CommonWealth REIT, et al. v. Corvex Management LP, et al.

On November 18, 2013 an Arbitration Panel ruled invalid the consent solicitation undertaken by Corvex Management LP (Corvex) and Related Fund Management, LLC (Related) in June 2013 to remove the Board of Trustees of CommonWealth REIT (CommonWealth). The Panel also upheld two key provisions of CommonWealth’s bylaws (the current share ownership requirement to request a consent solicitation and the length of the consent period), while granting Corvex and Related the opportunity to bring a new consent solicitation under certain guidelines set forth by the Panel. Compass Lexecon experts Professor Bradford Cornell and Kevin Dages testified before the Arbitration Panel. Dages provided an analysis of the ownership and trading activity in CommonWealth shares, as well as economic evidence on shareholding requirements in REIT bylaws which was utilized by the independent consent solicitation experts. The Panel cited the economic evidence as support for the reasonableness of the share ownership requirement ($2,000 of stock for at least one year) and consent period (30 days) provided in CommonWealth’s bylaws. Professor Cornell testified as a rebuttal witness regarding the damages analysis of Corvex and Related’s expert. After the submission of Professor Cornell’s expert report, Corvex and Related petitioned the Panel to withdraw their damages claim. The request was granted, with prejudice. The Compass Lexecon experts were supported by a team including John Haut, Jennifer Milliron, Jonathan Polonsky, David Strahlberg, and Laura Yergesheva. The team from Compass Lexecon worked closely with counsel for the CommonWealth Trustees, Thomas Allingham, Robert Saunders, Lea Haber Kuck, James Carroll, Stephen Dargitz and Joseph Larkin of Skadden, Arps, Slate, Meagher & Flom LLP.