KPN-iBasis Hearing Transcript
Transcript of KPN-iBasis Hearing Transcript
-
8/14/2019 KPN-iBasis Hearing Transcript
1/18
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
iBASIS, Inc., ::
Plaintiff, :
:vs. : Civil Action: No. 4774-VCS
KONINKLIJKE KPN N.V., KPN :B.V., CELTIC ICS INC., EELCO :BLOK, JOOST FARWERCK, AD :SCHEEPBOUWER, STAN MILLER, :
BAPTIEST COOPMANS, A.H.J. :RISSEEUW, M. BISCHOFF, C.M. :COLIJN-HOOIJMANS, D.I. JAGER, :
M.E. VAN LIER LELS, J.B.M. :STREPPEL, R.J. ROUTS, D.J. :
HAANK, W.T.J. HAGEMAN, M.E. :HOEKSTRA, AND M.N.A.J. VOGT, :
:Defendants. :
:
KPN B.V. and KONINKLIJKE KPN :N.V., :
:Counterclaim-Plaintiffs,:
:vs. :
:iBASIS, INC., ROBERT H. :
BRUMLEY, CHARLES N. CORFIELD, :OFER GNEEZY, W. FRANK KING, and :GORDON J. VANDERBRUG, :
:Counterclaim-Defendants :
- - -
------------------------------------------------------
CHANCERY COURT REPORTERS500 North King Street - Suite 11400
Wilmington, Delaware 19801-3759(302) 255-0525
-
8/14/2019 KPN-iBasis Hearing Transcript
2/18
2
1 Chancery Court Chambers
New Castle County Courthouse2 Wilmington, Delaware
Friday, August 14, 2009
3 2:30 p.m.
4BEFORE: HON. LEO E. STRINE, JR., Vice Chancellor.
5SCHEDULING CONFERENCE
6 APPEARANCES:
7 RAYMOND J. DiCAMILLO, ESQ.Richards, Layton & Finger, P.A.
8 -and-
ADAM H. OFFENHARTZ, ESQ.9 JENNIFER H. REARDEN, ESQ.
Of the New York Bar10 Gibson, Dunn & Crutcher LLP
For Plaintiff and Counterclaim Defendants11
DAVID J. TEKLITS, ESQ.12 Morris, Nichols, Arsht & Tunnell LLP
-and-13 DARIN P. McATEE, ESQ.
JULIE A. NORTH, ESQ.
14 MISTY L. ARCHAMBAULT, ESQ.of the New York Bar
15 Cravath, Swaine & Moore LLPFor Defendants and Counterclaim-Plaintiffs
16 Koninklijke KPN N.V. and KPN B.V. andDefendants Celtic ICS Inc., Eelco Blok,
17 Joost Farwerck, Ad Scheepbouwer, Stan
Miller, Baptiest Coopmans, A.H.J.18 Risseeuw, M. Bischoff, C.M.
Colijn-Hooijmans, D.I. Jager, M.E. Van19 Lier Lels, J.B.M. Streppel, R.J. Routs,
D.J. Haank, W.T.J. Hageman, M.E. Hoekstra20 and M.N.A.J. Vogt
21- - -
22
23
24
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
3/18
3
1 THE COURT: Thanks for coming in.
2 Everybody wants to expedite, but nobody agrees on how.
3 Here's how we're going to do it. I'm
4 not going to just expedite one side or the other. On
5 the other hand, I do want this to be efficiently
6 litigated.
7 I'd have to say, on behalf of iBASIS
8 is the plaintiff here; right?
9 MR. OFFENHARTZ: Yes, Your Honor.
10 THE COURT: And then our friends from
11 the Netherlands are on the other side of it. The
12 bankers are so creative; right? Do you think it's
13 going to make your clients popular in Massachusetts to
14 name the target, or the way you're going to swallow it
15 up is name it Celtics. I'm not sure you view it that
16 way. Bankers need to -- I thought bleeding bait fish
17 is like the target and the shark or something.
18 Why don't you name it, like the
19 acquirer could be like paddywagon and the target could
20 be Irishman. A great thing for the home of the bean
21 and cod, too. That would be beautiful.
22 Anyway, here's what I think one of the
23 things -- I'll pick on iBASIS a little bit. A large
24 number of your defendants probably have no business
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
4/18
4
1 being in this case. You've got no possible way
2 probably of getting personal jurisdiction over them.
3 You're trying to get them because they're a European
4 supervisory board.
