Chancery Won't Allow Early Appeal In $1.6B
Dole Deal Case
(February 13, 2015, 7:15 PM ET) -- A Delaware Chancery judge on Friday
rejected a bid by
Dole Food Co. Inc. to fast-track an early appeal of his decision to
deny summary judgment in the litigation challenging CEO David Murdock's
$1.6 billion go-private deal in 2013, setting the stage for the issue to
go to trial.
Giving his ruling during a teleconference, Vice Chancellor J. Travis
Laster, denied bids from both Dole and
Deutsche Bank AG, the financial adviser on the deal, for interlocutory
appeal of his order last week that refused to throw out the case at the
summary judgment stage and determined there were genuine issues of
disputed facts that need to be sorted out.
The vice chancellor also denied Dole’s request to halt the trial schedule
while the appeal was pending, saying the issues to be challenged wouldn’t
get rid of the need for a trial anyway.
“The appeals aren’t going to dispose of the whole case,” Vice Chancellor
Laster said. “The public has an interest in prompt resolution of
The vice chancellor added that the interlocutory appeals could “derail”
the case less than 10 days before it was scheduled for a trial, Feb. 23,
that the sides had been preparing to tackle for some time. He also said
that interlocutory appeal was reserved for the most “extraordinary” of
instances, and the case at this juncture didn’t fit the bill.
“An appeal now could be wholly unnecessary depending on how the case turns
out,” Vice Chancellor Laster said. “An interlocutory appeal would be
The issues stems back to the deal that saw Murdock, who had already owned
40 percent of Dole,
take the company private in 2013, with him paying $13.50 per
share for the units he didn’t already control. The transaction
was valued at $1.6 billion including debt.
Several minority shareholders
sued in Delaware Chancery Court over the deal, arguing in
part the offer undervalued the company and that the board of directors
engineered a series of moves to sink the price to that level.
The litigation, which consists of a series of consolidated lawsuits, also
came to include an appraisal demand by a handful of hedge funds that
bought stock days before the deal closed and are contending they didn’t
get fair value for their shares.
Back when the case was in the pleading stage in August 2013, Vice
declined to put it on the fast track, ruling that the
shareholders, if their claims were ultimately successful, would recover a
monetary award whether the case were adjudicated before or after the deal
In the roughly year and a half since then, the case had been simmering as
litigators waited for the Delaware Supreme Court’s ruling in the
now-famous MFW case dealing with how judges ought to consider suits that
challenged take-private deals.
The high court
affirmed MFW in March — which set up a more lenient courtroom
review of such transactions, so long as they included a committee of
independent directors and approval by a majority of noncontrolling
shareholders — and the Dole case eventually kicked back into high gear
with the sides preparing, and disputing over, a massive amount of
discovery evidence to be presented to the vice chancellor over nine trial
When Vice Chancellor Laster denied Dole’s motion for summary judgment Feb.
5, which he said looked more like a post-trial brief given its length and
number of exhibits, he wrote that the requests actually raised a number of
facts that needed to be better developed through a trial.
The vice chancellor also wrote that the case would be evaluated under
Delaware’s strict entire fairness standard, with the burden of proof on
the defendants, because the shareholders had offered evidence indicating
Dole may not have met the requirements set up in the MFW case to afford it
consideration under the board-deferential business judgment standard.
“The merger agreement that was executed did not contain a nonwaivable
majority-of-the-minority requirement,” Vice Chancellor Laster wrote in his
Feb. 5 order. “There is evidence Murdock had previously threatened and
taken punitive action against directors who did not accede to his wishes.”
While the vice chancellor’s ruling Friday denies certification of the
interlocutory appeals, he said the ultimate authority about what happens
next in the case lies with the Supreme Court, who could render a
contradictory decision, hear the appeal anyway and stay the trial.
“I’m not the final word,” Vice Chancellor Laster said. “If they want to
stay [the case] so they can hear these appeals, I will certainly follow
whatever direction they give me.”
After the hearing, attorneys for the shareholders said they were gearing
up for the fact trial.
“The vice chancellor's thorough rebuttal of the defendants' motions was
absolutely correct and we are fully prepared to present our case during
the upcoming trial,” Kevin G. Abrams of
Abrams & Bayliss LLP said.
Attorneys for Dole did not immediately respond to requests for comment
The shareholders are represented by Stuart M. Grant, Geoffrey C. Jarvis
and Nathan A. Cook of Grant & Eisenhoffer PA, and Kevin G. Abrams, J.
Peter Shindel, Jr., Daniel R. Ciarrocki and Matthew L. Miller of Abrams &
Bayliss LLP, Randall J. Baron, A. Rick Atwood Jr., David T. Wissbroecker,
Edward M. Gergosian and Maxwell Huffman of
Robbins Geller Rudman & Dowd LLP, and Marc A. Topaz, Lee D. Rudy,
Michael C. Wagner, J. Daniel Albert and Justin O. Reliford of
Kessler Topaz Meltzer & Check LLP.
Dole and the individual defendants are represented by Bruce L. Silverstein
Young Conaway Stargatt & Taylor and Theodore J. Boutrous, Andrea E.
Neuman, Colin B. Davis, Meryl L. Young and William B. Dawson of
The case is In re: Dole Food Co. Inc. Stockholder Litigation, case number
8703, in the Delaware Court of Chancery.
--Additional reporting by Lance Duroni, Eric Hornbeck and Karlee Weinmann.
Editing by Chris Yates.
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