David S. Hong

A judge dismissed a flurry of proposed class actions alleging retailers flouted a Massachusetts law requiring that job applications include a notice of the state's ban on lie detectors, while a personal injury law firm couldn't escape a former associate's suit over its unilateral decision to eliminate commissions for cases he brought to the firm, among notable state court decisions in November. Here are four recent rulings from the Suffolk County Superior Court's Business Litigation Session. No Harm, No Case in Lie Detector Litigation Justice Christopher Barry-Smith tossed claims against Nike, Bloomingdales, Walmart and Warby Parker over the four retailers' failure to include a notice on job applications that the use of lie detectors in employment decisions is illegal in the Bay State. In a Nov. 25 ruling, Justice Barry-Smith concluded that none of the plaintiffs in the proposed class actions could show they had since suffered anything more than minimal, slight or speculative harm, and therefore lack standing to bring a complaint under the statute. The complaints were among a recent spate of similar proposed class actions brought against national companies hiring workers in Massachusetts. The lawsuits have all alleged that the employers' failure to provide the notice, required under a 1985 statute, entitled the plaintiffs to compensation of at least $500 per violation. The four companies argued the plaintiffs could not show that they had standing or suffered any more than minimal, slight, or speculative harm. None of the employers use lie detector tests in their hiring process, the judge said. The retailers argued two theories: that the statute only creates a cause of action for employers who actually do use lie detectors, which the judge rejected, and that none of the plaintiffs had actually suffered the sort of harm entitling them to relief, a view the judge shared. The judge, in considering whether any of the plaintiffs were "persons aggrieved" by the omission, looked at similar statutes covering zoning laws, administrative appeals, discrimination, and insurance, and concluded that a plaintiff must show more than a minimal, purely technical harm. "Further, any harm plaintiffs assert is speculative, at least as to employers that do not use lie detector tests," Justice Barry-Smith said. The plaintiffs are represented by James E. Kruzer and David S. Godkin of Birnbaum and Godkin LLP and Julian C. Diamond, Joseph I. Marchese and Matthew A. Girardi of Bursor & Fisher PA and James J. Reardon Jr. of Reardon Scanlon LLP. Nike is represented by Daniel B. Klein and Michael E. Steinberg of Seyfarth Shaw LLP. Bloomingdales and Walmart are represented by Derek Gillis, Kateryna Kingsbury and Edward Shoulkin of Barton Gilman LLP. Warby Parker is represented by Douglas J. Hoffman and Alexander J. Reganata of Jackson Lewis PC. The cases are Ababio v. Nike Retail Services Inc., case number 2584CV01134, Shi v. Bloomingdales LLC, case number 2584CV01138, Lamas v. Warby Parker Inc., case number 2584CV01164 and Alexandrovicz v. Walmart Inc., case number 2584CV01352, all in the Suffolk County Superior Court of the Commonwealth of Massachusetts. Insurance Class Action Not Totaled Justice Debra A. Squires-Lee trimmed a proposed class action against Progressive Direct Insurance Co., finding that a customer had made a plausible claim that the auto insurer had engaged in unfair practices by refusing to write her a policy that included collision coverage — but that in doing so, the company may now escape two breach of contract claims. In a Nov. 25 decision, the Business Litigation Session justice found that the insurer "cannot have breached a contract in advance of its formation," dismissing two contract-based claims brought by the plaintiff. Danielle Gondola had sought optional collision and comprehensive coverage for two cars she owned in 2023, as required by her auto lender. Insurers are allowed to deny such coverage in Massachusetts under some limited circumstances involving high-risk drivers, but