Ohio court revives Corpus Christi pension fund's lawsuit over Big Lots activist investors

An Ohio appellate court has breathed new life into a lawsuit filed by a public pension fund that claims a group of activist investors profited improperly from a high-stakes campaign targeting Big Lots Inc.

In a decision released May 27, the Tenth District Court of Appeals reversed a trial court’s dismissal of a complaint brought by the Corpus Christi Firefighters’ Retirement System. The pension fund alleges that several entities tied to Macellum Capital Management and Ancora Holdings violated Ohio’s Anti-Greenmail Statute—section 1707.043 of the state’s Revised Code—after building a significant stake in the Ohio-based retailer, launching a public campaign against management, and then selling off shares for a sizable profit.

According to court records, the investor group amassed an 11 percent stake in Big Lots before publicly criticizing its board of directors and urging various changes to the company’s leadership and policies. The public pressure coincided with an increase in Big Lots’ share price. The group then sold 686,571 shares of the company’s common stock, generating proceeds exceeding $34.6 million and reducing its position to below 3 percent.

The Corpus Christi pension fund, which also held shares in Big Lots, filed suit on April 30, 2021, arguing that the investor group’s conduct constituted manipulative practices prohibited by the state’s anti-greenmail law. The statute restricts certain trading behaviors by investors who make or publicly discuss proposals to acquire control of a company, especially if they sell their shares within 18 months of such a move.

The defendants moved for summary judgment, asserting that the pension fund lacked standing to sue, that the case wasn’t properly filed as a derivative action under Ohio procedural rules, and that the group’s activities didn’t amount to manipulation or a control proposal under the law. On March 20, 2024, the Franklin County Court of Common Pleas granted the motion and dismissed the case. Although the trial court expressed skepticism about whether the pension fund had standing under R.C. 1707.043, it did not rule on that issue and instead assumed standing for the sake of analysis. It then concluded that the plaintiff failed to establish that the investors engaged in manipulative conduct as defined by the statute.

On appeal, the Tenth District Court of Appeals found that to be a legal misstep. The trial court should have resolved the standing issue before addressing the substance of the case. Because standing is a jurisdictional prerequisite, the appellate judges wrote, the case could not proceed to the merits until that threshold was met. They reversed the lower court’s ruling and remanded the matter to determine whether the Corpus Christi Firefighters’ Retirement System had standing to bring the lawsuit.

The appellate court declined to rule on the remaining legal questions, including whether the investor group had actually made a proposal to acquire control of Big Lots. It also left unresolved three cross-appeals filed by the defendants. Additionally, several amici weighed in on the case, including the Ohio Environmental Council, the Investor Choice Advocates Network, and the Greater Cleveland Partnership. Big Lots itself filed a motion to either substitute as the plaintiff or intervene in the case; that request, along with other post-briefing motions, was denied as moot pending a ruling on standing.

For institutional investors, this case illustrates the legal complexity surrounding activist campaigns and the rules that can apply to investors who seek to influence corporate direction without formally launching a takeover bid. With over $34.6 million in proceeds and an alleged violation of a rarely litigated state statute, the outcome of this dispute could set notable precedent for how states approach shareholder activism and short-term exits.

For now, the legal questions surrounding the Macellum-Ancora campaign against Big Lots remain unresolved. The next step belongs to the trial court, which must determine whether the pension fund had a legitimate basis to bring the case in the first place. Only then can the court—and the broader investment community—turn to the more contentious questions about manipulation, control, and the boundaries of modern shareholder activism.