5 There's a reason why we have entities
6 in Delaware and entities in the United States and
7 there is a limited liability and you're pleading in
8 civil conspiracy and everything. You get the parent
9 corporation. That's the whole idea. The controlling
10 stockholder. That's the doctrine you extend beyond
11 the board to a controller who is supposedly exercising
12 control over an entity akin to that of a fiduciary on
13 the board. That would suffice to get the Dutch parent
14 company, not -- because I read things, you know,
15 not -- was it 18?
16 MR. McATEE: Eight or nine guys.
17 THE COURT: None of whom are directors
18 of the Delaware entity; right.
19 MR. McATEE: Correct.
20 MR. DiCAMILLO: There are two
21 defendants.
22 THE COURT: There are two. I don't
23 read your friends as saying that those folks are in
24 the fiduciary breach. I know European -- about
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
5/18
5
1 European board structures and stuff. It's like a
2 hobby of mine. Safer than other hobbies. Not as
3 interesting.
4 But my point is, I don't think that we
5 have a statute for, you know, if you serve on the
6 supervisory board of an entity that's a controlling
7 stockholder of a Delaware corporation we can serve
8 you. Part of why I'm getting into this now is people
9 want expedition. You have to focus. And, you know,
10 requests for admission to 18 different people, the
11 tradition around here is, when you expedite, you
12 obviously have to choose your targets for discovery.
13 Firms of the quality of the four firms involved have
14 typically been able to sit down rationally and agree
15 on these things.
16 What I'm saying to iBASIS is -- you
17 know, I'm not -- you're not going to get this like a
18 plenary entire fairness proceeding trial. One tactic
19 you can do is let it close and then press whether it's
20 entire fairness or not. But, you know, there's enough
21 here around these projections and others things and
22 there's a utility to deciding that upfront that I'm
23 going to expedite. But I want it to be focused.
24 With respect -- you can bring your
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
6/18
6
1 legal arguments. If you want to waive discovery,
2 waive discovery. And I have no problem with you
3 bringing -- as part of what you wish for relief if you
4 want to combine it with the briefing and just go on
5 the law, that's fine. But you are seeking something
6 in the nature of final relief. And actually
7 traditionally, if you read Intercompany, I know that
8 there's a footnote in Time Warner that suggests
9 Intercompany's, you know, not good law. But the
10 spirit of what they say would suggest that this part
11 of Intercompany says, when you're going to redeem a
12 rights plan, it's final relief. It can't be done on a
13 preliminary injunction basis for an obvious reason.
14 If the Court's wrong, there's no way to undo it.
15 And one of the things Chancellor Allen
16 did in Intercompany was to construct the stylized --
17 that's what the friends in academia would say --
18 stylized facts. You know, he did that in this case
19 and he sort of listed these ten things that he said
20 was undisputed and on that basis pulled the pill. In
21 many situations the facts aren't uncontroverted, which
22 means you all need to think about whether you want a
23 short evidentiary hearing with respect to the pill.
24 With respect to the projections and
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
7/18
7
1 other things, I also need to see, you know, whether
2 they're reliable, how they're being prepared. I also
3 will say, having written both Pure Resources and some
4 other stuff, that one of the things that's really
5 never been able to be authoritatively determined by
6 our Supreme Court since Kahn v Lynch is exactly what
7 are the standards which apply in this context.
8 And so I'm not saying that either side
9 is wrong. I'm saying, as a judge, the way that
10 Kahn v Lynch has worked, it's a beautiful thing. I
11 wish I could write something like this, which is write
12 an opinion that is its own defense. It's an opinion
13 that makes it impossible for the doctrine to be
14 reversed because the hydraulic pressures it creates
15 means there's never any chance for appellate review.
16 I'm sure that United States Supreme Court judges on
17 both sides wish they could come up with something as
18 effective as that. So there is some interesting
19 issues.
20 With respect to timing, that's where I
21 need a little bit of people's rational help. I've got
22 to say that the papers I got today aren't that
23 helpful. With respect to the controller, I don't
24 really care whether the controller has to wait a
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
8/18
8
1 little bit. I mean, you've controlled this company
2 for a long time. You whip out an offer at the end of
3 July and you have to swallow the minority by X date.
4 I mean, come on. And that's just not that compelling
5 an interest.
6 On the other hand, you know, commerce
7 is commerce and it ought to move on. And I'm hesitant
8 to just sort of embrace a date without you all. I
9 also actually like lawyers. They're interesting,
10 intelligent people. It's the time of year when, you
11 know -- and you work hard enough where you endanger
12 your family life in general, where I don't wish to
13 destroy anyone's family life.
