FILED: NEW YORK COUNTY CLERK 03/20/2014 INDEX NO /2014 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 03/20/2014. Exhibit 6

Transcription

1 FILED: NEW YORK COUNTY CLERK 03/20/2014 INDEX NO /2014 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 03/20/2014 Exhibit 6

2 EFiled: Mar :11PM EST Transaction ID Case No VCL IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE COMPELLENT : TECHNOLOGIES, INC. SHAREHOLDER : LITIGATION : : Civil Action : No VCL Chancery Courtroom No. 12C New Castle County Courthouse Wilmington, Delaware Thursday, January 13, :30 a.m. BEFORE: HON. J. TRAVIS LASTER, Vice Chancellor PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION AND THE COURT'S RULING North King Street - Suite Wilmington, Delaware (302)

3 2 1 APPEARANCES: 2 CHRISTINE S. AZAR, ESQ. Labaton Sucharow LLP 3 -and- PAUL J. SCARLATO, ESQ. 4 of the New York Bar Labaton Sucharow LLP 5 Co-Lead Counsel for Plaintiff 6 JAMES C. STRUM, ESQ. Faruqi & Faruqi LLP 7 -and- ADAM GONNELLI, ESQ. 8 of the New York Bar Faruqi & Faruqi LLP 9 For Plaintiff The Booth Family Trust 10 CARMELLA P. KEENER, ESQ. Rosenthal Monhait & Goddess, P.A. 11 -and- PHILIP T. TAYLOR, ESQ. 12 of the New York Bar Abraham Fruchter & Twersky LLP 13 For Plaintiffs 14 GREGORY P. WILLIAMS, ESQ. BLAKE ROHRBACHER, ESQ. 15 Richards Layton & Finger PA -and- 16 JOHN L.LATHAM, ESQ. of the Georgia Bar 17 Alston & Bird LLP For Defendants Dell Inc., Dell 18 International L.L.C., and Dell Trinity Holdings Corp. 19 DONALD J. WOLFE, ESQ. 20 SCOTT B. CZERWONKA, ESQ. Potter Anderson & Corroon LLC 21 For Defendant Compellent Tehcnologies, Inc., and the Individual Defendants

4 3 1 THE COURT: Good morning, everyone. 2 Good to see everybody. Thank you for coming in. 3 Even though we don't really have a 4 leadership dispute anymore, I would like to start with 5 a couple questions. 6 Is someone here from the 7 Abraham Fruchter firm? 8 MR. TAYLOR: Yes, Your Honor. 9 Philip Taylor. 10 THE COURT: Great. Welcome. Come on 11 up. 12 Is your relationship with the Orlando 13 police a monitoring relationship? Is that exclusive 14 to your firm, or is that something nonexclusive that 15 they have with other firms? 16 MR. TAYLOR: My understanding is that 17 it's nonexclusive and they do have relationships with 18 other firms. 19 THE COURT: And then you discuss in 20 your submission that they have authority to disagree 21 with any proposed settlement. What authority do they 22 have, in terms of ongoing litigation decisions? 23 MR. TAYLOR: Well, as our client, we 24 would always consult with them before we go ahead with

5 4 1 any major decisions in the case. So I believe that's 2 where the authority is being referred to. 3 THE COURT: Have they delegated 4 anything like that? Do they take a hands-off policy 5 and basically hand it over to you, or what? I mean, 6 it just seemed odd to me you called out settlement, as 7 opposed to referring to the type of ongoing client 8 relationship that you mentioned just now. 9 MR. TAYLOR: Excuse me. Could you THE COURT: Sure. In your submission, 11 you didn't say, they're the client, they have decision 12 authority over everything. In your submission you 13 said to me, they have authority over settlement. And 14 that created an inference in my mind that, as to other 15 aspects of litigation, you guys had the ball and could 16 run with it and didn't have to check in with them on 17 other aspects short of settlement. 18 My question to you is, is that the 19 case? 20 MR. TAYLOR: My understanding is, we 21 have a typical attorney/client relationship where we 22 would make most of the strategic decisions and we 23 would consult with our clients, as I said, before we 24 make any major decisions in the action.

