     Case: 09-30708     Document: 00511219493         Page: 1     Date Filed: 08/30/2010




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          August 30, 2010

                                       No. 09-30708                        Lyle W. Cayce
                                                                                Clerk

ELIZABETH BOLTON HASSINGER; MARY BOLTON JENNINGS,
Individually and as trustee of the James K. Jennings, III Trust and as trustee
of the Elizabeth Bolton Jennings Trust; ROBERT H BOLTON, JR.;
CATHERINE HASSINGER DRENNAN; MARY HASSINGER SCHMIDT; ET
AL,

                                                  Plaintiffs - Appellants,
v.

JP MORGAN CHASE & COMPANY,

                                                  Defendant - Appellee.




                   Appeal from the United States District Court
                      for the Eastern District of Louisiana
                             USDC No. 2:06-CV-2931


Before JONES, Chief Judge, and HIGGINBOTHAM and ELROD, Circuit
Judges.
PER CURIAM:*
        This case involves a complicated fact pattern with a simple legal issue:
Do proceeds from a settlement agreement represent post-merger consideration?
JPMorgan Chase & Company (JPMorgan) paid shareholders cash to settle their


       *
         Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
   Case: 09-30708    Document: 00511219493      Page: 2   Date Filed: 08/30/2010

                                  No. 09-30708

securities class action in relation to a merger. Appellants assert that this
money should be treated as additional money paid for the merger and that
because they are former debenture holders, JPMorgan must pay them an equal
amount of cash. Because we agree with the district court that Appellants have
failed to demonstrate a genuine issue of material fact as to whether the
settlement constitutes post-merger consideration, we AFFIRM.
      Prior to the merger of JPMorgan’s predecessor, Banc One, and First
Commerce Corporation (First Commerce), Appellants owned convertible
debentures in First Commerce. Under the Trust Indenture Agreement, which
governed such debentures, debenture holders could, before December 1, 2000,
convert the principal amount of their debentures into First Commerce common
stock at an established conversion ratio. The Trust Indenture Agreement also
included an anti-dilution provision, which secured the debenture holders’ right
to receive, in the event of a merger, the same monetary consideration for
debenture stock as an ordinary shareholder. Thus, when First Commerce
merged with Banc One in 1998, the conversion ratio for the debentures was
modified so that debenture holders would, upon conversion, receive the same
merger consideration as the common stockholders.
      Subsequently, however, former First Commerce shareholders sued Bank
One (Banc One’s successor1 ) and its corporate officers for securities violations
under §§ 11, 12(a)(2), and 15 of the Securities Act (the “Levitan action”).
15 U.S.C. §§ 77k, 77l(a)(2) and 77o. The shareholders claimed that Banc One
and its officers overstated the value of Banc One’s credit card division, which
inflated its overall value. Consequently, First Commerce shareholders overpaid


      1
         The case before this court concerns the merger between Banc One and First
Commerce. Banc One later merged with First Chicago to become Bank One, and in 2004,
Bank One merged with JPMorgan. By the time of the JPMorgan merger, the Appellants’
debentures had been converted.

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                                  No. 09-30708

for Banc One shares. The Levitan action eventually became a class action with
a class defined as former First Commerce shareholders who retained their
shares until August 24, 1999—the time at which the information underlying the
lawsuit became public. Some Appellants attempted to join the Levitan action,
but the case manager denied their requests.
      On October 31, 2005, JPMorgan, as successor to Banc One, settled the
Levitan shareholder suit without admitting liability. In exchange for dropping
all legal action with respect to the merger, JPMorgan paid the Levitan class
$33.9 million, which equates to approximately $0.89 per share of potentially
eligible stock. Following the settlement, Appellants sued JPMorgan for breach
of contract under § 13.04(f) of the Trust Indenture Agreement, asserting that
the settlement proceeds were “post-merger” consideration. In ruling on the
parties’ motions for summary judgment, the district court rejected Appellants’
theory and concluded that the settlement proceeds were not post-merger
consideration.
      We review a district court’s grant of summary judgment de novo, applying
the same legal standards used by the district court. Moss v. BMC Software, Inc.,
610 F.3d 917, 922 (5th Cir. 2010).       “Summary judgment is proper ‘if the
pleadings, the discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)(2)).
On cross motions for summary judgment, the court reviews each motion
independently, viewing the evidence and inferences in the light most favorable
to the non-moving party. Tidewater Inc. v. United States, 565 F.3d 299, 302 (5th
Cir. 2009). “If there is no genuine issue and one of the parties is entitled to
prevail as a matter of law, [this] court may render summary judgment.” Shaw
Constructors v. ICF Kaiser Eng’rs, Inc., 395 F.3d 533, 539 (5th Cir. 2004)
(citations omitted).

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      The Levitan settlement agreement is a contract, Estate of Kokernot, 112
F.3d 1290, 1294 (5th Cir. 1997), and therefore, this court interprets it pursuant
to general contract law principles, Treaty Pines Invs. P’ship v. Comm’r, 967 F.2d
206, 211 (5th Cir. 1997). Under Louisiana law, “[c]ontracts have the effect of law
for the parties,” La. Civ. Code Ann. art. 1983, and the “[i]nterpretation of a
contract is the determination of the common intent of the parties, La. Civ. Code
Ann. art. 2045. “When the words of a contract are clear and explicit and lead to
no absurd consequences, no further interpretation may be made in search of the
parties’ intent.” La. Civ. Code Ann. art. 2046. Moreover, “[a] contract should not
be interpreted in an unreasonable or strained manner . . . to enlarge or to
restrict its provisions beyond what is reasonably contemplated by unambiguous
terms or [to] achieve an absurd conclusion.” P.D. & An.D. v. S.W.L., 993 So.2d
240, 245 (La. Ct. App. 2008).
      Here, we agree with the district court that “debenture holders are entitled
[under § 13.04(f) of the Trust Indenture Agreement] to any subsequent payment
received by shareholders, so long as that payment specifically adjusts the price
shareholders received for their stock at the time of merger.”         Appellants,
however, have failed to bring forth any evidence that would entitle them to
additional monies under § 13.04(f).     Indeed, as the district court observed,
Appellants’ “only evidence that the settlement specifically adjusted the price
paid to shareholders at the time of the merger is the settlement agreement
itself,” and “the settlement agreement specifically disclaims any liability on
behalf of [JPMorgan] or damages on behalf of the [Appellants].” In addition,
Appellants have failed to point to any language in the settlement agreement that
“equates the payment of additional monies with additional value for the
shareholder’s stock at the time of merger.”
      Accordingly, we agree with the district court that Appellants “have failed
to demonstrate a genuine issue of material fact as to whether the Levitan

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settlement constitutes post-merger consideration.” We AFFIRM the judgment
of the district court essentially for the reasons stated in its careful and thorough
orders, dated April 1, 2009 and July 23, 2009.




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