14 MS. NORTH: My family is thankful for
15 that.
16 THE COURT: It's the time of year
17 where oftentimes you have some precious opportunity to
18 spend a little time with your children or, if you're
19 lucky enough and they're gone, spend time with your
20 spouse or maybe somebody you like better than your
21 spouse. And often that happens before Labor Day.
22 What I'm saying is, we ought to do
23 this in a way that doesn't destroy -- the company's
24 not going anywhere. This is not a situation where,
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
9/18
9
1 you know, the acquirer is going to lose the target to
2 someone else.
3 I don't know how many depositions you
4 are all seeking, if you were to do this in advance of
5 a preliminary injunction?
6 MR. DiCAMILLO: Unclear. We've
7 noticed a bunch of depositions. However, we certainly
8 are cognizant of what Your Honor said, and as we
9 indicate in our paper today --
10 MR. OFFENHARTZ: We will certainly
11 trim it down. When we made those initial discovery
12 requests, we neither had counsel that we could
13 block --
14 THE COURT: You want a couple on the
15 board and a couple in the working group, whoever the
16 person is at Morgan Stanley.
17 MR. DiCAMILLO: Yes. We need a
18 handful of depositions.
19 MR. OFFENHARTZ: A few additional ones
20 dealing with the fraudulent scheme issues. Certainly,
21 Your Honor --
22 THE COURT: Is a fraudulent schemer so
23 extensive that it goes beyond the same people?
24 MR. OFFENHARTZ: Your Honor, I really
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
10/18
-
8/14/2019 KPN-iBasis Hearing Transcript
11/18
11
1 schedule.
2 We understand what Your Honor wants to
3 hear and how you want to do it. I think we can figure
4 it out.
5 THE COURT: The question is, you know,
6 in some ways it's more to you all, which is you're
7 attacking this rights plan.
8 Are you limiting yourself to the idea
9 that they just simply, no matter -- assume there would
10 be clear justification under something like the Unocal
11 standard for the target board to do what it wishes,
12 which is they have no authority to do. Are you
13 limiting yourself to that argument or are you going to
14 say and, in the alternative, there's no justification
15 equitably for them to use a pill even if they have
16 authority?
17 MR. McATEE: We were going to make
18 both arguments, although only the first on our
19 proposed motion. But if we want to do it all at the
20 same time --
21 THE COURT: The reason why I say
22 there's not much room for efficiency, I think -- my
23 sense is, you know, you may say it's okay for you all
24 just the way the disclosures came out about the
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
12/18
12
1 projection. It is an interesting colorable claim. If
2 you look at Weinberger and other things, honestly, it
3 might be in your clients' interest to get it resolved
4 in some way. But I'm going to expedite on that.
5 Given that I'm going to expedite on that, it's not
6 really a real efficiency for me or anybody else to
7 jump a motion to judgment on the pleadings. You can
8 certainly make those arguments. What I'm getting at
9 is, what is the shape and nature of the hearing we're
10 going to have? If you want to present some factual
11 arguments about the pill in person, you know, we may
12 be talking about a short trial.
13 We're not talking about a damages
14 stage, so we're not getting to where they have to have
15 valuation experts. I mean, I think the more -- where
16 the valuation or something came up, the special
17 committee is going to make its arguments about value,
18 you guys will in the context of some sort of
19 reasonableness analysis when we get to the pill.
20 I've also seen some of that overlap
21 with why Morgan Stanley told these things, blah, blah,
22 blah.
23 If you assume that the worse you had
24 to take like -- if there were 12 depositions all
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
13/18
13
1 around, that's probably a reasonable.
2 MS. NORTH: I think that is
3 reasonable.
4 THE COURT: When could we be looking
5 to have and if you wanted like, say, two days, a day
6 and a half? We allocate two days for an evidentiary
7 hearing.
8 MR. DiCAMILLO: If we can get a couple
9 days early October, that might work.
10 THE COURT: It looks like I can do
11 something the eighth and ninth of October. I
12 understand from an acquirer's standpoint you want to
13 move fast. If you're thinking about when you can
14 actually -- since we're in the middle of August now --
15 MR. McATEE: And August is a very
16 tough month.
17 THE COURT: Right. Because the Dutch
18 are pretty sensible about this. They're on mandated
19 leave. You know what you get in the Netherlands from
20 the government? You get a check that comes to you
21 that's for your vacation. Just like, if your kid's in
22 school, you know what you get in the beginning of the
23 year? You get a check, I think, that helps with
24 school supplies. But they're socialists. They were.