6 5 1 THE COURT: Great. Thank you. 2 And from Labaton. 3 MR. SCARLATO: Yes, Your Honor. 4 Paul Scarlato. 5 THE COURT: Welcome. Great. Same 6 question for you as to Genesee. Do you guys have an 7 exclusive monitoring relationship with them or is that 8 nonexclusive? 9 MR. SCARLATO: My understanding is 10 that it is nonexclusive. 11 THE COURT: And the same question, 12 because you also singled out the settlement answer as 13 opposed to other aspects of the case. 14 MR. SCARLATO: Your Honor, Genesee is 15 very involved in any matters in which they are acting 16 as a representative party. And we communicate very 17 frequently with them on virtually any decision in the 18 litigation and they expect and demand input into 19 decisions that counsel makes. 20 THE COURT: Great. Thanks. 21 Look, I just want to say -- you can 22 sit down -- I thought that the submission from 23 Mr. Rosenthal's firm was very helpful to me. I really 24 appreciate the level of detail that was provided. I

7 6 1 thought the incamera submission was helpful as well. 2 So I commend you all for that. 3 I'll tell you, the key factor for me, 4 when we have these leadership disputes, is what your 5 track record is generating tangible benefits for 6 stockholders. 7 I am really not impressed by the 8 monitoring role stuff in Bitter bump cases, or the 9 monitoring of the special committee that negotiates 10 the price increase and you all have the settlement 11 aligned. And I really find it problematic, when those 12 are pitched in these firm materials, as if they were 13 sole credit cases. And I see a lot of firm materials 14 that are pitched that way even submitted to me. I 15 know they weren't because I was involved in a lot of 16 cases. 17 But you guys -- at least the Abraham 18 firm -- had some good results. And so does the 19 Labaton firm. And the Faruqi folks, you couldn't 20 identify one. And you need to -- it's a big hole in 21 your firm resume. 22 And I'll also say that I also think 23 it's important when a plaintiff has taken a matter the 24 distance, even if you don't win. So in this Hammons

8 7 1 case that you just litigated, who knows how that will 2 come out; right? But it shows tenacity and vigor. 3 Now, my friends from the defense bar 4 will probably say, "Oh, you're incentivizing people to 5 litigate." But the whole problem is the diversion of 6 interests between entrepreneurial plaintiffs' counsel 7 and the class. You all maximize by getting the most 8 fee for the least work. The class maximizes by 9 getting a recovery. And that's not to condemn 10 anybody. That's just life. So you have an incentive 11 to do less. So, I think that it is salutary to reward 12 you all and give you a counterincentive when you do 13 more. At most, it's going to balance things out. 14 So when you're submitting these things 15 to me, if you want to mention times when you've gone 16 the distance, even if it hasn't worked out, that's 17 also good for me to know, because it shows you're in 18 there fighting and you're not simply taking the easy 19 disclosure settlement and walking away with your four 20 to 500,000. But as I said, I think this was very 21 helpful. 22 Now, anyone from Cooch & Taylor and 23 Levi grace us with their presence today? 24 All right. Did anyone from that firm

9 8 1 contact you all before you had to go to all the work 2 of doing this leadership fight? 3 Miss Keener, you're shaking your head 4 no. 5 MS. KEENER: Your Honor, I'm not aware 6 of any contact in that regard. We constantly 7 monitored the dockets yesterday to be certain. 8 THE COURT: Did they call you? 9 MS. KEENER: No, Your Honor. Not me. 10 THE COURT: All right. Well, look, 11 that's very disappointing to me. And I am happy to 12 resolve these leadership fights when they have to be 13 resolved. But the idea of crying wolf on a leadership 14 fight is not very helpful and it's, frankly, not very 15 civil to force you all to do a lot of work. Right? 16 You guys really worked to get me some very helpful 17 submissions and I appreciate that. So I was very 18 disappointed when I saw that they had decided to cave 19 on it -- not because they decided to cave. If they 20 wanted to cave, that's fine. But I just wished they 21 would have done it at a time when it was constructive 22 for the litigation. 23 The upside of all this is that I feel 24 like I have very good insight, and I'm not into your

10 9 1 all lead plaintiff and lead counsel status. And so, 2 to the extent we have to have some type of class 3 certification motion, I'm pretty comfortable with 4 where you guys are. You have given me a ton of good 5 information. I appreciate that. So it won't have 6 been in vain. 7 All right. But where we are for 8 today, then, in terms of scheduling? Mr. Wolfe, are 9 you the spokesman? 10 MR. WOLFE: Your Honor, I would never 11 say that I was the spokesman for Mr. Williams, but I'm 12 up first. I'll say that. 13 THE COURT: That's fine. I read the 14 preliminary proxy. It doesn't have a meeting date in 15 it. Has the meeting date been set yet? 16 MR. WOLFE: I believe it's 17 February 14th -- 15th. I'm sorry, Your Honor. 18 February 15th. 19 THE COURT: So you guys went through 20 the SEC at this point? 21 MR. WOLFE: Yes, sir. 22 THE COURT: Now, the order in the 23 Minnesota action had the look, at least, of an 24 unopposed order. Was it opposed?

