Litigation stemming from the JPMorgan-Bear Stearns merger took a step forward this week, with New York state Judge Herman Cahn holding a summary judgment hearing on Monday (12 August), writes The American Lawyer.

The case in question was brought by Bear shareholders claiming that Bear Stearns and its directors breached their fiduciary duty when they agreed to a buyout by JPMorgan and did not find a better alternative. JPMorgan initially offered $2 (£1.06) per share, then raised its offer to $10 (£5.34) per share. The shareholders also are going after JPMorgan, claiming the bank aided and abetted those breaches. This week's hearing was on the defendants' motion for summary judgment.

Gregory Markel of Cadwalader Wickersham & Taft argued for Bear Stearns and inside directors. He said the company's directors were diligent in fulfilling their fiduciary duties and negotiated a deal for more money than shareholders otherwise would have got had Bear Stearns filed for bankruptcy, according to the transcript.

"They had four major and respected law firms advising them, as well as Lazard," said Markel. "And all of them, all of them were advising the board that there was zero value in a bankruptcy for shareholders as well as losses to creditors."

Daniel Krasner of Wolf Haldenstein Adler Freeman & Herz, representing the plaintiffs, said that Bear directors erred in "turning over the keys of the bank to JPMorgan," which weakened their bargaining power when they renegotiated the $2 per share price.

The The American Lawyer is a US sister title of Legal Week.