CalPERS and Colorado PERA are asking to be allowed to intervene in a lawsuit against Johnson & Johnson Inc. by one of its shareholders to allow shareholders to vote on restricting future securities claims to arbitration rather than in court.
A hearing on the pension plans' motion to intervene as defendants is scheduled for June 17.
Siding with Johnson & Johnson, the $360.3 billion California Public Employees' Retirement System, Sacramento, and the $49 billion Colorado Public Employees' Retirement Association, Denver, said in a joint news release that if the lawsuit is successful it "could lead to the end of shareowner securities class-action cases against the company."
"As things stand, this litigation presents a truly anomalous scenario: Johnson & Johnson is the only party defending shareholders' right to bring a class action against Johnson & Johnson," the pension plans' motion states. "Meanwhile, the only shareholder party — a trust that owns 1,050 Johnson & Johnson shares — has chosen to advocate a position that is contrary to other shareholders' interests."
CalPERS and Colorado PERA argue that forcing cases into arbitration denies shareholders the right to protect their investments in court. What's more, they say arbitration limits public disclosure of settlements, reducing transparency. Together, CalPERS and Colorado PERA own 10 million shares of Johnson & Johnson stock, their motion said.
Doris Behr 2012 Irrevocable Trust filed the lawsuit against Johnson & Johnson on March 1, in U.S. District Court in Trenton, N.J. The trust wants to amend Johnson & Johnson's bylaws to ban class actions for all shareholders' securities legal claims and force them into arbitration. Johnson & Johnson currently opposes including this proposal in its proxy materials contending that it would violate state and federal law, according to the company's proxy materials.
In February, the Securities and Exchange Commission found that Johnson & Johnson did not have to include a shareholder proposal requiring such shareholder claims be directed to private arbitration.
Johnson & Johnson and the Doris Behr Trust have indicated they do not intend to take a position on the pension plans' motion to intervene; however, the trust reserved the right to file a response, the pension plans' motion said.