11 10 1 MR. WOLFE: It was not opposed, Your 2 Honor. The plaintiffs, as I understand it -- and I'll 3 have to defer or invite my friends to stand up and 4 correct me because I was not privy to the proceedings 5 at that point. 6 THE COURT: You were otherwise 7 engaged? 8 MR. WOLFE: I was, indeed. As I 9 understand it, the plaintiffs sought a hearing before 10 the Minnesota judge. A hearing was set. Before that 11 hearing took place, there were negotiations about 12 consenting to an order, subject to the judge's 13 approval, and I think that's the order that Your Honor 14 references. 15 At that point I think these matters 16 were assigned -- or at least one of them -- to 17 Chancellor Chandler. And there had been no activity 18 here in order to expedite the matter, despite the fact 19 that this transaction was imminent. So that's how I 20 understand the order came about. But it was not 21 opposed. 22 THE COURT: All right. So there 23 wasn't a hearing at which Judge Chu actually got to 24 look at the complaints and make a decision as to

12 11 1 expedition. 2 MR. WOLFE: I honestly don't know what 3 the proceedings involved, or whether she steeped 4 herself in the merits of the complaint. I wouldn't be 5 surprised. 6 THE COURT: But there wasn't 7 something -- 8 MR. WOLFE: There was no hearing where 9 there was back and forth about whether expedited 10 proceedings were appropriate. 11 THE COURT: I'm not suggesting that 12 she grant it. I'm sure she thought about it and 13 considered it. There's a question of whether she had 14 the opportunity to interact with counsel, as I'm 15 having here today. 16 All right. And I understand that the 17 scheduling has happened, in terms of what's going 18 forward on the 2nd. 19 MR. WOLFE: Yes, Your Honor. 20 THE COURT: Is there anything else 21 that you would like to tell me, in terms of whether I 22 ought to schedule something here? 23 MR. WOLFE: Well, I suppose only to 24 reemphasize what I hope was clear from the letter that

13 12 1 we submitted, which is that we are adamantly neutral 2 on this issue. We are concerned only with what I'm 3 sure Your Honor will understand is the unhappy 4 prospect of going forward in two different 5 jurisdictions simultaneously, which unfortunately 6 happens these days from time to time. 7 We think we have a good transaction. 8 We think we're going to be able to convince Your 9 Honor, or Judge Chu, whomever it may turn out to be, 10 that this transaction should go forward. So our only 11 concern really is avoiding the implicity and the waste 12 and the potential inconsistency that can result in 13 that circumstance. 14 We'd be happy to have Your Honor take 15 it, or leave it to Judge Chu. 16 THE COURT: If I were to schedule 17 something, when would you want me to schedule it? 18 MR. WOLFE: For what date? 19 THE COURT: Yeah. 20 MR. WOLFE: A hearing date? Well, I 21 think discovery is proceeding at this point. And as 22 Your Honor knows, we've invited everyone to the party, 23 on the assumption that the hearing will take place on 24 the second. So we are in the mode to meet that

14 13 1 deadline. I think it comes down to whether Your Honor 2 feels more time is necessary in order to assign it 3 before the hearing goes forward. But we're content 4 with anything between the second and the hearing 5 date -- I'm sorry -- the meeting date. 6 THE COURT: All right. That's great. 7 Anything else? 8 MR. WOLFE: I don't think so, Your 9 Honor. Perhaps Mr. Williams THE COURT: Mr. Williams, how are you? 11 MR. WILLIAMS: I'm doing great, Your 12 Honor. I really don't have anything of substance to 13 add, other than one thing I would just point out. 14 We did send a letter to the Court 15 notifying the Court earlier that we really had a one 16 forum position. 17 When we got Your Honor's order asking 18 us to make a submission, advising whether we think the 19 matter should be scheduled or not, it wasn't percent clear to us whether Your Honor was 21 cognizant of our earlier letter and wanted us to jump 22 off the fence, or whether you weren't. But the reason 23 that we stated in our letter, first, we're neutral; 24 secondly, if you're telling us you want us to jump off

