A Delaware state judge blocked a lawsuit accusing investment firms Apollo Global Management Inc and Riverstone Holdings LLC of using their holding company Talos Energy Inc to make unfair acquisitions.

Vice-Chancellor Morgan Zurn noted Thursday that she dismissed Vrajeshkumar Patel’s lawsuit because the Talos investor was denied the right to sue under a new demand futility test announced last week in a Supreme Court ruling of Delaware regarding a reclassification of Facebook shares.

The Supreme Court’s ruling, known as the Zuckerberg ruling, introduces a three-part test in which the court must determine whether a director gained personal benefit from the alleged misconduct of a lawsuit, faced a substantial risk of liability. for shareholder claims or is dependent on someone who benefited from the alleged misconduct. If the answer is yes for the majority of the board, the costume can continue.

Zurn’s opinion is the second to apply the Zuckerberg test in dismissing a derivative lawsuit.

Patel’s lawyers did not immediately respond to requests for comment on Friday. Neither have lawyers and representatives for Riverstone or Apollo. Lawyers for Talos of Latham & Watkins declined to comment.

Investor for follow-up Talos board of directors, major shareholders Apollo and Riverstone and underwriter Guggenheim Securities LLC for transactions that arose after the company’s merger with Stone Energy Corp in an approximately $ 2.5 billion deal , according to the June 2020 complaint.

Patel said that after the merger closed in 2018, Apollo and Riverstone treated Talos as “their own personal piggy bank” by tricking the company into buying Whistler Energy II LLC, another energy company owned by Apollo.

The investor claimed that the acquisition was made at an “inflated” price so that Apollo could recover the losses suffered by the “ailing” company. Patel also said that Talos bought certain assets owned by Riverstone at an “unfair” price.

The two Apollo and River stone decided to dismiss the lawsuit, arguing that they were not majority shareholders and therefore had not breached any obligation to protect the interests of the company and the shareholders.

The investor also voluntarily rejected some of his direct claims.

In Thursday’s ruling, Zurn said the lawsuit did not allege that Apollo and Riverstone agreed to save each other from bad investments.

“From there, the rest of the shareholder claims collapse1,” Zurn said.

The judge also said the lawsuit did not adequately allege that a majority of the company’s board of directors would have been unable to impartially consider the investor’s claims.

The case is Patel v. Duncan, Delaware Court of Chancery, No. 2020-0418.

For Patel: Eduard Korsinsky, Greg Nespole and Daniel Tepper from Levi & Korsinsky

For Talos: David Zensky and Scott Barnard from Akin Gump Strauss Hauer & Feld

For Riverstone: Andrew Clubok, Christian Word and Stephen Barry of Latham & Watkins

For Apollo: Bruce Birenboim and Susanna Buergel from Paul, Weiss, Rifkind, Wharton & Garrison

For Guggenheim: William Chandler III and Andrew Cordo by Wilson Sonsini Goodrich & Rosati; and Mark Kirsch and Randy Mastro of Gibson, Dunn & Crutcher

(UPDATE: This story has been updated to include that attorneys for Talos from Latham & Watkins declined to comment.)

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