# Brigham Exploration Company, Ben M. Brigham, David T. Brigham, Harold D. Carter, Stephen P. Reynolds, Stephen C. Hurley, Hobart A. Smith, Scott W. Tinker, Statoil ASA and Fargo Acquisition, Inc. v. Raymond Boytim, Hugh Duncan, Robert Fioravanta, Walter Schwimmer, Michael Ohler, Ryan Ohler, Walter Ohler, Jr., the Edward J. Goodman Life Income Trust and the Edward J. Goodman Generation Skipping Trust, Jeffrey Whalen, and Howard Weisberg, Individually > Texas Court of Appeals, 3rd District (Austin) · September 28, 2015 URL: https://www.frixlaw.com/law-library/cases/4077147 ## Case - **Court:** Texas Court of Appeals, 3rd District (Austin) - **Decided:** September 28, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4077147 ## How later opinions describe it (automated extraction) - finding, after class-wide trial, that the directors of Rural Metro Corp. had breached their fiduciary duties to a class of shareholders in connection with a sale of the company and that the Board's financial advisor had aided and abetted that violation ## Opinion text ACCEPTED 03-15-00248-CV 7124709 THIRD COURT OF APPEALS AUSTIN, TEXAS 9/28/2015 1:31:41 PM JEFFREY D. KYLE CLERK No. 03-15-00248-CV IN THE COURT OF APPEALS FOR THE FILED IN 3rd COURT OF APPEALS THIRD DISTRICT OF TEXAS AT AUSTIN AUSTIN, TEXAS 9/28/2015 1:31:41 PM BRIGHAM EXPLORATION COMPANY, BEN M. JEFFREY BRIGHAM , D. KYLE Clerk DAVID T. BRIGHAM, HAROLD D. CARTER, STEPHEN P. REYNOLDS, STEPHEN C. HURLEY, HOBART A. SMITH, SCOTT W. TINKER, STATOIL ASA AND FARGO ACQUISITION, INC., Appellants, V. RAYMOND BOYTIM, ET AL., INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, Appellees. On Appeal from the 201st Judicial District Court of Travis County, Texas, Trial Court Cause No. D-1-GN-11-003205 BRIEF OF APPELLANTS STATOIL ASA AND FARGO ACQUISITION, INC. BECK REDDEN LLP BECK REDDEN LLP Gretchen S. Sween Russell S. Post State Bar No. 24041996 State Bar No. 00797258 gsween@beckredden.com rpost@beckredden.com Christopher R. Cowan Fields Alexander State Bar No. 24084975 State Bar No. 00783528 ccowan@beckredden.com falexander@beckredden.com 515 Congress Avenue, Suite 1900 Parth S. Gejji Austin, TX 78701 State Bar No. 24087575 (512) 708-1000 pgejji@beckredden.com (512) 708-1002 (Fax) 1221 McKinney, Suite 4500 Houston, TX 77010 (713) 951-3700 (713) 951-3720 (Fax) COUNSEL FOR APPELLANTS, STATOIL ASA AND FARGO ACQUISITION, INC. Oral Argument Requested IDENTITY OF PARTIES AND COUNSEL Appellants: Counsel for Appellants: Brigham Exploration Company Debora B. Alsup Ben M. Brigham THOMPSON & KNIGHT LLP David T. Brigham 98 San Jacinto Boulevard, Suite 1900 Harold D. Carter Austin, TX 78701 Stephen P. Reynolds Stephen C. Hurley Timothy R. McCormick Hobart A. Smith Michael Stockham Scott W. Tinker Mackenzie Wallace THOMPSON & KNIGHT LLP (Defendants in the Trial Court) 1722 Routh Street, Suite 1500 Dallas, TX 75201 Statoil ASA Russell S. Post Fargo Acquisition, Inc. Fields Alexander Parth S. Gejji (Defendants in the Trial Court) BECK REDDEN LLP 1221 McKinney Street, Suite 4500 Houston, TX 77010 Gretchen S. Sween Christopher R. Cowan BECK REDDEN LLP 515 Congress Avenue, Suite 1900 Austin, TX 78701 Appellees: Counsel for Appellees: Raymond Boytim Randall J. Baron David T. Wissbroecker (Plaintiff in the Trial Court) Steven M. Jodlowski ROBBINS GELLER RUDMAN & DOWD LLP 655 West Broadway, Suite 1900 San Diego, CA 92101 Samuel H. Rudman Mark S. Reich Michael G. Capeci ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Medville, NY 11747 Willie C. Briscoe THE BRISCOE LAW FIRM, PLLC 8150 N. Central Expressway, Suite 1575 Dallas, TX 75206 Michael D. Marin BOULETTE GOLDEN & MARIN LLP 2801 Via Fortuna, Suite 530 Austin, TX 78746 Hugh Duncan Samuel H. Rudman Mark S. Reich (Plaintiff in the Trial Court) Michael G. Capeci ROBBINS GELLER RUDMAN & DOWD LLP 58 South Service Road, Suite 200 Medville, NY 11747 Joe Kendall Daniel Hill Jamie J. McKey KENDALL LAW GROUP, LLP 3232 McKinney Avenue, Suite 700 Dallas, TX 75204 ii Michael D. Marin BOULETTE GOLDEN & MARIN LLP 2801 Via Fortuna, Suite 530 Austin, TX 78746 Walter Schwimmer Evan J. Smith Marc L. Ackerman (Plaintiff in the Trial Court) BRODSKY & SMITH, LLC Two Bala Plaza, Suite 602 Bala Cynwyd, PA 19004 Michael Ohler Hamilton Lindley Ryan Ohler DUNNAM & DUNNAM L.L.P. Walter Ohler, Jr. P.O. Box 8418 Waco, TX 76714 (Plaintiffs in the Trial Court) The Edward J. Goodman Life Shane T. Rowley Income Trust LEVI & KORSINSKY LLP 30 Broad Street, 24th Floor (Plaintiff in the Trial Court) New York, NY 10004 Denis F. Sheils KOHN, SWIFT & GRAF, P.C. One South Broad Street, Suite 2100 Philadelphia, PA 19107 The Edward J. Goodman Hamilton Lindley Generation Skipping Trust DUNNAM & DUNNAM L.L.P. P.O. Box 8418 (Plaintiff in the Trial Court) Waco, TX 76714 Denis F. Sheils KOHN, SWIFT & GRAF, P.C. One South Broad Street, Suite 2100 Philadelphia, PA 19107 iii Robert Fioravanti Katharine M. Ryan Richard A. Maniskas (Plaintiff in the Trial Court) RYAN & MANISKAS, LLP 995 Old Eagle School Road, Suite 311 Wayne, PA 19087 Kelly N. Reddell THE REDDELL FIRM PLLC 100 Highland Park Village, Suite 200 Dallas, TX 75025 Howard Weissberg Patricia C. Weiser James C. Ficaro (Plaintiff in the Trial Court) THE WEISER LAW FIRM, P.C. 22 Cassatt Avenue Berwyn, PA 19312 Jeffrey Whalen Patricia C. Weiser James C. Ficaro (Plaintiff in the Trial Court) THE WEISER LAW FIRM, P.C. 22 Cassatt Avenue Berwyn, PA 19312 Trial Court: 201st District Court of Travis County, TX Hon. Lora Livingston, Presiding iv TABLE OF CONTENTS Page IDENTITY OF PARTIES AND COUNSEL ...........................................................................i TABLE OF CONTENTS .................................................................................................. v INDEX OF AUTHORITIES............................................................................................ vii STATEMENT OF THE CASE ........................................................................................... x STATEMENT REGARDING ORAL ARGUMENT ..............................................................xi NOTE REGARDING CITATION......................................................................................xi STATEMENT OF JURISDICTION .................................................................................. xii ISSUES PRESENTED ................................................................................................... xii INTRODUCTION ............................................................................................................ 1 STATEMENT OF FACTS ................................................................................................. 3 STANDARD OF REVIEW ................................................................................................ 8 SUMMARY OF THE ARGUMENT .................................................................................... 8 ARGUMENT ................................................................................................................. 9 I. The Trial Court Erred in Certifying the Aiding-and-Abetting Claim. .................................................................................................... 9 A. The Named Plaintiffs Are Not Adequate Class Representatives to Pursue an Aiding-and-Abetting Claim Against Statoil. ................................................................. 9 1. Proving adequacy requires proof that class representatives, not their lawyers, have specific knowledge of relevant facts. ............................................. 9 2. The Named Plaintiffs did not prove their adequacy to represent any class claims against Statoil. ............................................................................. 12 v B. The Named Plaintiffs’ Inadequacy Is Further Highlighted by the Deliberate Lack of “Rigorous Analysis” in the Trial Plan. ....................................................... 17 II. The Class Definition Fails Because It Contains Members Who Could Not Have Sustained Any Injury in Fact. ......................... 19 A. A Class Must Be Defined So That All Members Have Standing. ................................................................................... 20 B. The Class Definition Is So Broad That It Includes Many Members Who Could Not Have Been Injured, As a Matter of Law. .................................................................. 21 1. The class definition contains many members with no standing to assert any breach of fiduciary duty claim based on the allegedly unlawful disclosures. ...................................................... 21 2. The class definition contains many members with no standing to assert an aiding-and- abetting claim against Statoil. ......................................... 23 C. Plaintiffs Have Tried to Obscure the Mismatch Created by the Class Definition After Repeatedly Tweaking That Definition. ........................................................ 23 CONCLUSION AND PRAYER ....................................................................................... 25 CERTIFICATE OF SERVICE .......................................................................................... 27 CERTIFICATE OF COMPLIANCE .................................................................................. 29 vi INDEX OF AUTHORITIES Case Page(s) Berger v. Compaq Computer Corp., 257 F.3d 475 (5th Cir. 2001) .............................................................................. 10 In re BJ’s Wholesale Club, Inc. Shareholders Litig., 2013 WL 396202 (Del. Ch. Jan. 31, 2013) ...................................................17, 18 Bowden v. Phillips Petroleum Co., 247 S.W.3d 690 (Tex. 2008) ................................................................................ 8 City of Livonia Emps’ Ret. Sys. v. Boeing Co., 711 F.3d 754 (7th Cir. 2013) .............................................................................. 11 DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299 (Tex. 2008) .............................................................................. 20 In re Deepwater Horizon, 732 F.3d 326 (5th Cir. 2013) ........................................................................20, 25 In re Enron Corp. Securities Lit., 529 F. Supp. 2d 644 (S.D. Tex. 2006) ................................................................ 11 Ford Motor Co. v. Sheldon, 22 S.W.3d 444 (Tex. 2000)................................................................................. 20 Forsyth v. Lake LBJ Inv. Corp., 903 S.W.2d 146 (Tex. App.—Austin 1995, writ dismissed w.o.j.) ................................................................................ 10 Gen. Motors Corp. v. Bloyed, 916 S.W.2d 949 (Tex. 1996) ................................................................................ 9 Hunt v. Bass, 664 S.W.2d 323 (Tex. 1984) .............................................................................. 