15 14 1 the fence, it would make sense to us to not schedule 2 simply because we thought you might be saying to us, 3 "I want you to tell me what you think should happen." 4 THE COURT: Yeah. I want your best 5 view. I appreciate it. It doesn't offend me at all. 6 MR. WILLIAMS: That's good. And if 7 we -- if Your Honor does schedule something, the 8 defendants intend to go to Minnesota and seek to stay 9 those proceedings. 10 THE COURT: From the plaintiffs, what 11 do you all think in terms of a hearing date? 12 MR. GONELLI: Your Honor, Adam Gonelli 13 from Faruqi & Faruqi. We'd be comfortable with 14 anything from the second and the 15th as well. 15 THE COURT: All right. Well, here's 16 what I'm going to do. I am going to schedule this. 17 I'm going to schedule it for a preliminary injunction 18 hearing on the 11th of February. You all can figure 19 out a specific time with my secretary. 20 Here's my rationale. I start from the 21 proposition that the United States is a federal 22 republic that depends upon comity among the states for 23 the peaceful and efficient conduct of private 24 commerce. That eloquent statement was, of course, not

16 15 1 written by me. It was written by 2 Vice Chancellor Strine in the Third Avenue Trust case. 3 Every state has areas where it has 4 substantial interests. Every state also has areas 5 where it has less substantial interests, but where 6 litigation may nevertheless be presented to its 7 courts. 8 This is a matter involving the 9 internal affairs of a Delaware corporation. This is a 10 subject where Delaware's interests are at their 11 highest. The state of incorporation has a paramount 12 interest in the internal governance of the 13 corporation. That's not just Delaware's view, that's 14 the United States Supreme Court's view from cases such 15 as the CTS Corp. versus Dynamics Corp. case. 16 Internal affairs is an area where we 17 in Delaware develop substantial expertise. Expedited 18 deal litigation, in particular, is something where we 19 develop substantial expertise. It's not that we're 20 smarter, it's not that we're better judges. It's just 21 that we do it a lot and see it a lot. It's the basic 22 idea of comparative advantage. When you do something 23 over and over again, you develop expertise. 24 With all deference to my colleague in

17 16 1 Minnesota and to that state, I do not believe that 2 they have a similar interest in the internal affairs 3 of a Delaware corporation. Now, I understand that the 4 locus of part of the operations are up there, and 5 there's certainly areas where that would give 6 Minnesota the greater interest. One obvious one would 7 be labor law; another obvious one would be 8 environmental law. I'm sure there are numerous other 9 areas where the police powers of Minnesota are 10 paramount. 11 Now, theoretically, you could file a 12 suit under any one of those subject matters in 13 Delaware because it's a Delaware corporation and so it 14 can be sued here. But the fact that you could name 15 the corporation here would not give Delaware the 16 paramount interest in resolving those questions which 17 would be, in fact, of decidedly greater importance to 18 the State of Minnesota. In fact, even without a 19 parallel proceeding in Minnesota, I would think that 20 it would be appropriate to dismiss in favor of 21 Minnesota. Certainly, if it were a situation where 22 there was multiple contemporaneously filed lawsuits, 23 it would be a situation where I would freely defer to 24 Minnesota. Under those circumstances, Minnesota would

18 17 1 have the superior interest. Under those 2 circumstances, Minnesota would have the comparative 3 advantage in applying their law. 4 Without intending any disrespect to 5 Judge Chu, I don't believe that Minnesota has the same 6 type of focused docket that this court does. I had 7 the opportunity to meet with some Minnesota judges at 8 a judicial conference at Northwestern. They're great 9 people, great judges. But it was my clear impression 10 coming out of that that they had a much more diverse 11 and multifaceted docket that didn't give them 12 certainly the opportunity to focus on deal cases, much 13 less the opportunity to focus on deal cases under 14 Delaware law. 15 This is also -- this notion of comity 16 focusing on the state of incorporation, it's not just 17 a Delaware concept. These actions can proceed in 18 state court because of the Delaware carveout under the 19 PLSRA and SLUSA. The whole point of PSLRA and SLUSA 20 was to reduce the number of forums in which actions 21 could be filed, so that there weren't actions filed 22 all around the country in state courts. The primary 23 goal of those statutes was to concentrate those 24 actions in the federal courts. But in what's a called

19 18 1 the Delaware carveout, you can still bring in state 2 court an action under the law of the state of 3 incorporation for something like a deal case. If you 4 look at the legislative history, it's overwhelmingly 5 clear that the point was to concentrate those in the 6 state of incorporation. 7 Now, it didn't make it into the 8 explicit language of the statute. I don't know why. 9 Congress was doing a lot of things. But it's clear 10 that that was the policy that was animating the 11 attempt to reduce multiple forums. What that to my 12 mind makes this is something that is not compelled by 13 statute but rather something that should be 14 discretionary among the various courts. There 15 certainly could be situations in a nonexpedited case 16 where the only action was filed in Minnesota; where, 17 even if it involved Delaware law, if it had been going 18 on for a year or so and the courts up there developed 19 a knowledge about it and devoted significant 20 resources -- you know, the idea that you'd somehow 21 file a Delaware case that would take precedence would 22 be silly. So it's not an absolute rule. It has to be 23 applied with reason. But there's a clear federal 24 policy that's shown in the legislative history of

