A Shearman & Sterling Litigation team has won a motion to dismiss for longtime client Fairfax Financial Holdings Ltd. in a derivative action challenging Fairfax's take-private acquisition of its majority-held subsidiary Odyssey Re Holdings Corp. The Connecticut Superior Court issued an opinion granting the motion on December 30, 2010.

The plaintiff was a purported shareholder who argued that the tender offer and short-form merger were unfair in both substance and process, and that the disclosures in the recommendation statement were inadequate. Applying Delaware substantive law, the court adopted the position argued by Shearman & Sterling and held that the transaction satisfied Delaware's fairness standards and that the alleged omissions were either disclosed or immaterial as a matter of law.

Notably, upon being urged by Shearman & Sterling, the judge extracted a stipulation from the plaintiff that allowed the court to examine relevant documents outside the complaint without converting the motion to one for summary judgment, which is a significant departure from standard Connecticut procedure on a motion to dismiss. The plaintiff has elected not to amend its pleadings or to pursue an appeal.

The Shearman & Sterling team consisted of partner Alan Goudiss, associate Brian Burke and legal assistant Karen Prosky (all New York-Litigation).