20 King v. City of Austin, 2004 WL 578940 (Tex. App.—Austin Mar. 25, 2004, no pet.)........................................................................................ 10 In re Kosmos Energy Ltd. Securities Litig, 299 F.R.D. 133 (N.D. Tex. 2014) ...........................................................10, 11, 12 vii M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704 (Tex. 2001)................................................................................. 20 Malpiede v. Townson, 780 A.2d 1075 (Del. 2001) ................................................................................. 18 Morgan v. Cash, 2010 WL 2803746 (Del. Ch. July 16, 2010) ...................................................... 18 Polaris Indus. v. McDonald, 119 S.W.3d 331 (Tex. App.—Tyler 2003, no pet.) ...................................................................................................... 20 Riemer v. State, 392 S.W.3d 635 (Tex. 2012) ................................................................................ 8 In re Rural Metro Corp. Shareholders Litig., 88 A.3d 54 (Del Ch. 2014) ................................................................................. 17 S.W. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909 (Tex. 2010) ..........................................................................9, 10 Sw. Ref. Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000).......................................................................8, 19, 25 In re Telecomms., Inc., 2003 WL 21543427 (Del. Ch. July 7, 2003) ...................................................... 18 Tex. Dept. of Mental Health & Mental Retardation v. Petty, 778 S.W.2d 156 (Tex. App.—Austin 1989, writ dism’d w.o.j.)..................................................................................... 20 STATUTES AND RULES 8 DEL. CODE § 253 ..................................................................................................... 6 TEX. CIV. PRAC. & REM. CODE § 51.014(a)(3) ....................................................... xii TEX. R. APP. P. 39.1(d) ..............................................................................................xi TEX. R. CIV. P. 42(a) ................................................................................................. 9 viii OTHER AUTHORITIES 7A Wright & Miller, FED. PRAC. AND PRO. § 1766 (3d ed. 2005) ....................................................................................................... 10 1 H. Newberg & A. Conte, NEWBERG ON CLASS ACTIONS § 3:50 (5th ed. 2015) ............................................................................................. 9 ix STATEMENT OF THE CASE Nature of the Case Class certification appeal. APP. 1 (Order). This class action was brought by former shareholders of Brigham Exploration Company (“Brigham”) in response to an offer by Statoil ASA (“Statoil”) to buy Brigham. CR4-55. The principal defendants are Brigham and the Brigham directors who agreed to accept Statoil’s offer; Plaintiffs allege that the Brigham Defendants sold cheap, thereby injuring Brigham’s shareholders. CR5-7. In addition, Plaintiffs sued Statoil and a related entity (Fargo Acquisition, Inc.)1 for the successful acquisition. Plaintiffs allege that Statoil struck too good a deal for itself and in doing so aided and abetted a breach of the Brigham directors’ fiduciary duties. Id. Course of Proceedings During discovery, none of the class representatives was able to state a viable basis for the claims against Statoil; some did not even know they were suing Statoil. Nevertheless, Judge Lora Livingston found them all to be adequate class representatives and certified a class action. APP. 1, APP. 3. After a previous interlocutory appeal in which this Court reversed class certification for lack of a valid trial plan, APP. 2, Judge Livingston signed a new order certifying the class and adopted a trial plan proposed by Plaintiffs that barely discusses Statoil. APP. 1, APP. 3. Trial Court Honorable Lora Livingston, presiding 201st Judicial District Court, Travis County, Texas Disposition Below The trial court signed an order granting class certification on April 9, 2015. 1 Fargo, a Delaware corporation wholly owned by Statoil, was formed solely to effectuate Brigham’s acquisition. “Statoil” is used to refer to both Statoil and its subsidiary Fargo. x STATEMENT REGARDING ORAL ARGUMENT Statoil respectfully requests oral argument. This is the second appeal of a class certification order in this action; the first certification order was reversed. The district court’s decision involves important questions regarding the standards for adequacy of a class representative and for standing in a securities class action. Therefore, oral argument will likely aid the Court. TEX. R. APP. P. 39.1(d). NOTE REGARDING CITATION The record citations are to the Reporter’s Record (RR), the Clerk’s Record (CR), the first Supplemental Clerk’s Record (1SCR), second Supplemental Clerk’s Record (2SCR), and the third Supplemental Clerk’s Record (3SCR). The Clerk’s Record also includes exhibits the district clerk filed by hand. Although part of the Clerk’s Record, they are not paginated. These documents were initially filed with the district court under seal, but have since been unsealed. APP. 3 contains “Exhibit 1” filed with the Court on June 5, 2015, which includes “Plaintiffs’ Proposed Second Amended Plan for Trial of Class Claims.” APP. 4 contains “Exhibit 1” filed with the Court on August 14, 2015, which includes “Plaintiffs’ Response to Defendants’ Joint Opposition to Class Certification and Plaintiffs’ Proposed Amended Plan for Trial of the Class Claims.” xi STATEMENT OF JURISDICTION The Court has jurisdiction over this interlocutory appeal from an order granting class certification. TEX. CIV. PRAC. & REM. CODE § 51.014(a)(3). ISSUES PRESENTED In addition to the grounds for relief set forth by the Brigham Defendants, Statoil files this separate brief to develop two issues unique to Statoil and to underscore an issue of particular significance to class-action jurisprudence: I. Did the trial court err in certifying a class on the aiding-and-abetting claims against Statoil? Specifically: A. Did the trial court err in finding the Named Plaintiffs adequate to pursue aiding-and-abetting claims against Statoil where none of them knows any facts supporting the Plaintiffs’ allegation that Statoil “knowingly participated” in the Brigham Defendants’ alleged breach of fiduciary duties? B. Did the trial court err in certifying an aiding-and-abetting claim against Statoil based on a trial plan that is facially defective and betrays a lack of rigorous analysis for that claim? II. Did the trial court err in certifying a class based on a class definition that includes class members who could not have sustained the injuries alleged, depriving them of standing to participate in the class action? xii INTRODUCTION This class action was filed within hours of the announcement that Statoil had made an all-cash tender offer to purchase all Brigham shares at a price significantly above the market price. The principal claims are against the Brigham directors who approved the sale. Statoil, the buyer, was dragged into this lawsuit through a fanciful aiding-and-abetting theory. Statoil has been subjected to sustained, expensive litigation simply because it made a cash offer to buy another company on terms that it viewed as a good deal for its shareholders (not to mention terms that the vast majority of Brigham’s shareholders accepted and that the market itself viewed favorably during the entire time the tender offer was pending). Everyone involved in the underlying merger benefitted: those who accepted Statoil’s tender offer, those who traded their shares to capture the benefit that Statoil’s offer created, and even those few who held out until the tender offer was effected through a short-form merger. Nevertheless, Plaintiffs’ counsel sprinted to the courthouse to file this lawsuit the instant the merger was announced. Whatever one thinks of this dubious strategy as to the Brigham Defendants, the seven Named Plaintiffs are inadequate to represent a class against Statoil. They have offered no factual basis for suing Statoil; indeed, some did not even know that they had sued Statoil or who Statoil is. Of the few Named Plaintiffs who could even identify Statoil, the only basis they could offer for the decision to sue Statoil was this one: “I think they should have paid a higher price.” 3SCR85. 1 This claim is outlandish. Brigham shareholders are attempting to sue Statoil for negotiating a merger on terms that they allege were too favorable to Statoil. Such a claim is at odds with the very notion of a free market; securities litigation cannot be based on one company’s failure to look out for another’s shareholders. If this theory were valid, it would mean that the directors of the acquiring company in every merger are obligated to breach fiduciary duties to their own shareholders to ensure that shareholders on the other side of the deal are satisfied. It would also mean that a company must expose itself to the risk of a derivative suit by its own shareholders to avoid “aiding-and-abetting” liability. This position is nonsensical. It is unsurprising, therefore, that the Named Plaintiffs cannot explain their suit against Statoil and the trial plan regarding Statoil is facially flawed. In addition, the class definition—which has been retooled multiple times— remains completely out of joint with the alleged injury. The class is now defined as persons who held Brigham shares on October 17, 2011, the day the tender offer was announced. Yet the allegedly inadequate disclosures regarding this offer were not made until 11 days later. By that time, a massive volume of Brigham shares had been traded—well in excess of the total number of outstanding shares.2 Thus, the class definition indisputably includes a vast number of shareholders who could not have been injured by the disclosures, as a matter of law. This flaw is fatal. 2 This trading frenzy is explained by Statoil’s offer to pay $36.50 per share for Brigham shares, when the day before the announcement the stock had closed at only $30.90 per share. CR148. 