20 19 1 SLUSA that these things should be in the state of 2 incorporation. 3 So next I ask why is this case -- why 4 do we have multiple cases here, where we have cases 5 filed in Delaware and two cases filed up north? And, 6 quite frankly, it's in the interest of plaintiffs' 7 counsel, not in the interest of stockholders. 8 Stockholders don't have any reason to want multiple 9 forums. And the stockholders and directors of a 10 Delaware corporation jointly choose Delaware and 11 Delaware law. Otherwise, an operation in another 12 state wouldn't be subject to suit in Delaware. So 13 there's a forum selection choice there that you want 14 not only Delaware law but also the availability of a 15 Delaware forum. 16 This suit is in Minnesota because of 17 the Robbins brothers, and by that I mean the two law 18 firms, Robbins Geller and Robbins Umeda that are 19 headed up by the Robbins brothers. When 20 Lerach Coughlin, the predecessor to Robbins Geller, 21 split off from Milberg, they said, as their business 22 plan, we are going to sue elsewhere. We're not going 23 to sue in Delaware. It was widely known among those 24 of us who did this type of work, it's also documented

21 20 1 in a law review article where the author interviewed 2 one of the Robbins brothers. 3 Now, why did they want to do that? To 4 get control of cases. As my friend, Joel Friedlander, 5 points out, when you're a plaintiffs' lawyer, you have 6 three phases of the case: you want to get control, you 7 want to get a result, you want to get paid. Well, 8 when everybody is filing in the same forum, you're not 9 guaranteed to get control of a case. But if you then 10 go and file in another forum, you do have control of 11 that case and then the defendants have to deal with 12 you. You may get control of the entire action but, at 13 a minimum, you get control of a piece of the 14 litigation for purposes of the fee negotiations. 15 Now, there's no reason why the Robbins 16 brothers couldn't sue in Delaware. Robbins Geller has 17 come here on occasion, primarily where there was an 18 already existing proceeding in Delaware that then they 19 intervened in. But they have been here and they have 20 gotten good results. 21 I recently appointed Robbins Geller 22 colead in the Del Monte litigation. I talked about 23 their track record. They have gotten very good 24 results for stockholders. They do good work.

22 21 1 Frankly, had they come here, it would have been a 2 tough call for me in terms of who should get lead 3 because they have such a good track record. 4 Now, I can't say the same thing about 5 Robbins Umeda. I frankly don't know. I don't know if 6 they had a real result. Maybe they have. I just 7 haven't seen it. The one time here in front of me it 8 was in a settlement objection and they immediately 9 settled it for a piece of the fee award, which wasn't 10 exactly an impressive showing. But perhaps they have 11 done good things elsewhere and I'm just not aware. 12 But, regardless, filing first in 13 another jurisdiction is part of the business strategy 14 that they pursue. It is rational for them as 15 entrepreneurial lawyers. But it is a self-interested 16 strategy that is not beneficial to stockholders 17 because it generates a lot of these preliminary fights 18 over forum that otherwise wouldn't have to happen. 19 The way things proceeded in Minnesota 20 and the timing of things is also, frankly, suggestive 21 of self-interest by lawyers to get control of the 22 case. Why? Those of us who see a lot of these things 23 know that the litigation really can't kick off until 24 after the preliminary proxy. That's because the

23 22 1 principal claims that are litigated by stockholder 2 plaintiffs in most of these cases are disclosure 3 claims. It's also because to plead a meaningful 4 process claim, i.e., about why they agreed to a percent termination fee or how they got to the 6 "take-under price," you need to see the background of 7 the merger. You don't get to see the background 8 section that describes the events leading up to the 9 merger until the preliminary proxy. So when somebody 10 rolls in prior to the preliminary proxy and tries to 11 create some flurry of activity and seek a scheduling 12 hearing, et cetera -- oh, there's another reason. The 13 other reason is, the meeting date is always keyed off 14 when you cleared the SEC. In other words, when you 15 filed the definitive proxy. So you really can't know 16 when you're going to have a schedule until the 17 preliminary proxy comes out and you have some sense of 18 how fast they're going to get through the SEC. If the 19 SEC had tied these guys up, the meeting might not have 20 been until March, April. There was no guarantee that 21 they were going to get a clean pass and minimal 22 comments and be out and be on the street and be able 23 to go to a meeting in mid February. 24 So when somebody, you know, the time

