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1
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LETTER
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EXTRACTED KEY WORDS
MOTION COUNSEL GRANT PLAINTIFFS CLAIM REPRICING BYLAW MATTER EXPEDITION STUART ESQUIRE WILMINGTON CLARKSON COLLINS SANCTIONS CHANCERY COURT PARTIES HEREBY DENY OPINION STOCKHOLDER FAITH BASIS REQUEST MESSRS EXPEDITED PROCEEDINGS PRELIMINARY INJUNCTION CONTRAST FORTHRIGHT MANNER OFFICE CONFERENCE PROMPT DECISION REGISTER |
C OURT OF C HANCERY
OF THE
STATE OF D ELAWARE
,
LEO E. STRINE, JR. COURT H OUS E
VICE-CHANCELLOR W~LMIN~TON,
February 9, 1999
Stuart M. Grant, Esquire
Grant & Eisenhofer
Suite 500
1220 N. Market Street
Wilmington, DE 19801
P. Clarkson Collins, Jr., Esquire
Morris, James, Hitchens & Williams
222 Delaware Avenue
P.O. Box 2306
Wilmington, DE 19899
Re: General DataComm Industries, Inc. v.
State of Wisconsin Investment Board. C.A. No. 16923
Dear Counsel:
I have reviewed defendant's motion for sanctions under Chancery Court Rule 11,
which I received this afternoon. Rather than burden the plaintiff or this court with further
action with respect to this motion, I am writing to inform the parties that I hereby deny
defendant's motion. Although I understand defendant's view that the lack of ripeness of
plaintiffs claim was obvious, I note that there is no per se rule that prohibits a pre-
approval adjudication of a proposed bylaw; in fact, the principal authority upon which I
relied in my opinion to determine that plaintiffs claim was unripe was an unpublished
letter opinion.
Moreover, though the fact that plaintiff has now withdrawn its complaint in the
face of stockholder approval for the Repricing Bylaw further demonstrates why the case
was not ripe before, it does not, to me, demonstrate that the action was brought in bad
faith. In further regard to defendant's allegation of bad faith, I note that there is no doubt
that the plaintiff raised a substantial question about the validity of the Repricing Bylaw, a
question I did not reach.
I would note that this matter arose on an expedited basis. In such circumstances,
maneuverings by the parties on each side of a matter are more common than they are
unusual. It is not unusual, e.g., for counsel representing stockholder-plaintiffs to request
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2
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OPINION
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EXTRACTED KEY WORDS
GDC REPRICING BYLAW STOCKHOLDERS DELAWARE DIRECTORS COURT LAW AUTHORITY INVALID BY-LAW PROXY MATERIALS EXPEDITED PROCEEDINGS ADJUDICATION DICEON DECLARATORY VALIDITY ANNUAL MEETING VOTE SHAREHOLDERS COMPL CERTIFICATE DECLARATORY JUDGMENT INJUNCTION RELIEF MANAGEMENT SWIB INCORPORATION MOTION PROMPT |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
GENERAL DATACOMM >
INDUSTRIES, INC., >
>
>
Plaintiffs, >
V. > Civil Action No. 16923
>
STATE OF WISCONSIN >
INVESTMENT BOARD >>
Defendants. >
OPINION
Date Submitted: February 1,1999
Date Decided: February 1, 1999
Revised: February 5,1999
P. Clarkson Collins, Jr., Esquire, Lewis H. Lazarus, Esquire, of MORRIS, JAMES,
HITCHENS & WILLIAMS, Wilmington, Delaware; Attorneys for Plaintiffs.
Stuart M. Grant, Esquire, John C. Kaitis, Esquire, of GRANT & EISENHOFER,
Wilmington, Delaware; Attorneys for Defendants.
STRINE, Vice Chancellor
In this matter, the plaintiff, General DataComm Industries, Inc.,
("GDC"), a Delaware corporation, seeks declaratory and injunctive relief
regarding the validity of a bylaw proposed for consideration at GDC's
upcoming annual meeting by the defendant, State of Wisconsin Investment
Board ("SWIB"). The proposed "Repricing Bylaw" provides as follows:
Option Repricing. [GDC] shall not reprice any stock options already
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3
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MOTION
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EXTRACTED KEY WORDS
GDC SHAREHOLDER VOTE SANCTIONS MOTION COURT SWIB COUNSEL LAW COMPLAINT FILING MEETING PLEADING CIR RIPE DICEON PRECEDENT REVIEW MATTER RESPONSE ADOPTION ATTORNEYS IMPOSING PLAINTIFF FAITH STOCKHOLDERS EXPEDITE PROCEEDINGS PURPOSE AUTHORITY |
IN THE COURT OF CHANCERY OF THE STATE
IN AND FOR NEW CASTLE COUNTY
GENERAL DATACOMM INDUSTRIES, INC., )
a Delaware corporation, ))
Plaintiff,
)
V. ) CA. No. 16923-NC `[
I'
)
STATE OF WISCONSIN INVESTMENT )
BOARD, ` `,
)
) / :
Defendant. 1 `
-; '
1
MOTION FOR SANCTIONS
The defendant, State of Wisconsin Investment Board ("SWIB"), by and through
its undersigned attorneys, hereby respectfully moves this Court for an Order, in the form attached
hereto, imposing sanctions against plaintiff General DataComm Industries, Inc. ("GDC"). In
brief, GDC filed its Complaint in this action at a time when, under clear Delaware precedent, it
was not ripe for review, requiring considerable expenditure of this Court's time and substantial
time and expense of SWIB and its counsel. Once the matter became ripe, GDC quickly
dismissed its action, showing that the filing of the Complaint was not done in good faith.
As grounds for its motion, SWIB states as follows:
1. On or about September 2,1998, SWIB submitted a proposal to GDC for
consideration and action by GDC's stockholders at GDC's next annual meeting scheduled for
February 4, 1999. The proposal sought the addition of the following bylaw ("Repricing Bylaw")
to GDC's bylaws:
Option Repricing. The Company [GDC] shall not
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