C.A. No. 4674-VCP (Del. Ch., June 26, 2009)
In this case, challenging a proposed merger, the Court of Chancery declined to dismiss or stay the Delaware action in favor of several earlier filed California actions.
On June 4, 2009, Wind River Systems, Inc. (“Wind River”) announced a merger with a subsidiary of Intel Corporation. From June 4, 2009 to June 16, 2009, four separate suits were filed in California courts challenging the merger and various disclosures made by Wind River. On June 16, Plaintiff Rosen filed an individual and derivative action in the Court of Chancery challenging the proposed merger. The next day Rosen moved for a preliminary injunction and expedited proceedings. Wind River opposed the motion to expedite and moved to dismiss or stay. The Court of Chancery tentatively granted the motion to expedite and set the hearing on the preliminary injunction for July 7 (the day before the California court set a hearing) and reserved decision on the motion to dismiss or stay.
In deciding the motion to dismiss or stay, the Court first considered whether to apply the McWane test or a forum non conveniens analysis. The Court held that the forum non conveniens analysis was the appropriate standard because (i) the twelve-day delay in filing the Delaware action was not prejudicial in view of the Court’s public policy in favor of “thoughtful, well-researched complaints – rather than ones regurgitating the morning’s financial press”; (ii) only limited discovery had been propounded in the California actions; (iii) the California actions were not materially ahead from the Delaware action either procedurally or substantively; and (iv) in representative actions the “appropriate approach is something akin to a forum non conveniens analysis.” (citing In re Bear Stearns, 2008 WL 959992 (Del. Ch.)).
Applying the forum non conveniens analysis, the Court noted that the applicability of Delaware law was a strong factor, even though the action may not involve “cutting-edge or terribly novel issues of Delaware corporate law.” While the “relative ease of access to proof” and the “availability of compulsory process for witnesses” tilted in favor of the California actions, the Court noted that preliminary injunction hearings are usually conducted on a paper record. Finally, with respect to the risk of conflicting or inconsistent judgments, the Court noted that it had contacted Judge Steven Brick, the judge in charge of the Consolidated California Action, to discuss how to proceed. Judge Brick indicated that if the Court of Chancery decided to move forward with the case, he would likely stay the California actions before him. Accordingly, there was little risk of inconsistent rulings.
The full opinion is available here.