24 23 1 before the preliminary proxy is very well used by 2 plaintiffs' terms to self organize. It makes a lot of 3 sense for people to try to get their act together 4 during that time period. It's a nice block of time 5 that's available for that period. But when somebody 6 makes a rush to schedule during that period, what it 7 signals is, is that they're trying to get control of 8 the case, not that they're acting for the benefit of 9 the stockholders. Now, could there be some 10 exceptional situation? Sure. But there's nothing 11 here to me that suggests that there was any reason why 12 anybody needed to make a real move before the 13 preliminary proxy came out. 14 The complaints that were filed up in 15 Minnesota are the very typical bare-bones initial 16 complaints that get filed. Is there a lot of words in 17 them? Sure. Is there the type of words that make out 18 real claims after the preliminary proxy is out? No. 19 Because the preliminary proxy wasn't out yet. It 20 wasn't even out at the time this hearing was 21 scheduled. 22 And, again, I don't fault Judge Chu 23 for that at all. But when you see these things over 24 and over again, as we do here, you understand the

25 24 1 rhythm of them and you know sort of what the normal 2 schedule is as to how these things play out and when 3 it makes sense to have things take place. 4 Another part of the problem here, 5 frankly, is defendants don't have any incentive to 6 police this. And there's two reasons for that. It's 7 never fun to tell a judge that you don't want to be in 8 their court. It's just not something you really like 9 to do. You worry about how that goes over. And, 10 again, I'm not offended by it. I wasn't offended that 11 Mr. Williams said, hey, this thing really ought to go 12 forward in Minnesota. What he wants is one forum. I 13 don't think it makes the most sense to go forward in 14 Minnesota. But as between the two, he wants one 15 forum. That's fine. But because of that, the 16 defendants have rationally taken this 17 all-we-care-about-is-one-forum position which really 18 punts on the question. And that simply pushes off the 19 time at which somebody has to make a decision and 20 really leaves it to the courts to try to act among 21 themselves. 22 The second reason is that it's, 23 frankly, advantageous for defendants to have multiple 24 actions. The vast majority of these cases settle.

26 25 1 And if one case is being pushed hard, you can go to 2 the other plaintiff. 3 So, there isn't a natural pressure to 4 come up with a logical solution to this unless courts 5 start focusing on the issue and trying to craft a 6 solution. 7 What Vice Chancellor Strine has been 8 saying for several years, and what I firmly believe 9 in, is people should focus on their area of expertise. 10 He used the phrase "stay in your lane." One of our 11 lanes, one of our primary lanes is internal affairs. 12 One of the most significant aspects of that lane is 13 expedited litigation involving internal affairs. 14 That's, again, where Delaware's interests are at their 15 highest. It's therefore my conclusion that under the 16 internal affairs doctrine, as a matter of the 17 appropriate allocation of responsibility among the 18 several states, and as shown by federal policy, as 19 evidenced by the legislative history of SLUSA, this 20 case should go forward here. 21 Now, I'm not going to schedule this on 22 February 2nd. That date doesn't -- I think it's not a 23 bad date, but the more you squeeze people in these 24 types of proceedings, they're expedited by nature.

27 26 1 It's very difficult to get things done. So you really 2 want to -- at least I generally try to give the 3 parties the maximal amount of time, consistent with my 4 ability to render a decision. 5 I now understand when the meeting date 6 is, and so a hearing on February 11th will give the 7 parties additional time to prepare, to provide 8 briefing, and then still give me enough time to decide 9 before the meeting and to issue an injunction, if I 10 have to do that. 11 Now, I recognize this is a burden on 12 the defendants. I understand that. But 13 unfortunately, I don't think it can be helped. And I 14 think until we start trying to address what is now a 15 problem in virtually every deal, you're going to keep 16 having these situations. And so I think that the best 17 thing for Delaware to do is just to continually state 18 our view. We are going to be hands off -- I'm going 19 to be hands off as to issues where I think other 20 states have a paramount interest. If this were a 21 class action involving whether some type of payments 22 or benefits under Minnesota law were triggered by the 23 merger, don't litigate that in front of me. That 24 should be in Minnesota. They would be the people that