2 STATEMENT OF FACTS Brigham approaches Statoil; eventually, these unrelated companies strike a win-win merger deal for their shareholders Statoil began as Norway’s state oil company over four decades ago. Today, it is a publicly traded energy company with a presence in over thirty countries. The company is listed on both the New York and Oslo stock exchanges.3 Brigham too was a publicly traded company until Statoil acquired it in 2011 as the result of an all-cash tender offer in response to which 92.6% of Brigham’s shares were voluntarily tendered. CR1941. The acquisition resulted from inquiries that Brigham had initiated and followed months of arms-length negotiations. CR1416; CR1418-28. Nearly a year after Brigham approached Statoil and other potential buyers, Statoil’s board approved a proposal to Brigham. CR1420. Brigham countered. Id. Initially, neither side budged. But given the time and energy both had expended on the potential deal, they agreed to continue negotiating. Id. After further negotiations, Statoil increased its offer to $36.50 per share. CR1424. Brigham’s board later unanimously approved that amount. CR1426. Thus, on October 17, 2011, Statoil and Brigham executed a merger agreement. CR1428. That same day, the basic terms of the deal were made public. CR27. 3 See http://www.statoil.com/en/About/History/Pages/default3.aspx (September 25, 2015). 3 Statoil’s tender offer boosts Brigham’s share price Statoil’s tender offer represented a premium of more than 18% over the highest price for Brigham shares during the 30 days before the deal was announced and a 33% premium over the average market price of Brigham shares during that same period. CR184-85. The $36.50 offer was close to Brigham’s historic high4 and far above its historic low of less than $1 per share. CR143-216. After Statoil’s offer was announced, Brigham’s stock price shot up in very active trading. The first day after the announcement, 62 million outstanding shares (a number exceeding 50% of the outstanding shares) were sold on the open market; and the closing per-share price that day was $36.40—just 10 cents below the tender offer per-share price. CR185. Between October 17 and October 28, 2011, 134 million Brigham shares were exchanged on the open market at similar prices. Id. By the time the merger was effected on December 8, 2011, 262 million shares had been traded at similar prices. Id. Plaintiffs file suit, anticipating an injury that never occurs On October 17, 2011—the very day that Statoil’s tender offer was announced and 11 days before the tender offer even opened—a lawsuit was filed that became the template for this class action. CR221-38. That first lawsuit was filed on behalf of Raymond Boytim, one of the Named Plaintiffs. Id. 4 Brigham’s shares were largely tied to the price of oil. The all-time closing price high of $37.50 lasted for less than a week, when oil prices spiked to over $110 per barrel. CR182; CR194. Since then, of course, oil prices have plummeted. 4 Astoundingly, Boytim testified that he did not decide to file suit until some time later, after he had read about “all of these law firms that were filing suit.” 3SCR112. When asked point blank about the lawsuit bearing his name that was, indisputably, filed on October 17, 2011, Boytim said: “If it -- if it was, I just wasn’t aware of it.” Id. (emphasis added). The lawsuit filed in Boytim’s name sought to enjoin the Statoil tender offer on the ground that Brigham’s board had failed to disclose material information to Brigham shareholders. CR233-34. More specifically, it alleged that Brigham board members had failed “to disclose material financial information” related to the merger “to enable Brigham’s stockholders to cast informed votes on the Proposed Transaction.” CR234; CR235. And it included a claim against Statoil for allegedly aiding and abetting the Brigham board’s purported failure to disclose. CR235-36. But at the time, the tender-offer disclosures did not even exist yet— they were made later, in required SEC filings. CR1472. Other lawsuits quickly followed. Between the October 17 announcement and the October 28 disclosures, nine other putative class actions were filed alleging similar claims and attacking disclosures that had not yet been made. CR1461-63. Finally, on October 28, 2011 (11 days after the first lawsuit had been filed) the required disclosures were filed with the SEC. CR1391-1530. These are the allegedly defective disclosures subsequently identified in the Named Plaintiffs’ class action trial plan. See APP. 3, Trial Plan at 4. 5 The vast majority of Brigham shareholders embrace the tender offer The day of the disclosures—October 28, 2011—the tender offer opened. The tender offer was successful: 92.6% of all shares were voluntarily tendered. CR1941. Because Statoil acquired more than 90% of Brigham’s outstanding shares during the first-step tender offer, it was entitled to effect a “short-form merger” that did not require the approval of Brigham’s shareholders. 8 DEL. CODE § 253. Using this procedure, each remaining share of Brigham stock was converted into a right to receive $36.50 per share on December 8, 2011. CR1942. But even as shareholders were voting with their shares in favor of the deal, Plaintiffs sought to enjoin the merger. On November 22, 2011, Judge John Dietz held a hearing and denied Plaintiffs’ request for a temporary injunction. APP. 5. Thereafter, Plaintiffs sought class certification and damages based on allegations that individual board members had breached fiduciary duties owed to Brigham shareholders and that Statoil and Brigham itself had aided and abetted that breach. CR370-400; CR678-707. Well after the merger had been concluded, and after evidentiary hearings on class certification, Judge Lora Livingston granted Plaintiffs’ motion to certify a class defined as “all holders of common stock of Brigham Exploration Company as of October 17, 2011.” CR1089; CR1190-95. The class action trial plan devoted just three sentences to the aiding-and-abetting claim against Statoil. CR1150. 6 After the class is decertified, Plaintiffs obtain the same result on remand On appeal, this Court held that the trial court had abused its discretion by certifying a class without an adequate trial plan. APP. 2. The Court did not need to reach any other issues, leaving for another day serious arguments that Plaintiffs had failed to satisfy the requirements of Rule 42—such as adequacy. Id. at n.2. On remand, Plaintiffs again proposed a class defined as “all holders of common stock of Brigham Exploration Company as of October 17, 2011.” 3SCR664. Plaintiffs also proposed an amended trial plan, which was unchanged with respect to the claim against Statoil. CR92. After Statoil objected to the absence of any law relevant to the aiding-and-abetting claim, Plaintiffs submitted a second amended trial plan that purported to address Statoil’s concerns. APP. 3. That version, however, still only devotes one paragraph to the claim against Statoil and merely recites the pleading standard. Id., Trial Plan at 4-5. The Defendants again objected to certification and to the proposed trial plan on multiple grounds. CR119-216; 3SCR3-652. Judge Livingston signed a second class certification order, adopting and incorporating Plaintiffs’ second amended class action trial plan. APP. 1; APP. 3. The court authorized the seven Named Plaintiffs to serve as class representatives— although only four had attended the initial class certification hearing and Plaintiffs had presented no evidence that any Named Plaintiff knew facts relevant to the claim against Statoil. CR656-76; CR1589-1859. Statoil appealed again. 7 STANDARD OF REVIEW A trial court exercises discretion in certifying a class action, but must do so subject to the requirements of Rule 42; “compliance with class action requirements must be demonstrated rather than presumed.” Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 696 (Tex. 2008). The Texas Supreme Court has rejected a “certify now and worry later” view of class certification. Sw. Ref. Co. v. Bernal, 22 S.W.3d 425, 435 (Tex. 2000). The court must perform “a ‘rigorous analysis’ before ruling on class certification” in order to assure that Rule 42 is satisfied. Id.; see also Riemer v. State, 392 S.W.3d 635, 639 (Tex. 2012) (same). SUMMARY OF THE ARGUMENT Statoil respectfully adopts the issues presented and the arguments developed in the Brigham Defendants’ brief. In addition, this brief focuses on two arguments of importance to Statoil. First, the Named Plaintiffs are not adequate representatives for the class claims against Statoil because none of them has any knowledge of facts relevant to the aiding-and-abetting claim. Second, in attempting to cover up the adequacy defect, the trial plan is facially defective and betrays a fatal lack of rigorous analysis. Finally, as currently defined, the class contains numerous shareholders who could not have sustained the injuries alleged because the conduct in question did not occur until after the inception of the class. Thus, many class members (perhaps most) lack standing to bring any of the asserted claims against Statoil. 8 ARGUMENT I. The Trial Court Erred in Certifying the Aiding-and-Abetting Claim. A. The Named Plaintiffs Are Not Adequate Class Representatives to Pursue an Aiding-and-Abetting Claim Against Statoil. Regardless of the viability of the class certification order with respect to the Brigham Defendants, there is no basis for class certification with respect to Statoil. The Named Plaintiffs failed to show that they are adequate class representatives with respect to Statoil; in fact, their testimony conclusively proved otherwise. 1. Proving adequacy requires proof that class representatives, not their lawyers, have specific knowledge of relevant facts. Rule 42(a) requires that class representatives “fairly and adequately protect the interests of the class.” TEX. R. CIV. P. 42(a). This “adequacy” requirement implicates paramount due process concerns. See 1 H. Newberg & A. Conte, NEWBERG ON CLASS ACTIONS § 3:50 at 408 (5th ed. 2015); see also S.W. Bell Tel. Co. v. Mktg. on Hold Inc., 308 S.W.3d 909, 919 (Tex. 2010) (explaining that class action requirements “are not only procedural safeguards but are based in the Due Process clauses of the United States and Texas Constitutions”). Importantly, these concerns are not satisfied unless both “class representatives and their counsel are adequate representatives” for the class. Gen. Motors Corp. v. Bloyed, 916 S.W.2d 949, 954 (Tex. 1996). When a district court ignores this requirement, reviewing courts “have no assurance that the district court fully appreciated the scope and nature of the interests at stake.” Id. 9 Thus, class representatives must produce “actual, credible evidence” that they “are informed, able individuals, who are themselves—not the lawyers— actually directing the litigation.” In re Kosmos Energy Ltd. Securities Litig, 299 F.R.D. 133, 145 (N.D. Tex. 2014)).5 A class action cannot be lawyer-driven: “the class representative is ‘not simply lending [his or her] name [ ] to a suit controlled entirely by the class attorney.’” Mktg. on Hold, 308 S.W.3d at 927 (quoting 7A Wright & Miller, FED. PRAC. AND PRO. § 1766 (3d ed. 2005)). At a bare minimum, class representatives must establish that they possess personal knowledge of the facts underlying their claims—and must know who they are pursuing those claims against, and why. See Forsyth v. Lake LBJ Inv. Corp., 903 S.W.2d 146, 152 (Tex. App.