On January 24, 2011, the Court of Chancery in Air Products & Chemicals, Inc. v. Airgas, Inc., et al. C. A. No. 5249-CC, issued a written decision explaining its January 21, 2011 oral ruling denying Airgas’s motion to exclude the testimony of Air Products’ expert witness, Joseph J. Morrow, at the supplemental evidentiary hearing. Read letter ruling here.
This summary was prepared by Kevin F. Brady of Connolly Bove Lodge & Hutz LLP.
By way of background, after trial in October 2010, Air Products raised its offer from $65.50 to $70 per share. The Court then scheduled a supplemental evidentiary hearing regarding Air Products’ position that $70 per share was its “best and final” offer and the Airgas board’s decision to reject that offer as “clearly inadequate.” On January 5, 2011: Airgas (i) identified an expert witness, Peter C. Harkins, who had testified at trial as to the realistic attainability of a 67% vote at a special meeting to remove and replace Airgas’s sitting directors; and (ii) produced Harkins’ Second Supplemental Expert Report which addressed several issues, but did not offer an opinion regarding the “67% vote” issue. On January 12, Air Products advised that it did not intend to call a rebuttal witness to address the testimony of Harkins, but reserved the right to do so if Harkins testified on matters outside the scope of his Second Supplemental Expert Report. When Harkins was deposed on January 14, 2011, counsel for Air Products questioned him on his views about the “67% vote” issue and Airgas did not object. On January 18, 2011, Air Products’ advised that it now intended to call Joseph J. Morrow as an “expert rebuttal witness, ”and that it would “promptly produce” Morrow’s expert report which it did on January 20, 2011 (one day before the discovery cut-off). Morrow’s expert report addressed matters beyond those addressed in Harkins’s second supplemental report, including the “67% vote” issue. Airgas then moved to exclude the testimony of Morrow.
Airgas argued that it did not have adequate time to fully prepare for Morrow’s deposition and therefore Morrow’s testimony and report should be excluded. In the alternative, Airgas asked the Court to preclude Morrow from testifying with respect to the “67% vote” issue. Airgas also argued that since Harkins did not opine on this issue in his Second Supplemental Report, it was not a proper subject for a “rebuttal.” Finally, Airgas argued that in the event that Morrow was allowed to testify that Harkins be permitted to testify on the “67% vote” issue. Air Products argued that (i) the “67% vote” topic was addressed at Harkins’s deposition, (ii) Airgas questioned Air Products’ witnesses on this subject, and (iii) Airgas failed to demonstrate any prejudice. Air Products also argued in the alternative that it would agree to a limitation preventing either party from offering testimony on the “67% vote” issue.
The Court found that the expert report was timely produced and as a result, Morrow was not precluded from testifying. The Court also noted that while the “67% vote” was not addressed in Harkins’s second supplemental report, Harkins had opined on this issue before and was questioned about it in his deposition by Air Products’ counsel. The Court concluded that Airgas would not be prejudiced by the admission of Morrow’s report and testimony, and that Air Products would be entitled to rebut the testimony given by Harkins. The Court also granted Airgas’s request that Harkins be permitted to testify in response to Morrow’s testimony on the “67% vote” issue.