instead, Progressive cited a "binding restriction," based on what it later said was a report of potential flooding, and denied her that coverage, as well as her later claim after an accident in her Mazda SUV, the judge wrote. Based on the record at the time of the hearing, the judge found, Gondola had made out a straightforward claim under the state's consumer protection law that Progressive had "refused to provide coverage it was obligated by law to offer by misrepresenting its reliance on a 'binding restriction.'" "Progressive's assertion that it is not obligated to offer optional coverage and that binding weather restrictions are commonplace and/or approved by the Commissioner of Insurance is not supported," Justice Squires-Lee wrote. However, since the collision and comprehensive coverage was not included in Gondola's policy, there was no contract, leading the judge to dismiss breach of contract and breach of good faith claims. "Here, the agreement between the parties did not include the optional insurance coverage," Justice Squires-Lee said. "Because Progressive did not offer those coverages, plaintiff did not accept them, and Progressive therefore cannot be liable in contract for breach of them." Gondola is represented by Joshua N. Garick of the Law Offices of Joshua N. Garick PC and Scott G. Gowen of the Law Offices of Scott G. Gowen. Progressive is represented by Melanie A. Conroy of Pierce Atwood LLP and Karl Bekeny, Brianna Soltys and Ariana Benard of Tucker Ellis LLP. The case is Gondola v. Progressive Direct Insurance Co., case number 2484CV02902, in the Suffolk County Superior Court of the Commonwealth of Massachusetts. Real Estate Investors Hit With Injunction Justice Squires-Lee blocked a California real estate investment firm from more than doubling rents at a South Shore mobile home park, partially granting a request from the state attorney general's office in a lawsuit alleging BoaVida Group LP and its affiliates violated the state's Manufactured Housing Act. In a Nov. 18 order, Justice Squires-Lee said BoaVida can charge no more than $385 per month — a rent that the company had set in January 2023, shortly after purchasing Willow Terrace in Taunton — until January 2028 or the resolution of the case, whichever is sooner. Because of the unique circumstances of manufactured housing, where residents typically own their home but rent a lot, and the challenge of selling such a property, the state requires owners of such parks to offer five-year leases. The suit alleges that BoaVida did not offer leases and continued to increase the rent further in 2024 and 2025, when the attorney general's office got involved. In response to a demand letter, BoaVida hiked the rent again, to $702 per month, and blamed the attorney general's office, according to the decision. When the AG called that deceptive, BoaVida announced it was ending all tenancies at will as of July 31, then offered tenants a five-year lease at $703 per month. Justice Squires-Lee found that while BoaVida was not barred from increasing the rent after purchasing the property, as long as it complied with the law and offered a lease, it had likely engaged in retaliation in response to the AG's involvement. "The Commonwealth has presented evidence that the defendants offered leases more than doubling the rent within four months of receipt of the AGO's March 2025 notice and while in settlement discussions with the AGO," Justice Squires-Lee wrote. "Indeed, the defendants informed tenants of the rent increase despite being aware that the AGO considered such an increase to be retaliatory because it was in such close proximity to protected advocacy." The judge rejected BoaVida's arguments that the rent increase took place more than six months after the tenants first complained to the AG, putting it outside the statutory and regulatory presumption time frame for a retaliation claim. The judge said such an interpretation would "unduly curtail" the intent of lawmakers in creating tenant protections. "Had the defendants complied with