—Austin 1995, writ dismissed w.o.j.) (quoting federal authority for the principle that an adequate representative is “one who will check the otherwise unfettered discretion of counsel in prosecuting the suit and who will provide his personal knowledge of the facts underlying the complaint”). These adequacy requirements are identical in state and federal court.6 5 Kosmos was decided under the federal analogue to Rule 42(a), but it is especially persuasive because it involves an attempt to certify a class pursued by the same counsel appointed as lead counsel here, in reliance on evidentiary submissions markedly similar to those proffered here. After a rigorous, well substantiated analysis, the class representatives were deemed inadequate. See Kosmos, 299 F.R.D. at 136-37. 6 See King v. City of Austin, 2004 WL 578940, at *4 (Tex. App.—Austin Mar. 25, 2004, no pet.) (mem. op.) (named plaintiff who had been “recruited by counsel to be a class representative” and “did not do independent investigation to assist his attorneys” was held to be inadequate); see also Berger v. Compaq Computer Corp., 257 F.3d 475, 482-83 (5th Cir. 2001) (explaining that class representative is required “to possess a sufficient level of knowledge and understanding to be capable of ‘controlling’ or ‘prosecuting’ the litigation”). 10 Applying these adequacy standards, class certification should be denied “where the representative lacks knowledge or a basic understanding of what the suit is about” or the representative is unable to “identify certain named parties or the roles the defendants played in the alleged fraud.’” Kosmos, 299 F.R.D. at 146 (quoting In re Enron Corp. Securities Lit., 529 F. Supp. 2d 644 (S.D. Tex. 2006)). A class representative’s “inability to articulate any underlying case specifics ‘beyond conclusory allegations of fraud’” is a telltale sign of inadequacy. Id. Kosmos offers an apt benchmark for this case. The affidavit in Kosmos, which was sponsored by the same class counsel as this case, was aptly described as “little more than formulaic, boilerplate assertions.” Id. It included the following “conclusory pronouncements”:  “I have participated in the Plan’s decision-making with respect to litigation matters, and have participated in supervising outside legal counsel in the Plan’s pending litigation.”  “The Plan has reviewed and monitored the progress of this litigation and has actively participated in its prosecution. For example, the Plan has” “received and reviewed” reports and correspondence, “supervised” discovery preservation, “reviewed pleadings” and “consulted with lawyers.” Id. Such conclusory statements fail to satisfy the adequacy requirement. Id. Class counsel in this case have an unfortunate history of aggressive tactics that abuse the class-action device and devalue its important purposes. See, e.g., City of Livonia Emps’ Ret. Sys. v. Boeing Co., 711 F.3d 754, 762 (7th Cir. 2013) (Posner, J.) (citing cases). This case follows the same pattern. 11 2. The Named Plaintiffs did not prove their adequacy to represent any class claims against Statoil. Plaintiffs presumed (incorrectly) that they could rely on written affidavits, comprised entirely of boilerplate assertions, to prove that their class representatives were adequate. It is telling that the affidavit that was found wanting in Kosmos, reproduced in its entirety at footnote 64 of that opinion, was far more detailed than most of the Named Plaintiffs’ affidavits in this case. The affidavits do little more than assert that each affiant had “actively monitored the litigation” and planned to “direct class counsel.” CR656-76. Most of the Named Plaintiffs’ affidavits do not even mention Statoil, and none of the affidavits suggests any factual basis for the aiding-and-abetting claim asserted against Statoil. See id. The affidavits are not “actual, credible evidence” that the affiants are “informed, able individuals, who are themselves—not the lawyers—actually directing the litigation.” Kosmos, 299 F.R.D. at 141. They are legally insufficient on their face. Additionally, the Named Plaintiffs’ deposition testimony demonstrated conclusively that they had no knowledge to support an aiding-and-abetting claim— most did not even know who Statoil is or why it was sued: Myrna Goodman of the Edward J. Goodman Trust Q: What is Statoil ASA? A: Don’t know. Q: Do you know why Statoil ASA is being sued? 12 A: No. …. Q: What about Statoil, did you do any independent investigation regarding Statoil? A: No. Q: Did you look online onto Statoil’s website? A: No. Q: Do you know what type of company Statoil is? A: No, I do not. 3SCR32; 3SCR 37-38. Jeffery Whalen Q: What are you alleging that Statoil did wrong in connection with the merger of the Brigham Exploration and the share price? A: That I can’t answer. 3SCR45. Hugh Duncan Q: Mr. Duncan, are you suing Statoil in this case? A: Am I what? Q: Are you suing Statoil? .... A: I think the pleadings speak for themselves. Q: Do you know whether you’ve sued Statoil or not? A: Pardon me? Q: Do you know, as we sit here, whether you are suing Statoil? 13 A: I believe we are, aren’t we? ... Q: Mr. Duncan, why are you suing Statoil? ... A: I’ll claim the privilege. 3SCR52-53 (objections omitted). Walter Schwimmer Q: Why are you suing Statoil? . . . . Dr. Schwimmer, if you have an independent understanding of why you sued Statoil other than the outcome of discussion with your attorneys, you can respond. A: I’m sorry. I don’t have any information other than that which has been communicated to me by our -- my attorneys. 3SCR60-61 (objection omitted). Howard Weissberg Q: My last question was, have you sued Statoil? A: No. 3SCR68. Robert Fioravanti Q: Why are you suing Statoil? A: Because they didn’t – I believe they did not pay a fair value of the company’s worth. Q: Do you believe they wronged you? A: I believe they should have paid more for the Brigham stock. Q: Is that it? Is that the only thing you think they did wrong? A: I think they should have paid a higher price. 14 Q: Anything else? A: No. 3SCR84-85 (objections omitted). Raymond Boytim Q: What about Statoil, what are you alleging Statoil did wrong? A: Statoil? Q: Statoil. A: That’s a tough one. . . . All the parties here had to be closely involved to the point that they all had some responsibility with what happened, the merger of the companies. And if the Brigham side of the merger was flawed in some way, I feel the other side has got to be flawed, because they came together so late and so quickly, no prolonged negotiations, no long discussions. It was just bingo. And - -- and there’s no explanation for it. It just happened. And I don’t like things that just happen. You know, a deal – a deal is made. And I – personally I would like to know how they really got together and decided on $36.50. And anybody that was a party to agreeing it is listed on this. Q: And are you contending that Statoil did something to injure you as a shareholder of Brigham Exploration? . . . Are you contending that Statoil injured you as a shareholder of Brigham Exploration? When you said their processes must have been flawed, are you suggesting that they are responsible for some sort of injury to you? A: I don’t know enough about it to make those allegations really. It is implied. But I – I stand by what I said. They were involved; they were a party to it. 3SCR122 (objections omitted). In short, none of the Named Plaintiffs stated a viable basis for suing Statoil. 15 Only four of the Named Plaintiffs attended the class certification hearing. CR1589-1859.7 Two of the four tried to rehabilitate their testimony about Statoil, but they were unable to shed any real light on why class counsel had sued Statoil. First, Whalen testified that “Statoil is the other entity in the merger, and if -- I think that the share price was too low for the acquisition cost, then they would be liable for any damages because Brigham Oil is now owned entirely by Statoil.” CR1737-38. But Whalen also admitted: “I just made that up right now.” Id. Second, Weissberg similarly testified that the Plaintiffs had sued Statoil “because Statoil is the company that bought Brigham. So, consequently, okay, they are the ones who now own Brigham and they are the ones responsible for Brigham, okay?” CR1679-80. “The attorneys decide who to sue.” CR1680. In other words, the two Named Plaintiffs who testified at the hearing alleged that Statoil is liable for the Brigham Defendants’ actions as the successor company (which is false), not that it is responsible for any wrongdoing in the merger itself. Indeed, their testimony demonstrated not only that they lacked any factual basis for suing Statoil, but that they did not even understand the theory against Statoil. This record includes no evidence that will satisfy the adequacy requirement. Instead, it conclusively demonstrates the Named Plaintiffs’ inadequacy. 7 Boytim was not among them. Perhaps he did not attend the hearing because his deposition had revealed the awkward fact that he was not even aware that class counsel had filed a lawsuit in his name on October 17, 2011. He testified that he had not sought a lawyer until after several other lawsuits had been filed. 3SCR112. 16 B. The Named Plaintiffs’ Inadequacy Is Further Highlighted by the Deliberate Lack of “Rigorous Analysis” in the Trial Plan. The sole claim asserted against Statoil is an aiding-and-abetting claim, which would require the Plaintiffs to prove Statoil’s “knowing participation” in the Brigham board members’ alleged breaches of fiduciary duty. The trial plan fails to account for this critical element, allowing class certification on an invalid theory. Proving the point, Plaintiffs’ trial plan is just a one-paragraph recitation of the pleading standard for an aiding-and-abetting claim. APP. 3, Trial Plan at 4-5. It ignores the elements Plaintiffs must prove at trial—because they cannot allege the facts required to prove the claim. To prove Statoil knowingly participated in a breach of fiduciary duty by Brigham’s board, Plaintiffs must prove that Statoil: (1) “directly sought to induce the breach of fiduciary duty”; (2) “create[d] or exploit[ed] conflicts of interest in [Brigham’s] board,” (3) “used knowledge of the breach to gain a bargaining advantage” in negotiations with Brigham’s board, or (4) knew the “terms of the transaction [were] so egregious or the magnitude of the side deals [] so excessive as to be inherently wrongful.” In re BJ’s Wholesale Club, Inc. Shareholders Litig., 2013 WL 396202, at *14 (Del. Ch. Jan. 31, 2013); see also In re Rural Metro Corp. Shareholders Litig., 88 A.3d 54, 99 (Del Ch. 2014) (to prove aiding or abetting a breach of fiduciary duty, the plaintiff must establish that “the third party, for improper motives of its own, misleads the directors into breaching their duty of care”). 