Opinion
C. A. No. 05C-05-218.
Submitted: January 29, 2008.
Decided: April 17, 2008.
Upon Consideration of Plaintiff's Motion to Consolidate: Granted, In Part.
Jeffrey S. Goddess, Esquire, of Rosenthal, Monhait Goddess, P.A., Wilmington, Delaware.
Kirk B. Hulett, Esquire, of Hulett, Harper, Stewart, LLP, San Diego, California, admitted pro hac vice
Robert A. Goodin and Francine T. Radford, Esquires of Goodin, MacBride, Squeri, Ritchie Day LLP, San Francisco, admitted pro hac vice Attorneys for Plaintiff Michael D. Lesh, M.D.
Daniel V. Folt and Matt Neiderman, Esquires, of Duane Morris, LLP, Wilmington Delaware.
Matthew A. Taylor, James L. Beausoleil, Jr. and Seth A. Goldberg, Esquires, of Duane Morris, LLP, Philadelphia, Pennsylvania, admitted pro hac vice Jeffrey J. Bouslog and Bret A. Puls, Esquires, of Oppenheimer Wolff Donnelly, LLP, Minneapolis, Minnesota, admitted pro hac vice Attorneys for Defendants.
MEMORANDUM OPINION
This case is on remand from a consolidated appeal in our state Supreme Court. The two cases were brought by two former Appriva shareholders against defendants. After a purported assignment of rights from former shareholder Erik van der Burg, Appriva Shareholder Litigation Company (ASLC) brought suit against EV3 Incorporated and EV3 Sunnyvale, Incorporated. Plaintiff Lesh, also a former shareholder, brought suit against Appriva Medical Incorporated, Microvena Corporation, EV3 Incorporated, Warburg, Pincus Equity Partners, L.P., Warburg Pincus Netherlands Equity Partners, I, C.V., Warburg Pincus Netherlands Equity Partners, II, C.V., Warburg Pincus Netherlands Equity Partners, III, C.V., Warburg, Pincus LLC, Vertical Fund I, L.P., Vertical Fund II, L.P., and Paul Buckman. Plaintiff Lesh has moved this Court for consolidation of both cases throughout pretrial proceedings.
Appriva Shareholder Litig. Co., LLC v. EV3, Inc., 937 A.2d 1275 (Del. 2007).
C.A. No. 05C-05-218; C.A. No. 05C-11-208.
Plaintiff's motion points out that both actions arise out of the acquisition by merger of Appriva Medical by Microvena Corporation. Plaintiff argues that the complaint in both suits alleges approval for the acquisition by merger was obtained through misrepresentations and that a payment provision was breached. Finally, plaintiff points out that, in both actions, defendants are represented by the same counsel.
Defendant does not dispute that the genesis of both complaints began with the acquisition by merger, but argues that each plaintiff has sued different defendants under different legal theories. Defendants oppose the motion because "[s]imply put, consolidation is premature until the Courts evaluate the merits of the motions to dismiss in each action."
In its Opposition to Plaintiff's Motion, Defendants argue "[w]hile the contract and some of the tort claims asserted . . . appear similar, in that they arise out of the Merger Agreement, there are material differences in the factual allegations purporting to support those claims."
Superior Court Rule 42(a) governs consolidation. The rule provides:
When actions involving a common question of law or fact are pending before the Court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
In assessing a motion to consolidate, the Court is to conduct a two-step analysis. First, it must consider whether the cases present common questions of law, fact or both. Specifically, the Court is to examine whether the two cases have central issues in common. If so, then the Court must examine savings in time, effort and cost, in contrast to additional inconvenience, delay and expense if the motion is granted. Even if there is substantial time and cost savings, the motion will not be granted if undue prejudice or confusion will result. The Court has discretion.
Olson v. Motiva Enterprises, L.L.C., 2003 WL 21733137 (Del.Super.); Ison v. E.I. DuPont De Nemours and Co., 2004 WL 2827934 (Del.Super.).
Olson, 2003 WL 21733137 at *2. See also, Wikert v. Express One Holdings Corp., 2002 WL 31814932 (Del.Super.).
Ison, 2004 WL 2827934 at *2.
Ison, 2004 WL 2827934 at *2
Earl D. Smith, Inc. v. Carter, 2000 WL 972825 (Del. Super) citing Super. Ct. Civil R. 42(a) and Union Mutual Life Ins. Co. v. Dewey, 270 A.2d 833 (Del.Super. 1970).
As for the first step, defendants allege that until plaintiffs establish standing there is insufficient commonality to warrant consolidation because one case or the other might be dismissed. Defendants also argue that the Supreme Court "did not indicate that either action should proceed with fullblown discovery on the merits before the standing issue is resolved." Defendants also point to the distinctive factual issue in the ASLC action concerning the "purported assignment to ASLC." Moreover, defendants cite to differences between the asserted tort claims and named defendants in each action.
On remand, this Court must proceed according to the Supreme Court's "mandate as well as the law of the case established on appeal."This includes any implicit determinations. The law of the case doctrine compels this Court to decide new issues in accordance with the Supreme Court's holding on appeal.
Cede Co. v. Technicolor, 884 A.2d 26, 38 (Del. 2005).
Id. citing Insur. Co. of Amer. v. Barker, 628 A.2d 38, 40 (Del. 1993).
Barker, 628 A.2d 38.
In its decision, the Supreme Court stated that (1) plaintiff ASLC is permitted to present extrinsic evidence of its assignment from van der Burg, (2) that the relevant provisions of the Shareholder Representative Agreement and Merger Agreement are ambiguous, and thus plaintiffs may present extrinsic evidence on the issue of standing. In any event, the Supreme Court has also held that even if the individual plaintiffs do not have standing, then "the plaintiffs in both actions are entitled to cure any defects pursuant to Superior Court Rule 17."
Appriva Shareholder Litig. Co., 937 A.2d at 1293.
The Court recognizes defendant's claim that plaintiff Lesh has named additional defendants and causes of action. However Lesh and ASLC appear to interpret the agreements in a similar manner, but that interpretation is distinct from defendants. As such, there is sufficient factual and legal commonality to establish a nexus.
As for the second part of the analysis, the Court finds that there would be duplicitous discovery as the parties will seek to ascertain the nature, terms and limitations of the agreements at issue if the parties proceeded separately. There will also be additional expense because similar legal arguments will be made for each action if the motion is denied. If the motion is denied, judicial resources will also be wasted. As the Court is only granting the motion to consolidate for the limited purpose of addressing the standing issue, there is no risk of jury confusion or separate judgments. The Court notes that although defendant argues that consolidation would result in "undue prejudice" because there is, at present, uncertainty as to the identity of the parties and claims, the Court notes that consolidation for the limited purpose of determining standing does not implicate those concerns.
Plaintiff's Motion for Consolidation is GRANTED, for the limited purpose of determining the issue of standing; as it relates to (1) the assignment from van der Burg to ASLC and (2) interpretations of the Shareholder Representative and Merger agreements. The parties shall submit extrinsic evidence on these points by June 30, 2008.
IT IS SO ORDERED.