On appeal from Superior Court of New Jersey, Chancery Division, Morris County, C-206-99.
Before Judges Baime, Wallace, Jr.*fn1, and Lintner.
The opinion of the court was delivered by: Baime, P.J.A.D.
Plaintiff, on behalf of all Warner-Lambert Co. shareholders, brought this action in the Chancery Division, seeking to enjoin a merger between Warner-Lambert and American Home Products Corp. Following the Chancery Division's order staying the action pending disposition of first-filed, parallel litigation in Delaware, plaintiff asked the court to dismiss his complaint. The Chancery Division granted plaintiff's request. Plaintiff now appeals, contending that entry of the stay constituted an abuse of discretion. We disagree and affirm.
On November 3, 1999, Warner-Lambert and American Home Products agreed to merge. The proposed merger was announced publicly the next day. Within hours of the announcement, Pfizer, Inc. made an unsolicited announcement of its intention to acquire Warner-Lambert.
On November 4, 1999, Pfizer filed suit in the Delaware Chancery Court, seeking to enjoin the proposed merger, and to eliminate provisions in the merger plan for termination fees and cross-options. Beginning the same day and continuing for the next two weeks, thirty-nine Warner-Lambert shareholders brought thirty-six separate class action suits in Delaware, advancing the same claims and causes of action alleged in the Pfizer pleadings. Sixteen of these complaints were filed before plaintiff commenced this action.
On November 5, 1999, plaintiff filed his complaint in the Chancery Division. Plaintiff sought to enjoin the proposed merger, and demanded damages, costs and attorneys' fees. Named as defendants were Warner-Lambert, its directors, and American Home Products.
Plaintiff's claims and those in the Delaware litigation are identical. It is asserted in both instances that Warner-Lambert directors breached their fiduciary duties by (1) failing adequately to consider entering into a business combination with Pfizer, (2) agreeing to the termination fee and cross-options in the merger agreement with American Home Products, and (3) attempting to entrench themselves as officers and directors. Both seek injunctive relief against the consummation of the merger, a declaration that the directors breached their fiduciary duties, recission of the termination fees provision, damages, costs and attorneys' fees.
The Delaware Chancery Court immediately consolidated all of the Delaware actions, and instructed the attorneys "to ensure that no duplication of effort or unnecessary expense [occurs]." The Delaware shareholders are represented by forty-six separate law firms. It is fair to say that several of the nation's most prominent and highly experienced shareholder litigation firms have been assigned leadership roles in the consolidated actions. The representative plaintiffs include institutional shareholders with substantial holdings.
On November 19, 1999, the Delaware Chancery Court ordered coordinated, expedited discovery. Discovery proceeded rapidly. By December 30, 1999, notices to produce resulted in the exchange of some 147,100 pages of documents, interrogatories were served, and numerous depositions were taken.
In contrast, plaintiff first moved for expedited discovery on December 2, 1999. Defendants cross-moved for a stay or dismissal of the complaint. On January 7, 2000, Judge MacKenzie entered a stay pending final judgment in the Delaware litigation. In his accompanying written opinion, the judge reasoned that the Delaware Chancery Court first acquired jurisdiction and thus had precedence absent special equities. The judge stressed that the same factual and legal claims existed in both the instant suit and in the Delaware litigation, and that the parties were the same. The judge also determined that the litigation was national, and even international, in scope and import, with shareholders in all parts of the world. The judge concluded that, although both Warner-Lambert and American Home Products had a strong "presence" in New Jersey, the subject of the litigation had no particular New Jersey nexus.
We add the following facts for the sake of completeness. On February 7, 2000, it was announced that the merger agreement between Warner-Lambert and American Home Products was terminated. On the same date, Warner-Lambert and Pfizer announced that they had entered into a merger agreement. The litigation between Pfizer, Warner-Lambert and American Home Products has been dismissed. The shareholder litigation nevertheless remains pending in the Delaware ...