17 Because Plaintiffs cannot establish these factors, the trial plan omits them. APP. 3, Trial Plan at 4-5. Instead, it assumes that Plaintiffs could prevail based on their allegation that Statoil bought Brigham too cheaply. But under Delaware law, attempting “to reduce [Brigham’s] sale price through arm’s length negotiations” and “hard bargaining” is insufficient to state a claim as a matter of law. In re BJ’s, 2013 WL 396202 at *14; Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001). Even if Brigham was “worth substantially more” than the purchase price, that fact does “not provide a reasonable inference” that Statoil “conspired with the Board to purchase the Company at a discounted price.” In re BJ’s, 2013 WL 396202 at *15. Nor could Plaintiffs prevail by proving that Statoil sought to retain members of the Brigham management team; “retaining management is a routine occurrence for the obvious reason that an acquiror often wants to keep existing management in order to ensure that the acquired assets continue to be managed optimally.” Morgan v. Cash, 2010 WL 2803746, at *5 (Del. Ch. July 16, 2010). Thus, Plaintiffs’ allegations do not state a cognizable claim against Statoil. In Delaware state court, this aiding-and-abetting claim against Statoil would have been dismissed on the pleadings. E.g., Malpiede, 780 A.2d at 1098; In re BJ’s, 2013 WL 396202, at *14; In re Telecomms., Inc., 2003 WL 21543427, at *2-3 (Del. Ch. July 7, 2003). Statoil’s offer to buy Brigham for the best price Statoil could obtain through arms-length negotiations is simply not a basis for a legitimate aiding-and-abetting claim. 18 The Texas Supreme Court mandates that, before certifying a class action, trial courts must undertake a “rigorous analysis” of the “claims ... relevant facts, and applicable substantive law” in order to “make a meaningful determination of the certification issues.” Bernal, 22 S.W.3d at 435. That rigorous analysis must be reflected in the trial plan. Id. This trial plan falls woefully short of that standard, because none of the Named Plaintiffs has any factual basis for asserting that Statoil “knowingly participated” in any breach of fiduciary duty by the Brigham board. APP. 3, Trial Plan at 4-5. This claim is a naked attempt to penalize an acquiring company for trying to make a good deal, which is nothing but a toll on capitalism. By certifying the claim for class treatment, the trial plan is fatally defective. Taken together, the inadequacy of the class representatives and the invalidity of the trial plan (which was deliberately constructed to cover up that inadequacy) reveals that the lawyers, and not the class representatives, are driving this lawsuit. The trial court abused its discretion by certifying a class against Statoil. II. The Class Definition Fails Because It Contains Members Who Could Not Have Sustained Any Injury in Fact. As stated above, Statoil incorporates the Brigham Defendants’ arguments, which demonstrate additional reasons why the entire class should be decertified. One of those arguments merits particular emphasis because it is so foundational: the class has been defined in such a way that it includes numerous individuals who do not have standing to sue because they could not have sustained any injury. 19 A. A Class Must Be Defined So That All Members Have Standing. Standing is the first prerequisite to maintaining a legal action. Hunt v. Bass, 664 S.W.2d 323, 324 (Tex. 1984). Class actions are no exception to that rule. M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001) (explaining that a plaintiff in a class action must satisfy the threshold requirement of standing); see also DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304 (Tex. 2008) (stating that “[a] court has no jurisdiction over a claim made by a plaintiff without standing to assert it”); Tex. Dept. of Mental Health & Mental Retardation v. Petty, 778 S.W.2d 156, 163-67 (Tex. App.—Austin 1989, writ dism’d w.o.j.) (finding plaintiff that lacked standing was not a competent class representative). Because standing is jurisdictional, a class definition cannot include any claimants who lack standing. See In re Deepwater Horizon, 732 F.3d 326, 342 (5th Cir. 2013) (citing multiple federal authorities). In other words, a class must “be defined in such a way that anyone within it would have standing” with respect to the claims asserted. Id. (emphasis added). Federal and state law are consistent in this area, so “federal decisions and authorities interpreting current federal class action requirements are persuasive in Texas actions.” Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 452 (Tex. 2000); see also Polaris Indus. v. McDonald, 119 S.W.3d 331, 338 (Tex. App.—Tyler 2003, no pet.) (applying this principle to standing). Therefore, the Fifth Circuit’s recent Deepwater Horizon decision, which is directly on point, should be controlling in this case. 20 B. The Class Definition Is So Broad That It Includes Many Members Who Could Not Have Been Injured, As a Matter of Law. This class is defined to include “all holders of Brigham common stock as of October 17, 2011.” CR3167. Many members of that class do not have standing to bring any claims based on the disclosures that Plaintiffs allege injured them. Thus, under the rule of Deepwater Horizon, the class definition is defective. 1. The class definition contains many members with no standing to assert any breach of fiduciary duty claim based on the allegedly unlawful disclosures. According to the trial plan, this case turns on an inadequate disclosure theory involving disclosures that were made on October 28, 2011: plaintiffs contend that the Individual Defendants disseminated a Schedule 14D-9 and tender offer statement on Schedule TO, filed with the Securities and Exchange Commission on October 28, 2011, which was false and misleading and failed to disclose all material information to Brigham shareholders in connection with the tender offer from Statoil. APP. 3, Trial Plan at 4 (emphasis added). As Plaintiffs put it in their live petition: The Individual Defendants breached their fiduciary duties of good faith, loyalty, due care and candor ... by failing to: ... (f) disclose all material information concerning the transaction to enable Brigham’s stockholders to, on an informed basis, tender their shares for the Acquisition. . . . Such breaches of fiduciary duties could not and would not have occurred but for the conduct of ... Statoil, which, therefore, aided and abetted such breaches via entering into the Merger Agreement. CR47. Thus, the classwide liability theory turns on legally-required disclosures that were not made until October 28, 2011. 21 Plaintiffs have conceded that, if the Schedule 14D-9 and related tender offer statement on Schedule TO did not contain material non-disclosures or omissions, their duty-of-candor claims fail. APP. 4 at 7 (“If plaintiffs do not establish that shareholders were misled [as alleged], plaintiffs’ claims based on the breach of the duty of candor fail and defendants are entitled to judgment on that claim”). Thus, the injury the class members allege arises from disclosure statements that were not made until after the date of the class definition: no class member could have been injured by those disclosures until at least 11 days later. CR1391-1530. Moreover, during that 11-day period, Brigham stock was traded on the open market so extensively that the volume exceeded 100% of Brigham’s total shares.8 This tremendous trading activity between October 17, 2011 (when the tender offer was announced) and October 28, 2011 (when the disclosures were made and the tender offer period opened) conclusively demonstrates that many, if not most, Brigham shareholders on October 17, 2011 no longer owned that stock when the critical disclosures were made on October 28, 2011. As defined, many members of the class could not have a justiciable injury arising from the challenged disclosures. CR45-47. Because many class members have no standing to sue any defendant for an injury arising from those disclosures, the class definition constitutes an abuse of discretion. 8 On October 17, 2011, approximately 117 million Brigham shares were outstanding. CR3164. From October 17 to October 28, 134 million Brigham shares exchanged hands. CR185-86. 22 2. The class definition contains many members with no standing to assert an aiding-and-abetting claim against Statoil. The only claim asserted against Statoil is an aiding-and-abetting claim. CR46-48. It assumes (at least in part) that the individual Brigham Defendants made misleading disclosures regarding the Statoil tender offer. See, e.g., CR47 (alleging that Statoil and Brigham aided and abetted “the Individual Defendants’ breaches of fiduciary duties” and “damaged” the class members “in that they have been prevented from obtaining a fair price for their shares and were not able to tender their shares on an informed basis”) (emphasis added). Because most members of the class lack individual standing to assert the breach of the duty of candor/disclosure claim, they likewise lack standing to assert a claim that Statoil aided and abetted such a breach. Class members who owned Brigham shares on October 17, 2011 and sold them before the relevant disclosures were made on October 28 cannot claim any injury fairly traceable to the allegation that Statoil aided and abetted a fiduciary breach with respect to those disclosures. Thus, with respect to Statoil, the class definition constitutes an abuse of discretion. C. Plaintiffs Have Tried to Obscure the Mismatch Created by the Class Definition After Repeatedly Tweaking That Definition. The current class definition, which has not changed since the first appeal, was Plaintiffs’ third attempt to define the scope of their class. The evolution of the class definition exposes the reality of their case, and it is not pretty. 23 At one point, the class included “[a]ll holders of Brigham common stock as of 12/8/11 who held their shares from consummation of the acquisition of Brigham by Statoil at a price of $36.50 per share.” CR128. But Plaintiffs abandoned this definition tethered to December 8 (the date when the tender offer closed), presumably because it would contain very few members. CR185-86; CR1941. The frenetic trading that occurred between the announcement of the tender offer and the date the tender offer closed indicates that very few Brigham stockholders (1) owned Brigham stock on October 17, 2011, (2) held that stock until after the October 28 disclosures, and (3) refused to tender their shares by December 8: As this graphic illustrates, a class limited to the handful of Brigham shareholders who might claim actual injuries from the disclosures in question would be tiny. Thus, class counsel gerrymandered the class definition to make it more profitable. 