28 27 1 would know about that and have a paramount interest in 2 that. 3 Something that involves the internal 4 affairs of a Delaware corporation, where it's issues 5 like a no-shop provision that I see all the time, a 6 termination fee that I consider all the time, you 7 know, subtleties in pill language, these are things 8 that I think appropriately belong here. 9 What I would like to do to avoid the 10 plaintiffs' efforts having gone for naught in terms of 11 the excellent submissions they gave me, so I would 12 like to go ahead and address class certification. So 13 if not later than Monday, I get a motion for class 14 cert from you all, that would be wonderful. And if 15 not later than Wednesday the defendants could advise 16 you whether they oppose class certification and on 17 what grounds, we can hopefully get that taken care of. 18 Because, as I say, we have institutional investors 19 here. Those are, frankly, the type of people we want 20 bringing these types of cases. I've read about the 21 institutional investors involved, I've read about your 22 firms, and I think that to the extent we cannot have 23 all that good effort go to waste, it would be helpful. 24 I'm not telling defendants you can't oppose. I'm just

29 28 1 telling you, let's see if we can get this done. If 2 you've got a good reason to oppose, great. If you 3 don't have a good reason to oppose, then let's at 4 least get one thing knocked out and move on. 5 With all that said, and that was a 6 lengthy dialogue I forced you all to listen to you, 7 does anyone have any questions at this point that 8 could help this proceeding go forward efficiently. 9 Mr. Wolfe. 10 MR. WOLFE: Your Honor, I have one, 11 and that would be if the Court has a preference about 12 the last brief before the hearing. We can work 13 backwards from there. 14 THE COURT: Twenty-four hours in 15 advance of the hearing, please. 16 MR. WOLFE: Your Honor, also, perhaps 17 Mr. Williams is going to make a statement. Obviously 18 we're going to have the benefit of Your Honor's 19 remarks, which I'm sure will be helpful to Judge Chu 20 in understanding how this came about. But as 21 Mr. Williams indicated, I'm sure that the next thing 22 we're going to do is go before Judge Chu with Your 23 Honor's comments and ask for a stay. And I suppose 24 it's conceivable that we might have to be back in the

30 29 1 event that that's unsuccessful. So I'm apologizing in 2 advance. 3 THE COURT: And I won't be offended if 4 you come back. I can tell you that what you're likely 5 to get from me is Topps II. So if you want to see 6 what I'm likely to write, if you all go to Judge Chu 7 and she concludes that she shouldn't stay, which -- 8 like pretty much every judge, she has been on the 9 bench much longer than I have. So in no way am I 10 impugning Judge Chu or her competence or anything like 11 that. She's much more experienced than I am. I don't 12 know if she's more experienced than I am in deal cases 13 but certainly she has had a longer tenure as a judge. 14 Whatever she does, you all will have to make whatever 15 decision you do at that time, but reread Topps. I'm 16 happy to write Topps II, if you need me to write 17 Topps II. 18 MR. WOLFE: Understood, Your Honor. 19 THE COURT: Mr. Williams. 20 MR. WILLIAMS: Your Honor, I just have 21 a couple of questions. We're thinking out loud a 22 little bit here. But I'm assuming that Your Honor 23 would be willing to speak to Judge Chu? 24 THE COURT: Sure. I am happy to talk

31 30 1 to her. And I haven't reached out to her yet. But I 2 have always been happy to talk to the other judges 3 when we have these types of things. It's often the 4 Texas judges and the California judges. But I'm more 5 than happy to talk to her and I would be very willing 6 to do that. 7 MR. WILLIAMS: And we haven't had a 8 chance to think about this particular aspect, but it 9 may be that to avoid motion practice that we have to 10 speak with our Minnesota co-counsel. And rather than 11 file a motion to stay, et cetera, et cetera, it may be 12 that we may want to think about a less formal approach 13 at first, which might be perhaps contacting Her Honor 14 and just informing her of what happened and asking 15 that she speak with you. 16 THE COURT: Mr. Williams, I have no 17 objection to that at all. It's an unfortunate thing 18 that this happens. And it's certainly an unfortunate 19 thing that this happens in case after case. So I 20 really do think it's just a problem that we're all 21 grappling with and trying to find a solution to and 22 what the right mechanism is. 23 And I really think that one of the 24 right answers should be that the plaintiffs should use

32 31 1 the time before the preliminary proxy to organize. 2 And if they can't organize, there ought to be one 3 natural forum where they should fight. And then that 4 forum will resolve it and it will go forward in that 5 forum. Since the gravamen of litigation is often in 6 Delaware, since Delaware has the paramount interest, I 7 think it makes sense that in the time before the 8 preliminary proxy, whoever wants to come in, come in. 9 And as I say, I would have been happy to have Robbins 10 Geller come in here. They're a great firm. I could 11 well have appointed them lead. But what doesn't make 12 any sense is to have multiple jurisdictions all trying 13 to deal with these things without some type of clear 14 landmarks in terms of what people are going to do. 15 I think -- as I say, 16 Vice Chancellor Strine has been saying this for years 17 and I agree with him on it. This type of case here is 18 the type that is of paramount interest to this state 19 because it involves the internal affairs of a Delaware 20 corporation and its expedited deal litigation. 21 MR. WILLIAMS: And, Your Honor, I 22 think you've addressed this. But my next question was 23 going to be, I think it would be helpful to us as we 24 go to Minnesota to be able to say that while no

