The lawyers aren’t giving up yet


Three class action lawsuits were filed after Cumulus Media announced plans to go private in July 2007. The various actions basically accused the buyout group of shortchanging shareholders.

You may have assumed that after the buyout was terminated in May 2008 that the lawsuits dissolved. But you would be wrong.

Cumulus did, indeed, settle one of the lawsuits without admitting any wrongdoing. In fact, that settlement was last year, while the buyout was still pending.

But rather than the other two being withdrawn as pointless after the deal cratered, the lawyers for the plaintiffs came up with new allegations. Their new claims under Georgia state law include breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, abuse of control, gross mismanagement, corporate waste, unjust enrichment, rescission and accounting. The amended complaints further allege, for the first time, misrepresentations or omissions in connection with the purchase or sale of securities, Cumulus said in a filing with the SEC.

Cumulus and the other defendants from the aborted buyout have moved the two cases from state court to federal court and filed motions to have them dismissed.