their obligation when they increased rent in January 2023, the residents of Willow Terrace would have had the stability of a five-year lease required by the Act," Justice Squires-Lee wrote. Instead, they were put in a position where they would have no time to plan a sale or prepare for a steep rent increase, the ruling said. The government is represented by Ellen Peterson, Matthias Fressilli, Michael Turi and Jessica Rahmoune of the Office of the Attorney General of the Commonwealth of Massachusetts. The defendants are represented by Robert Kraus and John J. Prettyman of Kraus & Hummel LLP and Thomas A. Woods of Stoel Rives LLP. The case is Commonwealth v. The BoaVida Group LP, case number 2584CV02493, in the Suffolk County Superior Court of the Commonwealth of Massachusetts. Ousted Associate May Pursue Wrongful Termination Claims A Massachusetts personal injury law firm still faces the bulk of claims brought by a former associate who says he was fired after complaining about the firm's unilateral decision to eliminate commissions on cases he brought in, allegedly to prevent him from earning more than three recently-hired partners. Mark Cashman sued Sweeney Merrigan Law LLP and two partners, Tucker Merrigan and Peter Merrigan, for breach of contract, several counts of wrongful termination based on various grounds, and violations of the state's wage law. In a Nov. 13 decision, Justice Squires-Lee dismissed one wage law claim, finding that commissions Cashman says he was owed hadn't been calculated on the day he was fired. Under his employment agreement, the firm first had to receive payment of the fees and then calculate its share, the court found. However, Sweeney Merrigan's motion to dismiss the other counts was unsuccessful. Cashman, who worked for the firm from 2017 until 2021, was paid a salary plus bonuses, and commissions based on a percentage of income he generated, eventually 20%. Cashman says in the lawsuit that after the firm hired the new partners in 2021, he was told that his compensation plan "was done" and that he would now make a flat yearly salary of $120,000, with a potential future raise and a role as a "department leader" for medical malpractice cases. During a subsequent meeting, Tucker Merrigan allegedly told Cashman, "You don't seem happy here. I think we should separate," according to the decision. Cashman also learned that the firm would be contacting his clients without giving them an option of choosing to remain with Cashman or the firm as called for in the state's Rules of Professional Conduct. Cashman had approximately a dozen cases at the time that eventually generated fees entitling him to $1.5 million, according to the decision, including two that settled shortly after his termination, and that at a minimum, he would have been owed $143,000 for those cases, plus a $10,000 scheduled bonus. "The factual allegations of the complaint plausibly suggest that SML terminated Cashman without good cause to avoid paying him the commission he was owed or had 'almost earned … under the agreed-upon compensation structure," Justice Squires-Lee wrote in denying dismissal of the breach of contract and wrongful termination based on bad faith. Similarly, the judge let stand a claim of wrongful termination against public policy, saying that Cashman's objection to the firm's plan to contact his clients directly, and his termination immediately after that, could also be viewed as going against the public interest. The judge also allowed a Wage Act claim based on retaliation to proceed, finding that his complaint about the firm's decision to take away his commissions could be viewed as leading to his firing. The plaintiff is represented by Joseph P. Musacchi and Anthony Tarricone of Kreindler & Kreindler LLP. The defendants are represented by John D. ARnold, John Thomas Graff and Sophie A. Levine of Hirsch Roberts Weinstein LLP. The case is Cashman v. Sweeney Merrigan Law LLP et al., case number 2584CV01207, in the Suffolk County Superior Court of the Commonwealth of Massachusetts.