33 32 1 decisions have been made, we expect Your Honor would 2 favorably entertain an application from the Minnesota 3 plaintiffs to intervene in the Delaware action. 4 THE COURT: They certainly can. 5 I mean, look, at this point, I would 6 hope that they would talk to -- because I've 7 established a leadership structure here -- I would 8 hope they would talk to the folks here because you've 9 got people involved who know how to do this stuff who 10 are repeat players and who are facing very good 11 defense counsel. And the defense counsel can often 12 field the larger army. So for the brothers Robbins to 13 join up with the folks here would be quite 14 advantageous and to have some type of team work going 15 on. That's probably how you get the best results for 16 the class. And I'm fine with that. But I think what 17 first ought to happen -- what I don't want to do is 18 invite a motion to intervene. What I would like to do 19 is invite a phone call. Because I wouldn't be 20 surprised if the plaintiffs here would appreciate the 21 additional resources of a firm with a track record 22 like Robbins Geller. And if you want to see me talk 23 about their track record, just look at the Del Monte 24 case. They have done some good stuff.

34 33 1 MR. WILLIAMS: And your Honor, the 2 final point is, we have been negotiating with all the 3 plaintiffs, and the Delaware plaintiffs have been 4 involved in these discussions, deposition dates, with 5 depositions starting -- there's one today, one 6 tomorrow and some next week. 7 I would hope and maybe ask for a 8 little guidance from the Court that we not view those 9 dates as now, by the way, because we've set up 10 schedules based on those dates. And we have all been 11 in proceedings. If we go forward on February 2nd, we 12 have some dates in place and would very much like to 13 keep the schedule that we agreed to. 14 THE COURT: Yes. Look, you guys 15 probably still could be going forward on February 2nd, 16 and Judge Chu might enjoin the deal and I might not do 17 anything. But I don't -- the deposition is taking 18 place today, you said? 19 MR. WILLIAMS: Yes. 20 THE COURT: That's the other one. I 21 mean, in expedited litigation, people can get to 22 places real fast. So I wouldn't be surprised if, for 23 the deposition tomorrow, one of my friends on this 24 side of the room can get there.

35 34 1 MR. WILLIAMS: Our understanding is 2 that the Delaware plaintiffs are attending the one 3 that is occurring today. 4 THE COURT: Is that the case? Then 5 those can go forward. Absolutely. 6 MR. WILLIAMS: Thank you, Your Honor. 7 THE COURT: Absolutely. 8 Anything else from the plaintiffs' 9 side that would be helpful to you all? 10 MR. GONELLI: I don't think so, Your 11 Honor. 12 THE COURT: Okay. Well, again, I 13 appreciate everyone coming in today. I really do. I 14 appreciate you listening to my rather long-winded 15 remarks. And I regret the fact that the defendants 16 now face proceedings in two forums. But again, this 17 is something that is driven by the dynamics of the 18 entrepreneurial plaintiffs bar in class action 19 situations, rather than by what is collectively 20 rational for the system. And so what I think has to 21 happen is courts have to start being clear how they 22 think these things need to be approached -- and I've 23 tried to do that -- because I certainly don't have any 24 authority to do anything with respect to the Minnesota

36 35 1 action and the matter of comity would not. It's 2 Judge Chu's action. It's her court. I'm certainly 3 not going to do anything to interfere with anything 4 she does. We're in the situation we're in. But I 5 will see you all on the 11th. If anybody has any 6 problems before then, you know where to find me. 7 Since this is expedited, it will be at the top of my 8 list. 9 Thank you. 10 (Court adjourned at 11:10 a.m.)

37 36 1 CERTIFICATE 2 I, DIANE G. McGRELLIS, Official Court 3 Reporter of the Chancery Court, State of Delaware, do 4 hereby certify that the foregoing pages numbered 3 5 through 35 contain a true and correct transcription of 6 the proceedings as stenographically reported by me at 7 the hearing in the above cause before the Vice 8 Chancellor of the State of Delaware, on the date 9 therein indicated. 10 IN WITNESS WHEREOF I have hereunto set 11 my hand at Wilmington, this 14th day of January, /s/ Diane G. McGrellis Official Court Reporter of the Chancery Court 15 State of Delaware Certification Number: 108-PS Expiration: Permanent