Erik Himan were retained by plaintiffs in a stockholder class and derivative action in the Delaware Court of Chancery arising from the delisting of Tile Shop Holdings, Inc., a specialty retailer of tile, from the Nasdaq stock exchange and the deregistering of its stock from the SEC. In addition to announcing the delisting and deregistering of its stock, Tile Shop also announced, all on the same day, its quarterly earnings, the suspension of its dividend, the termination of its share repurchase program, and the resignation of a Board member. Plaintiffs alleged that Tile Shop undertook these actions with the intent to drive down the company’s stock price to allow certain members of the company and the Board to execute an open market buying spree of the company’s stock in order to ultimately gain control of the company. In response, Defendants asserted that they decided to delist and deregister the company’s stock in order to achieve over $1 million of cost savings.

Mr. Himan was hired to:

  1. Provide his expert opinion on the types of economic harm to Tile Shop and its investors,
  2. Develop a framework and methodology to calculate direct damages to Tile Shop’s stockholders as a result of the alleged scheme, and
  3. Evaluate and analyze the company’s alleged cost savings.

Mr. Himan submitted two expert reports to the Delaware Court of Chancery in which he provided a methodology to distinguish the price effect on the company’s stock as a result of the alleged scheme to calculate direct damages to the shareholders. Following the submission of Mr. Himan’s expert reports, plaintiffs entered into a favorable settlement with the defendants.

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