The courtroom battle surrounding the Avalara $8.4B Buyout Dispute Suit has intensified as shareholders accused the tax software company of trying to stall their federal case that alleges misleading investors ahead of its $8.4 billion sale to Vista Equity Partners.

In a Thursday filing, lead plaintiff Martin Sohovich and other investors told a Washington federal judge that Avalara Inc. “cannot cite a single case” supporting its motion to pause proceedings while a related state court case plays out.

They urged the court to reject Avalara’s attempt to stay litigation, arguing that the company’s reasoning was “legally hollow” and strategically designed to delay accountability.

A Clash Over Jurisdiction and Justice

Avalara wants to hit pause on the federal action until a separate case, Pipe Fitters Local Union 120 Pension Plan and Suzanne Flannery v. Scott McFarlane, winds its way through the Washington Court of Appeals.
Both cases revolve around claims that Avalara’s management misled investors to secure approval for its $93.50-per-share buyout in 2022.

However, the shareholders emphasized that their case was filed three months before Pipe Fitters, making Avalara’s argument for deference to the later-filed case “procedurally flawed.”

“The company presumes overlapping issues must be decided in Pipe Fitters,” the investors wrote, “even though that case trails behind this one and asserts entirely different causes of action.”

Ninth Circuit’s Revival Gave the Case New Life

The dispute over a stay follows U.S. District Judge Marsha J. Pechman’s September order largely denying Avalara’s renewed motion to dismiss after the Ninth Circuit Court of Appeals revived key parts of the lawsuit in March.

The appellate panel found that Avalara’s proxy statement may have misled shareholders by omitting key details — specifically, that inorganic growth was excluded from future revenue projections in the company’s valuation.

The court also noted evidence that Avalara selectively quoted favorable portions of a report from Institutional Shareholder Services while leaving out information that might have painted a less optimistic picture.

Judge Pechman concurred, stating that the omissions were “material to investors” and that Avalara’s past practice of including inorganic growth in guidance made its absence in the buyout valuation “notable and potentially misleading.”

Avalara’s Argument for Delay

Avalara contends that both the Sohovich and Pipe Fitters cases arise from the same underlying facts — namely, whether the company’s sale to Vista undervalued its worth.
In its motion, the company argued that “resolution of Pipe Fitters will likely simplify — and possibly resolve — all remaining issues” in the federal case.

Avalara maintains that both actions target nearly identical defendants and request the same form of relief, making simultaneous proceedings inefficient.

But the investors dismissed that claim outright, asserting that the company failed to show any precedent for halting a first-filed federal action with exclusive jurisdiction simply because a later state case exists.

Shareholders Push for Accountability

“Defendants cannot cite a single case holding that any argument they raise is relevant,” the investors declared, accusing Avalara of “forum shopping” to avoid facing scrutiny in federal court.

The plaintiffs are represented by Tamar A. Weinrib and Jeremy A. Lieberman of Pomerantz LLP, along with Duncan C. Turner of Badgley Mullins Turner PLLC.
Avalara is represented by Christopher B. Durbin, Shannon M. Eagan, Patrick E. Gibbs, Ziwei Xiao, and Taylor Boyle of Cooley LLP.

Representatives for both sides did not immediately respond to requests for comment on Friday.

What’s Next in the $8.4B Battle

The outcome of Avalara’s motion to stay could determine whether shareholders get their day in court or face months of delay as the state case unfolds.

For now, the Avalara $8.4B Buyout Dispute Suit remains a high-stakes fight over corporate transparency, investor trust, and the boundaries of fiduciary responsibility in billion-dollar private equity deals.