24 The district court should have recognized this ploy and denied certification. Its duty to engage in a “rigorous analysis” of the class certification criteria, Bernal, 22 S.W.3d at 435, included a duty to determine “whether broad swaths of the proposed class would have standing.” Deepwater Horizon, 732 F.3d at 343 n.11. Because this class is “defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct,” under the Deepwater Horizon test that Texas law should adopt, “the class is defined too broadly to permit certification.” Id. at 342 n.9 (quoting Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 824 (7th Cir. 2012)). Because the district court did not undertake this rigorous analysis, it certified a class containing many members without standing to assert any disclosure claim, much less the utterly speculative aiding-and-abetting claim asserted against Statoil. The district court’s failure to police Plaintiffs’ transparent attempt to obscure their numerosity problem with an overbroad class definition that is logically inconsistent with the class liability theory was an abuse of discretion. CONCLUSION AND PRAYER For these reasons as well as those set forth in the Brigham Defendants’ brief, Statoil asks that the trial court be reversed, the class be decertified, and the action be remanded for further proceedings consistent with this Court’s opinion. 25 Respectfully submitted, BECK REDDEN LLP /s/ Russell S. Post Russell S. Post State Bar No. 00797258 rpost@beckredden.com Fields Alexander State Bar No. 00783528 falexander@beckredden.com Parth S. Gejji State Bar No. 24087575 pgejji@beckredden.com 1221 McKinney, Suite 4500 Houston, TX 77010 (713) 951-3700 (713) 951-3720 (Fax) Gretchen S. Sween State Bar No. 24041996 gsween@beckredden.com Christopher R. Cowan State Bar No. 24084975 ccowan@beckredden.com BECK REDDEN LLP 515 Congress Avenue, Suite 1900 Austin, TX 78701 (512) 708-1000 (512) 708-1002 (Fax) Counsel for Appellants, Statoil ASA and Fargo Acquisition, Inc. 26 CERTIFICATE OF SERVICE In accordance with the Texas Rules of Appellate Procedure, I hereby certify that on September 28, 2015, a true and correct copy of the above and foregoing Brief of Appellants Statoil ASA and Fargo Acquisition, Inc. was properly forwarded to all counsel of record, by e-file and/or email, addressed as follows: Class Counsel for Appellees ROBBINS GELLER RUDMAN ROBBINS GELLER RUDMAN & DOWD LLP & DOWD LLP Darren J. Robbins Samuel H. Rudman Randall J. Baron Mark S. Reich David T. Wissbroecker Michael G. Capeci Steven M. Jodlowski 58 South Service Road, Suite 200 655 West Broadway, Suite 1900 Melville, NY 11747 San Diego, CA 92101-3301 srudman@rgrdlaw.com randyb@rgrdlaw.com mreich@rgrdlaw.com dwissbroecker@rgrdlaw.com mcapei@rgrdlaw.com sjodlowski@rgrdlaw.com Liaison Counsel for Appellees BOULETTE & GOLDEN LLP Michael D. Marin 2801 Via Fortuna, Suite 530 Austin, Texas 78746 mmarin@boulettegolden.com Additional Counsel for Appellees KENDALL LAW GROUP, LLP THE BRISCOE LAW FIRM, PLLC Joe Kendall Willie C. Briscoe Daniel Hill The Preston Commons Jamie J. McKey 8150 N. Central Expressway, Suite 1575 3232 McKinney Avenue, Suite 700 Dallas, Texas 75206 Dallas, Texas 75204 wbriscoe@thebriscoelawfirm.com jkendall@kendalllawgroup.com dhill@kendalllawgroup.com jmckey@kendalllawgroup.com 27 DUNNAM & DUNNAM L.L.P. BRODSKY & SMITH LLC Hamilton P. Lindley Evan J. Smith 4125 W. Waco Drive (76710) Marc L. Ackerman P.O. Box 8418 Two Bala Plaza, Suite 602 Waco, Texas 76714 Bala Cynwyd, Pennsylvania 19004 hlindley@dunnamlaw.com esmith@brodsky-smith.com mackerman@brodsky-smith.com LEVI & KORSINSKY LLP KOHN, SWIFT & GRAF, P.C. Shane T. Rowley Denis F. Sheils 30 Broad St., 24th Floor One South Broad Street, Suite 2100 New York, NY 10004 Philadelphia, PA 19107-3389 srowley@zlk.com dsheils@kohnswift.com THE WEISER LAW FIRM, P.C. RYAN & MANISKAS, LLP Patricia C. Weiser Katharine M. Ryan James M. Ficaro Richard A. Maniskas 22 Cassatt Avenue 995 Old Eagle School Road, Suite 311 Berwyn, PA 19312 Wayne, PA 19087 pw@weiserlawfirm.com kryan@rmclasslaw.com jmf@weiserlawfirm.com rmaniskas@rmclasslaw.com THE REDDELL FIRM PLLC Kelly N. Reddell 100 Highland Park Village, Suite 200 Dallas, Texas 75025 kelly@reddell-law.com Counsel for Brigham Exploration Company and Individual Appellants THOMPSON & KNIGHT LLP THOMPSON & KNIGHT LLP Timothy R. McCormick Debora B. Alsup Michael W. Stockham Thompson & Knight LLP Mackenzie Wallace 98 San Jacinto Blvd., Suite 1900 1722 Routh Street, Suite 1500 Austin, TX 78701 Dallas, Texas 75201 debora.alsup@tklaw.com timothy.mccormick@tklaw.com michael.stockham@tklaw.com mackenzie.wallace@tklaw.com /s/ Russell S. Post Russell S. Post 28 CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitation of Tex. R. App. P. 9.4 because it contains 6,093 words, excluding the parts of the brief exempted by Tex. R. App. P. 9.4(i)(2). 2. This brief complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2007 in 14 point Times New Roman font. Dated: September 28, 2015. /s/ Russell S. Post Russell S. Post Counsel for Appellants, Statoil ASA and Fargo Acquisition, Inc. 29 No. 03-15-00248-CV IN THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS AT AUSTIN BRIGHAM EXPLORATION COMPANY, BEN M. BRIGHAM, DAVID T. BRIGHAM, HAROLD D. CARTER, STEPHEN P. REYNOLDS, STEPHEN C. HURLEY, HOBART A. SMITH, SCOTT W. TINKER, STATOIL ASA AND FARGO ACQUISITION, INC., Appellants, V. RAYMOND BOYTIM, ET AL., INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, Appellees. On Appeal from the 201st Judicial District Court of Travis County, Texas, Trial Court Cause No. D-1-GN-11-003205 APPENDIX TO BRIEF OF APPELLANTS STATOIL ASA AND FARGO ACQUISITION, INC. TAB 1 Trial Court’s Order (CR3163-3167) 2 Court of Appeals’ memorandum opinion in previous appeal of class certification 3 “Exhibit 1” filed with the Court by the district clerk on June 5, 2015, which includes “Plaintiffs’ Proposed Second Amended Plan for Trial of Class Claims” 4 “Exhibit 1” filed with the Court on August 14, 2015, which includes “Plaintiffs’ Response to Defendants’ Joint Opposition to Class Certification and Plaintiffs’ Proposed Amended Plan for Trial of the Class Claims” 5 Judge Dietz’s order denying the request for a temporary injunction (CR305-307) 2 Tab 1 Trial Court’s Order (CR3163-3167) DC BK1M03 PG100 Flied In The District Court of Travis County, Texas AfR · 9 2015 At fj· (p f M. Velva L Price, District Clerk Cause o 0-J-G;-.:·11-003205 (Con oliduceition: (b) \.\hether the former members of llrigham's Hoard engogcd in a plan and scheme to benefit themse lves and/or Statoil al the expense of' lhc! members of the Class; (c) whether the former members t1f Uriglrnm's Bou rd brcuchcd their fid uciary duly to secure and ubtnin the best price reasonable under the circums1nnccs for the benefit of plaintiffs and the other members of the Class in connection with the Acqui.,ition: (d) \.\hcther Brigham and/or 1atoil aided 3nd abetted the breach of fiduciary dutie.s b} the Inc.Ji" i1 majorit) of the Cln.ss, especially in light of the potc!ntially small dollar amount of their indh idu:il claim'>, nnd that Cla's members' interests are far bcuer el"\cd b) the cl:iss nction device lhan pur uing im.li\iJual actions; and (b) Plaimiffs have submnted trial plan '"hich offers a rigorous analysis and a :.pcc1fic explanation or ho"' the class claims arc to pro\,;eed to triul Alter cvnlua1ing che plan, the Courl finds that o trial in Lhis action will be manogcnblc 1n that it involves lhc upplication of the Jaws of a single stutc (Dcluwurc), there are no indi vidt~ul lssm:s to b~ resolv1::d by lhJ3in1iff • Propo cd 1.:cond Amended Plan for Trial of Cla s C laims, liled ~1arch 19. 2015. 8. Phi inti fl! · Amended ~otice of Pendenc) of Clas Action, Bllal.!hcd as Exhibit I 0 to Pluintiff~ · Amended Motion for Class Certification. ~tis lie Ruic 42( c )(2 XB) of the Texas Rules of Ci\·il Procedure. h concise I) and clear!") stales in pl:iin, casil} understood l:ingu3gc: (i) the oatme of . 3. 3166 DC BK15103 PG104 the action; (ii) the definition of the Class certified; (iii) the Class claims, issues and defenses; (iv) that a member of the Class may enter an appearance through counsel if the member so desires; (v) that the judgment, whether favorable or not, will include and bind all members who do not request exclusion by the specified date; (vi) that the court will exclude any members of the Class if they request exclusion; and (vii) when and how a member may be exclude themselves from the Class. Good cause appearing, IT IS HEREBY ORDERED that: l. Plaintiffs' Motion for Class Certification is GRANTED. 2. The Class is defined as all holders of common stock of Brigham Exploration Company as of October 17, 2011. Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related to or affiliated with any defendant. 3. Plaintiffs are appointed as representatives of the Class. 4. Robbins Geller Rudman & Dowd LLP is appointed as Class Counsel, and Boulette Golden & Marin L.L.P. is appointed as Liaison Counsel. 5. The Court approves Plaintiffs' Amended Notice of Pendency of Class Action. Within 30 days, the parties shall meet and confer regarding a proposed plan for dissemination of the notice. ORDER IT IS SO ORDERED. DATED: THE HO -4 - 3167 Tab 2 Court of Appeals’ memorandum opinion in previous appeal of class certification TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN NO. 03-13-00191-CV Brigham Exploration Company, Ben M. Brigham, David T. Brigham, Harold D. Carter, Stephen P. Reynolds, Stephen C. Hurley, Hobart A. Smith, Scott W. Tinker, Statoil ASA and Fargo Acquisition, Inc., Appellants v. Raymond Boytim, Hugh Duncan, Robert Fioravanta, Walter Schwimmer, Michael Ohler, Ryan Ohler, Walter Ohler, Jr., The Edward J. Goodman Life Income Trust and The Edward J. Goodman Generation Skipping Trust, Jeffrey Whalen, and Howard Weissberg, Individually and on Behalf of Others Similarly Situated, Appellees FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT NO. D-1-GN-11-003205, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING MEMORANDUM OPINION Appellants Brigham Exploration Company, Ben M. Brigham, David T. Brigham, Harold D. Carter, Stephen P. Reynolds, Stephen C. Hurley, Hobart A. Smith, Scott W. Tinker, Statoil ASA and Fargo Acquisition, Inc., bring this interlocutory appeal challenging the trial court's order granting class certification. See Tex. Civ. Prac. & Rem. Code§ 5 l.014(a)(3). For the reasons that follow, we decertify the class, reverse, and remand this cause for further proceedings consistent with this opinion. BACKGROUND Appellant Brigham Exploration Company (Brigham) was a publically traded company. Appellant Statoil ASA (Statoil) made a tender offer for all shares of stock in Brigham at $36.50 per share, and Brigham's Board of Directors approved the transaction on October 16, 2011. Brigham announced the transaction the following day, and Statoil commenced the tender offer on