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
14/18
14
1 It's a cool country. I like it.
2 Can we work with those dates maybe?
3 Does that work?
4 MS. NORTH: Yes. There's some
5 holidays to navigate in September.
6 MR. OFFENHARTZ: Your Honor, if it's
7 possible to pick two days, perhaps the following week.
8 I apologize. I don't have my BlackBerry handy
9 regarding the various holidays which may come up in
10 September somewhat more than usual.
11 THE COURT: You got the whole -- my
12 only --
13 MS. NORTH: Yom Kippur is on the 28th.
14 THE COURT: But that -- how does the
15 8th or the 12th?
16 MR. OFFENHARTZ: I wasn't suggesting
17 necessarily that the holidays make the eighth or
18 ninth undoable. I was suggesting, as a practical
19 matter, given a few things, among them being August,
20 the fact that --
21 THE COURT: That's what I mean. Part
22 of what I'm saying is --
23 MR. OFFENHARTZ: And then moving into
24 September, other people are away. A little bit more
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
15/18
15
1 breathing room might be helpful for all of us. My
2 impression from our adversaries in terms of timing is
3 they have recognized, even under their scenario, that
4 they're rolling things out until September 24th, I
5 think, under your own proposal.
6 So we're not talking about a dramatic
7 extension even where they were coming in,
8 admittedly --
9 THE COURT: I understand. What I'm
10 trying to figure out --
11 MS. NORTH: What difference an
12 additional four days would make.
13 THE COURT: Versus the 12th or the
14 13th.
15 MR. DiCAMILLO: Is the Court open on
16 the 12th?
17 THE COURT: The 13th I'll have to
18 leave early, unless you want to do it in Cambridge
19 near -- I don't know how far the company is from
20 Cambridge.
21 Why don't we stick to the eighth and
22 ninth. See what you can do with the schedule. I'm
23 not an inflexible person. If you come back to me --
24 what I'm saying, I'll say to the defendants is be
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
16/18
16
1 flexible. If it really works the next week or the
2 week after better, then let me know and we'll do that.
3 My point is, you'll obviously have to work around the
4 scheduling of depositions and all. But you should be
5 in a situation where, you know, what you may need the
6 timing is getting your opening -- what you really have
7 to juggle, I think, is the Yom Kippur situation and
8 the implications for your brief.
9 On the other hand, ideally I would get
10 everything by Friday the second -- ideally -- but the
11 world is not ideal. I would have no problem with
12 getting opening briefs in on the 29th.
13 Now, obviously you can't work Yom
14 Kippur, but that doesn't mean you can't work Saturday
15 and Sunday before.
16 MR. DiCAMILLO: Your Honor, what do
17 you want in terms of brief?
18 THE COURT: It's always simpler to do,
19 especially in this situation where you each have
20 claims, simultaneous openings and simultaneous answer.
21 If you can do the 29th and get the briefs delivered to
22 me on the third. If we're going to have a pretrial
23 thing, have that in by Friday or something like
24 that -- the pretrial stipulation. That would work.
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
17/18
17
1 The sooner you notice up, you figure
2 out who your parties are for deposition, I think the
3 better. Most people are usually back after Labor Day.
4 And when does the break end in the Netherlands?
5 MS. NORTH: I don't know.
6 MR. McATEE: Early September.
7 THE COURT: I think school starts back
8 there, too.
9 MS. NORTH: Yeah. Definitely.
10 THE COURT: Okay. Well, good luck.
11 Wisdom never comes too late if people can reach an
12 agreement. Some interesting issues.
13 (Discussion off the record.)
14 (Adjourned at 2:50 p.m.)
15
16
17
18
19
20
21
22
23
24
CHANCERY COURT REPORTERS
-
8/14/2019 KPN-iBasis Hearing Transcript
18/18
18
1 CERTIFICATE
2 I, DIANE G. McGRELLIS, Official Court
3 Reporter of the Chancery Court, State of Delaware, do
4 hereby certify that the foregoing pages numbered 3
5 through 17 contain a true and correct transcription of
6 the proceedings as stenographically reported by me at
7 the hearing in the above cause before the Vice
8 Chancellor of the State of Delaware, on the date
9 therein indicated.
10 IN WITNESS WHEREOF I have hereunto set
11 my hand at Wilmington, this 17th day of August, 2009.
12
13 /s/ Diane G. McGrellis----------------------------
14 Official Court Reporterof the Chancery Court
15 State of Delaware
16
17 Certification Number: 108-PSExpiration: Permanent
18
19
20
21
22
23
24
CHANCERY COURT REPORTERS