Item 1. Legal Proceedings
Item 1. Legal Proceedings.
On September 26, 2023, Rodney Bell, Michael A. Roberts and Theresa Woods, three shareholders of Forward Air, filed a complaint (the “ Shareholder Complaint ”) against Forward Air and certain of its directors and officers in the Third District Chancery Court sitting in Greeneville, Tennessee. The Shareholder Complaint alleges, among other things, that Forward Air’s shareholders have the right to vote on certain transactions contemplated by the Merger Agreement and seeks an injunction against the consummation of the transaction until a shareholder vote was held. Based on the allegations contained in the Shareholder Complaint, the court issued an ex parte temporary restraining order (the “ TRO ”) enjoining the transactions contemplated by the Merger Agreement. On October 4, 2023, the shareholder plaintiffs filed an amended complaint setting forth additional bases for their contention that the transactions set forth in the Merger Agreement necessitated a shareholder vote under Tennessee law. On October 4, 2023, the shareholder plaintiffs further filed a motion for a temporary injunction enjoining the closing of the transaction until the entry of a final judgment as to the requirement for a shareholder vote. On October 11, 2023, the court held a hearing on the plaintiffs’ motion for a temporary injunction, at the conclusion of which it took the matter under advisement and entered an order extending the TRO until further order of the court. On October 25, 2023, the court held a telephonic conference in which it ordered the dissolution of the TRO. The court did not grant the shareholder plaintiffs’ request for a temporary injunction. On October 26, 2023, the shareholder plaintiffs filed an emergency motion to reinstate the TRO and for leave to take an interlocutory appeal. On October 31, 2023, the court held an emergency hearing on the shareholder plaintiffs’ request to reinstate the TRO and to take an interlocutory appeal of the court’s ruling. During the hearing, the shareholder plaintiffs withdrew their request to reinstate the TRO. The court took the request for leave to take an interlocutory appeal under advisement.
On October 31, 2023, Omni filed a complaint (the “ Omni Complaint ”) against Forward Air and certain of its direct and indirect subsidiaries in the Court of Chancery in the State of Delaware. The Omni Complaint alleges, among other things, that Forward Air is in breach of its obligation to close the transactions contemplated by the Merger Agreement and seeks specific performance to compel Forward Air to close and related declaratory relief. Forward Air has not yet formally responded to the Omni Complaint, but, as previously disclosed by Forward Air in its Form 8-K filed with the SEC on October 26, 2023, Forward Air believes that Omni has not complied with certain of its obligations under Sections 7.03 and 7.14 of the Merger Agreement. Consequently, Forward Air believes the closing condition contained in Section 8.02(b) of the Merger Agreement will not be satisfied at the anticipated closing of the transactions under the Merger Agreement, and Forward Air will not be obligated to close. As a result, Forward Air is considering its rights and obligations under the Merger Agreement. Forward Air intends to vigorously defend its rights in this matter, but there can be no assurance that Omni will not prevail in its claims or that the court will not compel Forward Air to close the transactions contemplated by the Merger Agreement.
From time to time, we are also a party to other litigation incidental to and arising in the normal course of our business, most of which involves claims for personal injury and property damage related to the transportation and handling of freight, or workers’ compensation. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Based on the knowledge of the facts, we believe the resolution of such incidental claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our business, financial condition or results of operations. However, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold. For information regarding our insurance program and legal proceedings, see Note 11, Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements (unaudited) set forth in Part 1 of this report.
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