October 28, 2011. After shareholders had voluntarily tendered over 92 % of the outstanding shares in December 2011, Statoil effected a short-form merger, converting each remaining share of stock into a right to receive $36.50. Appellees brought suit shortly after Brigham's announcement of the transaction, seeking to enjoin the transaction based on the Brigham Board's alleged failure to disclose material information to the shareholders. After a hearing on November 22, 2011, the trial court denied appellees' request for an injunction. Appellees proceeded with their suit, seeking class certification and damages based on their claims that individual Board members breached their fiduciary duties and that Brigham and Statoil aided and abetted the Board members' breaches of their fiduciary duties. Appellants denied the allegations and asserted affirmative defenses including acquiescence and waiver. Appellees filed a proposed order granting class certification and a proposed amended preliminary plan for the trial of the class claims. In their proposed amended plan, appellees set out Delaware substantive law that they contend applies to their claims and describe how they plan to prove their claims and damages at trial with common evidence. Appellees describe their plan for the trial as follows: 2 At this time, plaintiffs envision a single trial with the following procedural steps: 1. Plaintiffs will present their case-in-chief, submitting common evidence of defendants' wrongdoing, class-wide injury, and total damages; 2. The Individual Defendants will present the defenses they wish to advance; 3. Brigham and Statoil will present the defenses they wish to advance; 4. Plaintiffs will present their rebuttal case; and 5. The case will be submitted to the jury, which will enter a verdict based on a proposed jury charge. Appellees' proposed order granting class certification and their amended preliminary plan did not otherwise address appellants' pleaded defenses. Appellants objected to appellees' proposed order and trial plan. Their objections included that "the proposed trial plan is insufficient because it does not correctly identify the elements for each claim or defense asserted in the pleadings" and that it "contains only Plaintiffs' allegations and theory of the law without incorporating any of the Defendants' theories or defenses." The trial court held an evidentiary hearing on appellees' motion for class certification in October 2012 and a subsequent hearing in February 2013. After the hearing in February, appellants filed a document titled "Attachment to Plaintiffs' Proposed Amended Preliminary Plan for Trial of Class Claims." In the document, appellants describe their defensive theories and cite Delaware substantive law that they contend applies to appellees' claims and appellants' affirmative defenses. The trial court thereafter granted appellees' motion for class certification and certified a class "defined as all holders of common stock of Brigham Exploration Company as of 3 Oct. 17, 2011," the date the transaction was announced, excluding from the class defendants and other persons and entities related to or affiliated with defendants. In its order granting class certification, the trial court made findings concerning appellees' claims, including that "Plaintiffs have submitted [a] trial plan which offers a rigorous analysis and a specific explanation of how the class claims are to proceed to trial." Based on its evaluation of appellees' trial plan, the court also found that "a trial in this action will be manageable in that it involves the application of the laws of a single state (Delaware), there are no individual issues to be resolved by the fact-finder, and that the sole individual issue (the amount of shares held by each class member on October 17, 2011) can be resolved through a post-judgment proceeding." In the order granting class certification, the trial court expressly adopted and incorporated appellees' proposed amended preliminary plan for the trial of the class claims. Although the trial court also refers to "Defendants' position with respect to Plaintiffs' Trial Plan as set forth in its Attachment to Plaintiffs' Proposed Amended Preliminary Plan for Trial of Class Claims," it does not adopt or incorporate the attachment in its order or otherwise analyze the substance of appellants' position set forth in the attachment. This interlocutory appeal followed. ANALYSIS In six issues, appellants challenge the trial court's order granting class certification. In their first four issues, they contend that the trial court abused its discretion in concluding that the named plaintiffs and their counsel are adequate, that the named plaintiffs' claims are typical, and that individualized issues do not predominate. See Tex. R. Civ. P. 42(a)(3), (4), (b)(3). In their fifth issue, appellants urge that the trial court abused its discretion "in failing to 'rigorously analyze' all 4 certification requirements under Rule 42, as evidenced by the legally deficient class-action 'trial plan' approved by the [trial] court." In their sixth issue, they urge that the trial court abused its discretion in certifying the class and approving the trial plan. Class Certification Requirements and Standard of Review Appellate courts review a class certification order for abuse of discretion. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 696 (Tex. 2008); Compaq Computer Corp. v. Lapray, 135 S.W.3d 657, 671 (Tex. 2004). "A trial court abuses its discretion if it acts arbitrarily, unreasonably, or without reference to any guiding principles." Bowden, 247 S.W .3d at 696 (citing Walkerv. Packer, 827 S.W.2d 833, 839 (Tex. 1992)). We do not indulge every presumption in the trial court's favor, however, "as compliance with class action requirements must be demonstrated rather than presumed." Id. (citing Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 691 (Tex. 2002)). "Courts must perform a 'rigorous analysis' before ruling on class certification to determine whether all prerequisites have been met." Southwestern Ref Co. v. Bernal, 22 S.W.3d 425, 435 (Tex. 2000). The Texas Supreme Court has rejected a "certify now and worry later" approach. Id. at 435. Trial courts must determine the underlying substantive law prior to certification "as courts can hardly evaluate the claims, defenses or applicable law without knowing what the law is." Lapray, 135 S.W.3d at 672. All class actions must satisfy the four threshold requirements contained within Rule 42(a) of the Texas Rules of Civil Procedure: (1) numerosity ("the class is so numerous thatjoinder of all members is impracticable"); (2) commonality ("there are questions oflaw or fact common to the class"); (3) typicality ("the claims or defenses of the representative parties are typical of the 5 claims or defenses of the class"); and (4) adequacy of representation ("the representative parties will fairly and adequately protect the interests of the class"). Tex. R. Civ. P. 42(a)(l)-(4); Bernal, 22 S.W.3d at 433. In addition to the subsection (a) prerequisites, class actions also must satisfy at least one of the subdivisions of Rule 42(b). See Tex. R. Civ. P. 42(b) (subsection (b) directs that only certain kinds of actions can be class actions); Bernal, 22 S.W.3d at 433. Here the trial court granted class certification under Rule 42(b)(3). To certify a class under Rule 42(b )(3), in addition to the subsection (a) prerequisites, the trial court must "find that 'questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair andefficientadjudicationofthe controversy."' Lapray, 135 S.W.3d at663 (quoting Tex. R. Civ. P. 42(b)(3)) (emphasis in original). Subsection (c )(l)(D) of Rule 42 also requires certain statements to be included in an order granting or denying certification under Rule 42(b)(3). Relevant to this appeal, the order "must state ... the elements of each claim or defense asserted in the pleadings." Tex. R. Civ. P. 42(c)(l)(D)(i). The Trial Court's Trial Plan We begin with appellants' fifth issue because it is dispositive. Appellants urge that the trial court abused its discretion "in failing to 'rigorously analyze' all certification requirements under Rule 42, as evidenced by the legally deficient class-action 'trial plan' approved by the [trial] 6 court." Appellants focus, among other alleged deficiencies in the trial plan, on the omission of any discussion or analysis of their affirmative defenses. 1 "[A] trial plan is required in every certification order to allow reviewing courts to assure that all requirements for certification under Rule 42 have been satisfied." State Farm Mut. Auto. Ins. Co. v. Lopez, 156 S.W.3d 550, 556 (Tex. 2004) (emphasis in original). "The formulation of a trial plan assures that a trial court has fulfilled its obligation to rigorously analyze all certification prerequisites and 'understands the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues."' Id. (quoting Bernal, 22 S.W.3d at 435 (quoting Castano v. American Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996))). "'Thus it is improper to certify a class without knowing how the claims can and will be tried.'" Id. at 5 5 5. Here, the trial court's order and the adopted trial plan fail to meaningfully address appellants' pleaded defenses. We cannot ignore the trial court's failure to comply with the express requirement in Rule 42 to state the elements of those defenses in its order. Tex. R. Civ. P. 42(c)(l)(D)(i). Further, by failing to include analysis of the pleaded defenses, the trial court failed 1 Appellants' other asserted deficiencies in the trial plan include that their affirmative defenses require individualized proof, that the plan improperly includes claims for breach of the duty of care and disclosure claims, that the plan improperly omits the element of bad faith as to the claim of breach of the duty of loyalty, that the plan fails to address the effects of the aiding and abetting claims against Statoil, and that the plan and the trial court's order make improper factual findings. They specifically challenge the following sentence in the trial court's order: "Plaintiffs have demonstrated that each member of the Class is the victim of a common course of conduct engaged in by defendants" and the following sentence in the trial plan: "The Board allowed itself to be steered into a transaction with Statoil by a management team who was intent on achieving a liquidity event for their tens of millions of dollars in otherwise illiquid holdings in the Company." 7 to conduct the required "rigorous analysis" before ruling on the class certification. See Bernal, 22 S.W.3d at 435; see also Texas S. Rentals, Inc. v. Gomez, 267 S.W.3d 228, 247 (Tex. App.