A high-profile legal battle that pits a Texas pension fund against a group of activist investors is heading back to the trial court — but only for a limited review as to whether the pension fund ever had standing to bring the suit in the first place.
Specifically, the Ohio Court of Appeals for the Tenth District ruled in a May 27 decision that the Franklin County (Ohio) Court of Common Pleas erred by failing to determine whether the plaintiff — the Corpus Christi Firefighters’ Retirement System — had legal standing to bring the case. In so doing, the appeals court did not address the trial court’s finding that the investors had not engaged in a manipulative practice — saving review of that question until after the trial court revisits the question of standing. The court also stated, “motions denied as moot,” effectively pausing all other arguments until the standing issue is resolved.
“I don’t think the appellate court should have done that,” Phillip Goldstein, co-founder of Bulldog Investors LLC, principal of the firm, and its lead investment strategist, told Financial Regulation News on Monday.
“I don’t think any more resources should be wasted on this frivolous case,” he added. “I think the lower court’s decision that there was no manipulative practice should be affirmed and the predatory law firm that brought it should be ashamed of itself. They should not be suing activist investors for trying to enhance the value of an Ohio company’s stock.”
The case, Corpus Christi Firefighters’ Retirement System v. Macellum Capital Management, L.P., et al., dates back to 2021, when the pension fund alleged that several entities tied to activist investors Macellum and Ancora Holdings Inc., violated Ohio’s anti-greenmail statute after building up a sizable stake in Big Lots, launching a public campaign against its management, and then sold off shares for a profit.
At the center of the complaint is Ohio’s anti-greenmail statute, which was enacted in the 1980s to deter investors from using hostile tactics to pressure companies into buying back shares at inflated prices.
Most-recent arguments
The appellate court heard arguments May 1 regarding whether Ancora Holdings and Macellum violated Ohio’s anti-greenmail statute during their campaign calling for strategic changes at the retail chain and whether their subsequent sale of stock at a profit was unlawful.
The trial court previously dismissed the case on summary judgment, siding with the defense. But the plaintiffs appealed, bringing the matter before the Ohio three-judge panel: Judges Laurel Beatty Blunt, Shawn Dingus, and Carly Edelstein.
During May 1 arguments, defense attorney Joseph Weinstein of Squire Patton Boggs framed the case as a pivotal test of shareholder rights and warned that an expansive interpretation of the statute could chill legitimate investor advocacy.
A coalition of amici curiae — including Ohio businesses, labor groups, environmental organizations, and even the General Assembly — supported the trial court’s ruling.
Weinstein said that the statute was designed to prevent deceitful and manipulative tactics, not to penalize investors for making profits. “Virtually all investors… are in the market to make a profit. There’s nothing illegal or improper about profit-seeking,” he said.
A key legal question involved whether Ancora and Macellum’s push for a sale-leaseback strategy and board nominations constituted an attempt to “acquire control” of Big Lots — a threshold that could trigger the anti-greenmail statute.
Weinstein argued that the firms engaged in routine shareholder advocacy, not control-seeking behavior.
“There was no deceitful conduct here at all,” he said, noting that Big Lots eventually adopted the investors’ proposal independently — a move that caused the stock price to quadruple and stay high for more than two years.
Judge Edelstein voiced doubts about the clarity of the law itself, pointing to the extensive legal debate. “I’m struggling with the idea that it’s unambiguous — if it were, why are we all here arguing about its meaning?” she asked.
The judges also questioned whether procedural issues — specifically, whether the plaintiffs had standing — could prove decisive.
Edelstein suggested that that question alone might justify sending the case back to the trial court for further examination.
Recent ruling
That’s precisely what happened when the Tenth District Court of Appeals of Ohio reversed the lower court’s ruling in a May 27 decision.
But according to Goldstein, “given that there are no disputed factual issues that would affect standing, an appellate court has the power to decide standing even if the trial court does not,” noting that the U.S. Supreme Court often finds standing lacking when the lower courts have not squarely decided it.
Goldstein also said the appellate court could have assumed standing and ruled on the merits of the summary judgment dismissal order just as the trial court did, and, overall, he argues that the lawsuit is baseless and the statute itself is outdated.
“Ohio’s investor community will benefit from greater clarity regarding the greenmail statute,” added Goldstein. “The statute was obviously designed to deter greenmail, which was never an issue in this case. The federal government effectively eliminated greenmail nationwide many years ago by taxing it at 50 percent.”
While the appellate court’s ruling was procedural and did not address the underlying allegations, it puts the case back in the hands of the Franklin County trial court to determine whether the Corpus Christi pension fund can proceed under Ohio law. The defendants have argued that the pension fund never had standing to bring the claim, because the pension fund did not suffer any monetary or other concrete injury that would typically confer standing in an Ohio court. The trial court appeared to agree, expressing “doubts” about whether the pension fund had standing. The trial court, however, “presumed” in its opinion that the pension fund had standing. That “presumption” is at the center of the appeals court’s recent decision, which found that the trial court should have made a more definitive determination.
What’s next
The trial court will decide the limited issue of whether the pension fund had standing. If the trial court determines that the pension fund lacked standing, it will be another blow to the plaintiff’s attempt to move its claim forward.
In either event, after the standing issue is addressed, the case will likely return to the appeals court for further review. A ruling in favor of the plaintiffs could significantly broaden the reach of Ohio’s anti-greenmail statute, potentially discouraging activist investors from engaging with Ohio corporations. (Though in a proactive attempt to avoid those negative consequences, in December 2024 the Ohio legislature amended the anti-greenmail statute to essentially codify the trial court ruling that the statute does not apply to the lawful exercise of shareholder rights.)
Conversely, a ruling for the defense would reaffirm shareholder advocacy as a lawful and essential part of corporate governance.
“In the end, I don’t think the outcome will change, i.e., the case should be dismissed for either lack of standing or, as the trial court ordered, on the merits because the defendants did not employ any manipulative practice,” Goldstein said. “The negative consequences of remanding the case are wasted time and money for the parties and the courts but the appellate court did not say anything about the downside of dragging out this case.”
During arguments May 1, Joseph Weinstein, a defense attorney for the appellees, said they maintain that, even aside from standing, the trial court got the merits right.
“There is a big difference between innocent shareholder behavior and the kind of manipulative practice this statute was designed to prevent,” said Weinstein. “The plaintiff is asking for an unprecedented interpretation of the statute — effectively turning a law meant to stop manipulative practices into a weapon against ordinary shareholder activities.
“At bottom, this is a shareholder-rights case, because it impacts what shareholders can or cannot do without triggering liability,” he added. “What the plaintiff seeks would create great uncertainty about normal shareholder conduct.”
Terry Joyce, business manager of Building Laborers’ Local 310 and president of the Cleveland Building Trades Council, agrees with Goldstein that clarity should be a priority.
“The core issue is preserving Ohio’s balanced approach to business and investment,” said Joyce. “Ohio has built its reputation on being pro-business, pro-labor, and pro-investment. We need legal clarity that distinguishes between harmful manipulative practices and constructive shareholder advocacy that benefits companies, workers, and investors alike.”
“Creating uncertainty around legitimate investor engagement would undermine the business climate that serves all of our interests,” he said, pointing out that Ohio’s investor community, particularly pension funds and other institutional investors, needs clear guidance that responsible shareholder advocacy won’t expose them to litigation risk.
The statute should target genuinely manipulative behavior, not productive engagement that helps companies improve their performance, Joyce said.
“When that distinction becomes blurred, it’s ultimately the workers and retirees depending on these investments who pay the price,” he added.