Dec 1

9 min

Law360 (November 5, 2025, 7:29 PM EST) -- A pair of pharmacy trade groups is urging the Eighth Circuit to allow Arkansas to enforce a law barring pharmacy benefit managers from owning pharmacies, arguing the law is a rational response to "abusive" PBM practices. An Arkansas federal court was wrong to preliminarily enjoin the law, Act 624, on the grounds that it likely violates the dormant commerce clause by discriminating against out-of-state companies, the National Community Pharmacists Association and Arkansas Pharmacists Association told the Eighth Circuit in a Tuesday amici curiae brief. The appeal concerns a consolidated challenge to the law by PBM giants Express Scripts Inc, OptumRx and CVS, among other parties. Originally set to take effect next year, Act 624 would make it illegal for the state's pharmacy board to issue pharmacy licenses to PBMs, which generally act as intermediaries between insurance companies, drug manufacturers and pharmacies. Contrary to the district court's read on the law, this restriction is "facially neutral" and constructed to police the "conflict of interest that's inherent in a PBM owning pharmacies," Robert T. Smith of Katten Muchin Rosenman LLP, an attorney for the amici curiae trade groups, told Law360. "States should have plenary authority over pharmacy licenses and who holds them," Smith said. "This doesn't have anything to do with discriminating against in-state or [out-of-state] institutions. It's treating all PBMs the same regardless of where they're located, and it's agnostic to out-of-state ownership." In the underlying litigation, the three PBMs and trade group Pharmaceutical Care Management Association argue Act 624 would hurt patients' ability to access drugs at affordable prices. Their consolidated suits allege the law violates several constitutional guarantees and is preempted by federal statutes governing Medicare, employee benefit plans and Tricare health benefits for military personnel and retirees. In July, U.S. District Judge Brian S. Miller found plaintiffs were likely to succeed on their Tricare preemption arguments and their claims under the U.S. Constitution's dormant commerce clause, which bars states from unjustifiably discriminating against interstate commerce. In granting plaintiffs' preliminary injunction motion, Judge Miller wrote that Act 624's burden on interstate commerce was "excessive," in part because Arkansas already has laws geared at "curtailing plaintiffs' business tactics and minimizing the conflicts of interest inherent in PBM-affiliated pharmacies." Specifically, Judge Miller pointed to Arkansas laws requiring PBMs to reimburse pharmacies at rates equal or greater to what it costs pharmacies to acquire a drug, and prohibiting PBMs from reimbursing in-state pharmacies less than the amount they reimburse affiliates for providing the same services. But these laws have not prevented PBMs from "padding their profit margins through more pernicious practices," the National Community Pharmacists Association and Arkansas Pharmacists Association say in their Tuesday amici brief to the Eighth Circuit. The pharmacy trade groups point to vertical integration in the PBM industry, arguing that PBMs can steer patients to pharmacies they are affiliated with by offering lower copayments. This in turn leads to higher costs to benefit plans, which "ultimately increases the costs of prescription drug benefits for everyone," according to the amici curiae groups. "Act 624 was enacted to solve the problem by banning PBMs, wherever they are headquartered, from holding pharmacy licenses in Arkansas directly or through affiliates — stripping PBMs of the ability to both make and take payment terms and conditions," the brief says. The groups are urging the Eighth Circuit to reverse the district court's judgment. Representatives for the PBMs and Arkansas did not immediately respond to a request for comment Wednesday. The National Community Pharmacists Association and Arkansas Pharmacists Association are represented by Robert T. Smith and Timothy H. Gray of Katten Muchin Rosenman LLP. Arkansas is represented by Asher Steinberg, Ryan Hale and Jordan Broyles of the Arkansas attorney general's office. CVS is represented by J. Carter Fairley and Ben C. Hall of Barber Law Firm PLLC, and Jeffrey B. Wall and Judson O. Littleton of Sullivan & Cromwell LLP. The Pharmaceutical Care Management Association is represented by David S. Mitchell Jr. and Tyler D. Mlakar of Rose Law Firm APC, and Michael B. Kimberly of Winston & Strawn LLP. Express Scripts is represented by Scott P. Richardson of McDaniel Wolff PLLC and Daniel S. Volchok, Kevin M. Lamb and Joseph M. Meyer of WilmerHale. Optum is represented by Peter Shults of Shults Law Firm LLP, and Allyson N. Ho, Matthew S. Rozen and M. Christian Talley of Gibson Dunn & Crutcher LLP. The case is Express Scripts Inc et al. v. Richmond et al., case number 25-2529, in the U.S. Court of Appeals for the Eighth Circuit. - Additional reporting by Patrick Hoff. Editing by Amy French. For a reprint of this article, please contact reprints@law360.com.

