Fitbit is currently being sued in at least four different cases in response to Google’s announcement to acquire the company. The suits are Flynn v. Fitbit, Inc. et al 1:19-cv-02270, Tesnar v. Fitbit Inc. et al 1:19-cv-11247, Phillips v. Fitbit, Inc. et al 3:19-cv-08046, and Estes v. Fitbit, Inc. et al 3:19-cv-08059. The first two cases were filed in the Delaware District Court, New York Southern District Court, respectively, and the last two cases were filed in the California Northern District Court. All cases involve Securities Exchange Act violations or securities and financial violations. Plaintiffs are represented by Rigrodsky & Long, Monteverde, Faruqi and Faruqi, and Brodsky & Smith, respectively. Fitbit was also previously sued by John Thompson, a stockholder for violating the Securities and Exchange Act.
Fitbit is a publicly-traded company, so its shares have a set valuation of around $7.37. Fitbit’s Board of Directors entered a merger agreement with Google in November. As part of the agreement, Fitbit’s stockholders will get $7.35 for each share. Fitbit filed a proxy statement with the SEC for the proposed transaction.
The issue in the suits pertains to Fitbit’s allegedly incomplete and misleading proxy statement filed with the Securities and Exchange Commission (SEC). The complaints allege that this was in order to get Fitbit’s shareholders to vote in favor of the proposed merger. The plaintiffs request complete and accurate information ahead of the vote.
Estes v. Fitbit also accused Fitbit of not upholding its fiduciary duty, stating, “Defendants breached their fiduciary duties to the Company’s shareholders by agreeing to the Proposed Transaction which undervalues Fitbit and is the result of a flawed sales process. Post-closure, Fitbit shareholders will be frozen out of seeing the return on their investment of any and all future profitability of Fitbit.” This is the only case out of the four to raise this issue.
They have demanded injunctive relief, to bar the special voting meeting until the missing information is disclosed and to repay damages. Lastly, if the Fitbit “consummate[s] the Proposed Transaction rescinding it and setting it aside or awarding rescissory damages to Plaintiff and the Class,” and for Fitbit to exercise its fiduciary duties and create a sale that has everyone’s best interest.
Flynn, Phillips, Estes are class action suits.