Rosen v. Wind River Systems, Inc., C.A. No. 4674-VCP (Del. Ch., June 26, 2009), read opinion here.
Kevin Brady, a highly respected Delaware litigator, provides the following synopsis of this case.
In this decision, the Court of Chancery, in a putative class action regarding an all-cash, all-shares tender offer for the shares of Wind River Systems, Inc. (“Wind River”), declined to stay or dismiss the Delaware action in favor of various California actions (the “California Actions”) even though the earliest of the California Actions was filed 12 days before the Delaware Action.
On June 4, 2009, Wind River announced a merger with a subsidiary of Intel Corporation. By June 16, 2009, four suits had been filed in California Courts challenging the merger and disclosures made in Wind River’s 14D-9. Only limited discovery had started. On June 16, Plaintiff Rosen filed an individual and derivative action in the Court of Chancery challenging the merger. The following day Rosen filed a motion for preliminary injunction and for expedited proceedings. Wind River then filed a motion to dismiss or stay the Delaware action. The Court of Chancery granted the motion to expedite and set the hearing on the preliminary injunction for July 7. The California court expedited those actions and set a hearing for the preliminary injunction for July 8.
Forum Non Conveniens Versus McWane
Defendants argued that under McWane, the California actions were first-filed and the Delaware action should be stayed or dismissed. Plaintiff responded by arguing that a forum non conveniens analysis should apply because the Delaware Action was filed in relatively the same time period as the California Actions. The threshold question was whether the Court should apply a McWane or forum non conveniens analysis. Citing his 2008 decision in In re Bear Stearns, 2008 WL 959992 (Del. Ch. Apr. 9, 2008), Vice Chancellor Parsons held that in the case of class actions the “appropriate approach is something akin to a forum non conveniens analysis.” Where the delay in filing the class action is prejudicial, the forum non conveniens presumption may be rebutted.
Here, the Court found that there was no prejudicial delay. The California actions had not progressed far beyond the Delaware action. In addition, the Court noted that in light of the events from the announcement of the merger to the filing of the 14D-9, Rosen’s delay was minimal and in line with the Court’s “long expressed . . . ‘public policy interest favoring the submission of thoughtful, well-researched complaints – rather than ones regurgitating the morning’s financial press.’”
Applying the forum non conveniens analysis, the Court noted that none of the factors “severally or jointly, as applied to the facts and circumstances of this action, demonstrate the kind of hardship that would cause this Court to stay or dismiss the Delaware Action.” The Court did note that the applicability of Delaware law, even for issues that were neither “cutting-edge [n]or terribly novel issues of Delaware corporate law,” weighed heavily in favor of denying the motion.