Nov 5

3 min

A Louisiana bankruptcy judge on Tuesday told bondholders they cannot argue for consolidating the bankruptcy cases of the Roman Catholic Archdiocese of New Orleans and its parishes at the ongoing confirmation hearing for the archdiocese's Chapter 11 plan. U.S. Bankruptcy Judge Meredith S. Grabill told the bondholders that the second day of the two-week confirmation hearing is too late to add new arguments from an adversary action the bondholders filed late Monday afternoon. "We're not going to use it to hijack this issue," she said. The adversary action seeks to consolidate the Chapter 11 cases of the archdiocese — which filed for bankruptcy in May 2020 under the weight of hundreds of claims of child sexual abuse — and the cases of 156 affiliated parishes and other institutions that filed for Chapter 11 last week in support of the archdiocese's Chapter 11 plan. The archdiocese and the unsecured creditors' committee, representing abuse claimants, reached a deal in May on a plan that in its current version would create a $230 million abuse settlement trust funded with approximately $65 million from the archdiocese, $135 million from affiliates and $29.3 million from insurance settlements approved by Judge Grabill on Monday. The plan is facing an objection from bondholders with $41.9 million in claims, who argued it improperly crams them down by recharacterizing $9.3 million in prepetition interest payments as principal payments and paying off the balance over 12 years with a combination of cash and real estate transfers. The bondholders are arguing that after making the trust payments, the archdiocese will have enough assets to repay the bonds in full, and that they are being unfairly singled out among creditors by being repaid in installments. At the opening of Tuesday's hearing, archdiocese counsel Mark Mintz said the archdiocese has filed a revised plan to answer some of the bondholders' objections by proposing to pay them entirely with $20.3 million cash by making interest payments for 12 years and a final balloon payment at the end. Late Monday, the bondholders filed an adversary action seeking to consolidate the bankruptcy filings of the archdiocese and its affiliates — arguing the archdiocese has total administrative and financial control of its parishes — and the bondholders asked to make consolidation arguments at the confirmation hearing. Yet Mintz argued it is too late to "fold in" consolidation arguments to the ongoing hearing, saying there has been no opportunity for discovery and that the bondholders have had months to raise the issue. "They've known this is the plan and this was the idea since May," he said. Yet bondholder counsel Christopher Marks argued they could not have filed to consolidate the debtors until the affiliates actually filed for Chapter 11 and became debtors. He also argued the consolidation action ties into their argument that the archdiocese is solvent because it can tap into assets held by its affiliates. Judge Grabill said the witnesses and evidence for the confirmation hearing have already been set, and that the adversary action hasn't been served yet. "We can try this when it's ripe," she said. The remainder of Tuesday's hearing consisted of testimony on the archdiocese's operations and finances, with the Rev. Patrick Carr, the archdiocese's vicar of finance, testifying the trust fund payment will leave the archdiocese insolvent, taking into account the need to fund operations and be prepared to deal with future hurricane damage. Archdiocese financial adviser Lloyd Egan Jr. said properties sustained $50 million to $60 million in uninsured damage in 2021's Hurricane Ida and that it has still only received 60% of the Federal Emergency Management Agency funds it was due from Hurricane Katrina in 2005. He also said the archdiocese is facing rising insurance costs and considerable deferred maintenance costs. Both he and Carr testified the archdiocese plans to deal with this insolvency by selling unused real estate, streamlining operations, closing parishes, and selling archdiocese-operated nursing homes and assisted living centers, saying operating them had led to "overwhelming debt." "We should not have been a nursing home operator," Egan said. The hearing is scheduled to continue through Dec. 2. The archdiocese is represented by R. Patrick Vance, Elizabeth J. Futrell and Mark A. Mintz of Jones Walker LLP. The parishes are represented by Douglas S. Draper, Leslie A. Collins, Greta M. Brouphy and Michael E. Landis of Heller Draper & Horn LLC. The bondholders are represented by Colleen A. Murphy, Kevin J. Walsh, Charles W. Azano, Christopher Marks and Annette Jarvis of Greenberg Traurig LLP and David S. Rubin of Butler Snow LLP. The case is In re: The Roman Catholic Church for the Archdiocese of New Orleans, case number 2:20-bk-10846, in the U.S. Bankruptcy Court for the Eastern District of Louisiana.

