Brookfield Asset Management, Inc. v. Rosson

Martin Rosson (plaintiff) and the City of Dearborn Police and Fire Revised Retirement Fund (Dearborn) (plaintiff) were minority shareholders of TerraForm Power, Inc. (TerraForm), a publicly traded company. Brookfield Asset Management, Inc. (Brookfield) (defendant) was the majority shareholder of TerraForm. Brookfield and TerraForm’s board of directors (the board) planned to acquire a foreign company. In order to finance the acquisition, Brookfield and the board initially planned to raise money by issuing new shares of TerraForm in public markets at an offering price of $10.66 per share. Months later, Brookfield and the board restructured the offering as a private placement for the same $10.66 offering price, but by then TerraForm’s shares were trading publicly at a higher price. Rosson and Dearborn filed a class action asserting direct claims for breach of fiduciary duty against Brookfield, alleging that Rosson and Dearborn were damaged by Brookfield’s restructuring of the offer to a private placement for an insufficient price that diluted the minority shareholders’ financial and voting interests in TerraForm. Rosson and Dearborn also commenced a derivative action against Brookfield on behalf of TerraForm, claiming that TerraForm sustained similar damages as the minority shareholders alleged in the class action. The actions were consolidated. Brookfield moved to dismiss the direct claims on the ground that Rosson and Dearborn lacked standing. The trial court granted the motion. Rosson and Dearborn appealed.