By Nate Raymond 

For most companies, settling shareholder suits that pop up in the wake of merger announcements has become a cost of doing business. Settlements routinely involve a few hundred thousand dollars to the plaintiffs' lawyers in exchange for a few extra disclosures in deal documents. The U.S. Chamber of Commerce has attacked the phenomenon, dubbing it "the trial lawyers' new merger tax," but in the main, corporations would rather pay to make the suits go away than delay deals by fighting them.

Not Intel. After the company announced its $7.68 billion acquisition of McAfee in August 2010, the inevitable shareholder suits followed. Yet there was no quick settlement. Instead, the boards of Intel and McAfee elected to litigate, even after the deal closed a year ago. And on Thursday, it won. A state court judge in San Jose, California, tossed the shareholders' class action, more than two years after the litigation began.

For the defendants, fighting the lawsuit in Santa Clara Superior Court was about saying enough was enough, said Intel counsel Wayne Smith of Gibson, Dunn & Crutcher. Only a year earlier, another Intel acquisition-turned-lawsuit resulted in the defendants paying $700,000 to plaintiffs' lawyers in a disclosure-only settlement arising out of its $884 million acquisition of Wind River Systems. This time, Intel didn't want to pay, Smith said.

Whose call it was to not settle depends on who's on the phone. Plaintiffs' counsel Randall Baron of Robbins, Geller, Rudman & Dowd said once he decided there was real value to the case, the plaintiffs' lawyers decided against the typical quick settlement. "We never even discussed a disclosure settlement," he said. The defendants, in contrast, say in court papers filed in August that it was they who refused to cut a deal, thus depriving the plaintiffs' lawyers of a "quick payday."

"It's just a business for them, and Intel decided they didn't want to pay extortion every time they acquired a company," Smith said.

Robbins Geller's complaint for breach of fiduciary duty against McAfee, its directors and officers and Intel focused on the conduct of McAfee CEO David DeWalt at the time of the merger. The suit alleged that DeWalt never informed McAfee's board that he had been working in the months prior to the deal to help Intel formulate a bid for McAfee. The suit called Intel's subsequent $48 per share bid "unfair and undervalued," even though it represented a 60 percent premium over the then share price.

The litigation was consolidated in Santa Clara Superior Court, where McAfee is headquartered. After it was appointed to lead the case, Robbins Geller moved for expedited discovery in an attempt to enjoin a shareholder vote on the Intel acquisition. But Judge James Kleinbergdenied the motion in October 2010. The McAfee deal closed in February 2011, but the litigation lived on.

The plaintiffs did manage to win several motions. In July 2011, Kleinberg denied a preliminary motion to dismiss and subsequently certified a class of McAfee shareholders in January 2012, over defense objections by Intel and the former McAfee directors' lawyers at Wilson Sonsini Goodrich & Rosati about the adequacy of Robbins Geller's client, the Central Laborers' Pension Fund, as a class representative. (The defendants called Central Laborers a "professional plaintiff" frequently represented by Robbins Geller.)

Nevertheless, in a tentative ruling Thursday, Kleinberg finally agreed the suit should be dismissed. The judge found that the plaintiffs failed to raise a triable dispute over whether McAfee's independent directors breached their fiduciary duties to shareholders. And as for DeWalt, Kleinberg said there was "no basis" to find the chief executive was acting out of self-interest during the early talks with Intel, "rather than out of a motivation to maximize share prices for the benefit of all McAfee shareholders."

The judge has not yet issued a formal final order, but Smith said that the plaintiffs notified him Thursday that they would not seek a hearing to challenge the tentative ruling. Baron said he disagreed with the ruling and plans to appeal. "At this point, if (Kleinberg's) going to have a full record in front of him, he might as well let it go to trial," he said. "But he chose not to."

(This story has been updated to include the name of the law firm that represented McAfee's directors and officers and more details on the complaint.)

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