Nov 18

4 min

A Louisiana bankruptcy judge on Tuesday told bondholders they cannot argue for consolidating the bankruptcy cases of the Roman Catholic Archdiocese of New Orleans and its parishes at the ongoing confirmation hearing for the archdiocese's Chapter 11 plan. U.S. Bankruptcy Judge Meredith S. Grabill told the bondholders that the second day of the two-week confirmation hearing is too late to add new arguments from an adversary action the bondholders filed late Monday afternoon. "We're not going to use it to hijack this issue," she said. The adversary action seeks to consolidate the Chapter 11 cases of the archdiocese — which filed for bankruptcy in May 2020 under the weight of hundreds of claims of child sexual abuse — and the cases of 156 affiliated parishes and other institutions that filed for Chapter 11 last week in support of the archdiocese's Chapter 11 plan. The archdiocese and the unsecured creditors' committee, representing abuse claimants, reached a deal in May on a plan that in its current version would create a $230 million abuse settlement trust funded with approximately $65 million from the archdiocese, $135 million from affiliates and $29.3 million from insurance settlements approved by Judge Grabill on Monday. The plan is facing an objection from bondholders with $41.9 million in claims, who argued it improperly crams them down by recharacterizing $9.3 million in prepetition interest payments as principal payments and paying off the balance over 12 years with a combination of cash and real estate transfers. The bondholders are arguing that after making the trust payments, the archdiocese will have enough assets to repay the bonds in full, and that they are being unfairly singled out among creditors by being repaid in installments. At the opening of Tuesday's hearing, archdiocese counsel Mark Mintz said the archdiocese has filed a revised plan to answer some of the bondholders' objections by proposing to pay them entirely with $20.3 million cash by making interest payments for 12 years and a final balloon payment at the end. Late Monday, the bondholders filed an adversary action seeking to consolidate the bankruptcy filings of the archdiocese and its affiliates — arguing the archdiocese has total administrative and financial control of its parishes — and the bondholders asked to make consolidation arguments at the confirmation hearing. Yet Mintz argued it is too late to "fold in" consolidation arguments to the ongoing hearing, saying there has been no opportunity for discovery and that the bondholders have had months to raise the issue. "They've known this is the plan and this was the idea since May," he said. Yet bondholder counsel Christopher Marks argued they could not have filed to consolidate the debtors until the affiliates actually filed for Chapter 11 and became debtors. He also argued the consolidation action ties into their argument that the archdiocese is solvent because it can tap into assets held by its affiliates. Judge Grabill said the witnesses and evidence for the confirmation hearing have already been set, and that the adversary action hasn't been served yet. "We can try this when it's ripe," she said. The remainder of Tuesday's hearing consisted of testimony on the archdiocese's operations and finances, with the Rev. Patrick Carr, the archdiocese's vicar of finance, testifying the trust fund payment will leave the archdiocese insolvent, taking into account the need to fund operations and be prepared to deal with future hurricane damage. Archdiocese financial adviser Lloyd Egan Jr. said properties sustained $50 million to $60 million in uninsured damage in 2021's Hurricane Ida and that it has still only received 60% of the Federal Emergency Management Agency funds it was due from Hurricane Katrina in 2005. He also said the archdiocese is facing rising insurance costs and considerable deferred maintenance costs. Both he and Carr testified the archdiocese plans to deal with this insolvency by selling unused real estate, streamlining operations, closing parishes, and selling archdiocese-operated nursing homes and assisted living centers, saying operating them had led to "overwhelming debt." "We should not have been a nursing home operator," Egan said. The hearing is scheduled to continue through Dec. 2. The archdiocese is represented by R. Patrick Vance, Elizabeth J. Futrell and Mark A. Mintz of Jones Walker LLP. The parishes are represented by Douglas S. Draper, Leslie A. Collins, Greta M. Brouphy and Michael E. Landis of Heller Draper & Horn LLC. The bondholders are represented by Colleen A. Murphy, Kevin J. Walsh, Charles W. Azano, Christopher Marks and Annette Jarvis of Greenberg Traurig LLP and David S. Rubin of Butler Snow LLP. The case is In re: The Roman Catholic Church for the Archdiocese of New Orleans, case number 2:20-bk-10846, in the U.S. Bankruptcy Court for the Eastern District of Louisiana.

Nov 18

4 min

Elliott Investment Management LP has accused SRP Capital Advisors LLC and a principal of misappropriating "tens of millions" from Elliott and other investors in an alleged scheme that began to emerge after a books and records suit in Delaware's Court of Chancery earlier this year. A subsequent complaint, filed on Sept. 25 but made fully public only late on Monday, sought the appointment of a receiver in connection with the alleged misappropriations of funds, including $27 million — an amount also undisclosed before Monday — from investment vehicles controlled by Ryan Turner and Stronghold Resource Partners. Allegations include overcharging for expenses tied to oil tract investments in Texas by Turner-controlled private equity firm Stronghold Investment Management, as well as failure to liquidate the investments by Dec. 31, 2023, under a settlement reached in August 2022. The original deadline was later extended by a year. "The brazenness of this misconduct cannot be overstated. Through Stronghold, Turner had systematically looted entities they were supposed to be managing for the benefit of the investors," the now unredacted complaint said. "The inescapable conclusion is that, rather than selling its assets, distributing the proceeds and winding down" the fund at issue, "Stronghold has pillaged Fund II to line its own pockets and then tried to cover up its own wrongdoing by lying about the value of its unsold assets," it added. Stronghold and Elliott did not immediately respond to requests for comment on Tuesday. The nine-count complaint includes direct and derivative allegations of fiduciary duty breaches against Turner, the fund and general partners; aiding and abetting of breaches against Turner; and unjust enrichment against all those named, while also seeking the appointment of a receiver. According to the complaint, the enterprise dates to 2017, when Elliott and Stronghold established SRP III to buy, hold and manage mineral interests in Texas' Permian Basin. A year later, Elliott invested $79 million — forming a parallel vehicle, SRP II Sidecar — bringing its total investment to a combined $97 million, or 47%, of Fund II. Turner, meanwhile, allegedly controlled Fund II's operations in an enterprise focused on buying and developing mineral rights or leaseholds through portfolio investment companies. The enterprise later expanded, but according to the complaint, "Stronghold belatedly provided financial statements" for some assets that "contained alarming irregularities." In one instance, "Stronghold admitted that, during 2021, it had taken $13 million from two accounts, 'leaving nothing more than an IOU,'" Elliott alleged. According to the complaint, Elliott "finally forced Stronghold to make disclosures during earlier books and records litigation in Chancery Court." That effort revealed that Stronghold had created shell "service centers to funnel Stronghold's own overhead, research and development costs and unrelated litigation expenses to the shared funds." The arrangement "represents a massive wealth transfer from Fund II's limited partners to pay Stronghold's own expenses through fraudulent expense allocation practices," the complaint said. The scheme also allegedly led to a "massive increase in expenses at precisely the time when Fund II should have been selling assets and ceasing operations." Stronghold, the complaint said, "artificially inflated Fund II's asset valuations." While Stronghold claims that Fund II's remaining assets were worth $140 million as of June 30, 2025, Elliott has not been able to recreate this valuation using industry-standard valuation techniques, it added. "This explosion of non-transaction expenses after the settlement agreement was signed is inexplicable absent fiduciary misconduct," the complaint said, noting outlays largely flowed through four "black box" expense categories. Elliott Investment Management and limited partner Eller Associates Inc. et al. are represented by Raymond J. DiCamillo, Susan Hannigan Cohen and Danielle I. Bell of Richards Layton & Finger PA and Andrew J. Rossman, David S. Mader, Charles H. Sangree and Sarah Bittman of Quinn Emanuel Urquhart & Sullivan LLP. SRP Opportunities II LP, SRPO-II Partners I LP and SRP Opportunities III LP are represented by Garrett B. Moritz and S. Reiko Rogozen of Ross Aronstam & Moritz LLP and Edward C. Barnidge, Adrienne E. Van Winkle, Sean M. Douglass and Matthew D. Heins of Williams & Connolly LLP. The case is Eller Associates Inc. et al. v. SRP Opportunities II LP et al., case number 2025-1095, in the Court of Chancery of the State of Delaware.

Dec 2

3 min