-Corpus Christi 2008, no pet.) (noting that "difficult, if not impossible, for [the appellate court] to determine if the class should have been certified" and "surmis[ing] that the trial court's failure to include any discussion of these items in the trial plan is a result of its failure to rigorously analyze [the issues] in light of the predominance requirement"). We conclude that the trial court abused its discretion by certifying a class without an order complying with the express requirements of Rule 42 and "without formulating a trial plan confirming that it has rigorously analyzed the requirements of Rule 42." See State Farm, 156 S.W.3d at 557 (emphasis in original). Thus we must decertify the class and remand the case to the trial court. SeeBMG DirectMktg.,Inc. v. Peake, 178 S.W.3d 763, 778 (Tex. 2005)(decertifying class and remanding so that trial court "may determine effect of ... defense on the requirements for class certification"); National W. Life Ins. Co. v. Rowe, 164 S.W.3d 389, 390 (Tex. 2005) (per curiam) (reversingjudgment of court of appeals that affirmed class certification and remanding cause to trial court because trial court "did not conduct the rigorous analysis of the issues to be tried"). CONCLUSION For these reasons, we decertify the class that the trial court certified, reverse, and remand the cause for further proceedings consistent with this opinion. 2 2 Having concluded that certification was improper because the trial court's order and its trial plan fail to meaningfully address pleaded defenses, we do not consider appellants' additional challenges to the other certification prerequisites. See Union Pac. Res. Grp., Inc. v. Hankins, 111 S. W.3d 69, 75 (Tex. 2003) (reversing certification because none of the issues identified in trial 8 Melissa Goodwin, Justice Before Justices Puryear, Goodwin, and Field Reversed and Remanded Filed: August 15, 2014 plan satisfied commonality requirement and noting that the court "need not consider [appellant]'s additional challenges to the other certification prerequisites"); Texas Parks & Wildlife Dep 't v. Dearing, 240 S.W.3d 330, 361 (Tex. App.-Austin 2007, pet. denied) (deferring further analysis of propriety of class certification because impact of case on claims and defenses "will be integral to the district court's consideration of class certification on remand"). Further, we express no opinion on the proper outcome of a rigorous analysis under Rule 42. See North Am. Mortg. Co. v. 0 'Hara, l 53 S.W.3d 43, 44-45 (Tex. 2004) (per curiam) (declining to examine whether certification proper in absence of trial plan and noting that court of appeals should have remanded case for further certification proceedings "without dictating the result"). 9 Tab 3 “Exhibit 1” filed with the Court by the district clerk on June 5, 2015, which includes “Plaintiffs’ Proposed Second Amended Plan for Trial of Class Claims” filed in ~h~ou~i.'J, Teitas of Travis 4:t Oi"tr\cl court June 5, 2015 03-15-00248-CV MAR i 9 'l.\J\5 , ~·IC> {). M. At ' '·oistricJClerl COMPLAINT Defendants Rural/Metro Corporation ("Rural/Metro" or the "Company"). Christopher S. Shackelton, Michael P. DiMino. Eugene l. Davis. Earl P. Holland, Conrad A. Conrad, and Henry 0. Walker (collectively "the Rural/Metro Defendants"), by and through their undersigned counsel, hereby respond to the Verified Second-Amended Complaint (the "Amended Complaint'') as follows: GENERAL DENIAL Except as otherwise expressly recognized herein, the Rural/Metro Defondant~ deny each and every allc11ation contained in the Amended Complaint. The Ruml/Metro Defendnnts state U1at the headings and sub-headings throughout the Amended Complaint do not constitute well-pleaded allegations of fact and therefore require no response. To the extent a response is required, the allegations of the headings and sub-headings in the Amended Complaint are denied. The Rurul/Metro Defendants expressly reserve the right to seek to amend and/or supplement their Answer as may be necessary. •' . 8. The Rural/Metro Defendants are fully protected from liability under 8 Def. C. § 141(e). 9. Plaintiff's putntive claims and remedies arc barred by the doctrines of acquiescence, estoppel, Inches, unclean hands, or waiver. I 0. Without conceding that Plaintiff or any forme1· Rural/Metro stockholder is entitled to appraisal rights, any claim for appraisal or quasi-appraisal by any member ot' the class who fails to follow lhe procedure set forth in 8 Del. C. § 262(d) is barred by such class member's failure to perfccl appraisal rights in the manner specified in § 262 and as !let forth in the proxy statement. 11. The equitable remedy of quasi-uppruisal is not avuiluble in whole or in pnrt. The Rur.:11/Metro Defendants reserve the right to assert additional defenses as may be warranted by future discovery or investigation in this action. J•RA YER FOR RELIEF WHEREFORE, the RuraVMetro Defendants respectfully rcqut:st that lhe Court enter judgment in their favor, ond against Plaintiff, as follows: I. That Plaintiffs Verified Second-Amended Complainl be dismissed with prejudice and that judgment be entered against Plaintiff and in favor of the Rural/Metro Detendonts; 2. That the Rural/Metro Defendants be awarded the costs of this suit, includillg their disbursements and reasonable nttorncys' fees and expert foes (if any); and 86 EXHIBITB ' .. _J .. ) IN RE DOLE FOOD COMPANY, INC. ) C.A. No. 8703-VCL STOCKHOLDER LITIGATION ) ) ) IN RE APPRAISAL OF DOLE FOOD ) C.A. No. 9079-VCL COMP ANY, INC. ~ Public Inspection Version Filed November 17, 2014 James L Holzman (DE Bar l.D. 663) J. Clayton Athey (DE Bar l.D. 4378) Patrick W. Flavin (DE Bar I.D. 5414) OF COUNSEL: PRICKETT, JONES & ELLIOTT, P.A. 1310 King Street Peter M. Stone P.O. Box 1328 Edward Han Wilmington, DE 19899-1328 PAUL HASTINGS LLP (302) 888-6500 1117 S. California Avenue Palo Alto, California 94304-1106 Attorneys/or Defendants David H. (650) 320-1800 Murdock and DFC Holdings, LLC and Non-Party DFC Merger Corp. Dated: November 7, 20 l 4 FIFTEENTH AFFIRMATIVE DEFENSE (Estoppel) Plaintiffs' purported claims are barred in whole or in part because of or based on the doctrine of estoppel. SIXTEENTH AFFIRMATIVE DEFENSE (Laches) Plaintiffs' purported claims are barred in whole or in part based on the doctrine of laches. SEVENTEENTH AFFIRMATIVE DEFENSE (Waiver) Plaintiffs' purported claims are barred in whole or in part because the Plaintiffs have waived their claims and/or their right to seek damages. EIGHTEENTH AFFIRMATIVE DEFENSE (Acquiescence) Plaintiffs' purported claims are barred in whole or in part based on the doctrine of acquiescence. NINETEENTH AFFIRMATIVE DEFENSE (Exculpatory Provision) Plaintiffs' purported claims are barred in whole or in part because 245 • .c ... Dole's Amended and Restated Articles of Incorporation exculpate Defendants from liability to the fullest extent permitted under Delaware law pursuant to 8 Del. C. § 102(b)(7). TWENTIETH AFFIRMATIVE DEFENSE (Ratification) Plaintiffs' purported claims are barred by the doctrine of ratification as a result of the vote of Dole stockholders approving the transaction. TWENTY-FIRST AFFIRMATIVE DEFENSE (Reserve All Rights) Defendants hereby reserve and assert all affirmative defenses available. Defendants presently have insufficient knowledge or information upon which to form a belief as to whether they may have other, as yet unstated, affirmative defenses available. Therefore, Defendants reserve the right to assert additional affirmative defenses in the event that discovery indicates that it would be appropriate. PRAYER FOR RELIEF Wherefore, Defendants pray for a judgment in favor of Defendants and against Plaintiffs as follows: A. That Plaintiffs take nothing by their Second Amended Complaint; 246 CERTIFICATE OF SERVICE Pursuant to the attached Declaration of Service by E-Mail, I hereby certify that a true and correct copy of the foregoing instrument has been served in accordance to the Texas Rules of Civil Procedure, to those listed on the attached service list, on this 161h day of March 2015. Isl Michael D. Marin MICHAEL D. MARIN (' ... ' ,. ~ DECLARATION OF SERVICE BY E-MAIL I, June P. Ito, not a party to the within action, hereby declare that on March 16, 2015, I served the attached PLAINTIFFS' RESPONSE TO DEFENDANTS' JOINT OPPOSITION TO CLASS CERTIFICATION AND PLAINTIFFS' PROPOSED AMENDED PLAN FOR TRIAL OF CLASS CLAIMS on the parties in the within action by e-mail addressed as follows: Counsel for Defendant(s) Timothy R. McConnick Thompson & Knight LLP timothy.mcconnick@tklaw.com Michael W. Stockham michael.stockham@tklaw.com Timothy E. Hudson tim.hudson@tklaw.com Debora B. Alsup debora.alsup@tklaw.com Danley Comvn danley.comvn@.tklaw.com Karl S. Stem Vinson & Elkins L.L.P. kstem@velaw.com Michael C. Holmes mholmes@velaw.com Jennifer B. Poppe jpoppe@velaw.com Thomas S. Leatherburv tleatherburv@.velaw.com Counsel for Plaintiff(s) Michael Burnett Annburst & Brown. PLLC mbumett@.abaustin.com Kelly N. Reddell Baron & Budd, P.C. kreddell@.baronbudd.com Michael D. Marin Boulette & Golden LLP mmarin@.boulettegolden.com Evan J. Smith Brodsky & Smith, LLC esmith@brodsky-smith.com Marc L. Ackennan mackerman@.brodskv-smith.com Shane T. Rowley Farucii & Faruoi. LLP srow lev@.faruq ilaw .com Hamilton Lindley Dunnam & Dunnam hlindley@. dunnamlaw .com Joe Kendall Kendall Law Group, LLP jkendall@kendalllawgroup.com Daniel Hill dhill@kendalllawgroup.com Jamie J. McKey imckev@.kendalllawgrouo.com Denis F. Sheils Kohn, Swift & Graf. P.C. dsheils@.kohnswift.com Brian J. Robbins Robbins Arroyo LLP brobbins@robbinsarroyo.com Stephen J. Oddo soddo@robbinsarroyo.com Edward B. Gerard eu;erard@.robbinsarrovo.com Katharine M. Ryan Ryan & Maniskas, LLP kryan@nnclasslaw.com Richard A. Maniskas rmaniskas@.nnclasslaw.com Jonathan M. Stein Saxena White P.A. istein@.saxenawhite.com Willie C. Briscoe The Briscoe Law Finn wbriscoe@.thebriscoelawfirm.com Patricia C. Weiser The Weiser Law Finn, P.C. pw@weiserlawfirm.com James M. Ficaro imf@.weiserlawfinn.com I declare under penalty of perjury that the foregoing is true and correct. Executed on ~ d~ March 16, 2015, at San Diego, California. JJµ . JUNEP. ITO ffJ 1012652_1 Tab 5 Judge Dietz’s order denying the request for a temporary injunction (CR305-307) Notlct s~r;;: Finr1! ir.:er1{.>cutoq1 None ~ Disp Parties:_ ~ DC BK11327 PG689 Dlsp code: CVD / CLS - · Redact pgs:_ _........ --.-- --~ ... - Judge 5/kD Cterk mvm CAUSE NO. D-1-0N-11..003205 RAYMOND BOYTlM, Individually and oo § IN THE DISTRICT COURT OF Behalf of AU Others Similarly Situated, § § Plaintiff. § § vs. § § Brigham EXPLORATION COMPANY. BRN § TRAVIS COUNTY, TEXAS_· M. Brigham, DAVID T. Brigham. HAROLD § D. CARTER, STEPHEN C. HURLEY, § STEPHEN P. REYNOLDS, HOBART A. § SMITH, SCOTT W. TINKER. STATOIL § ASA, and FARGO ACQUISITION, INC., § § Defendants. § § 20 Ist JUDICIAL DISTRICT ORDER DENYING TEMPORARY INJUNCTION 1. On this 22nd day of November, 201 t came on to be heard Motion for Temporary Injunction (..Motion") filed by Plaintiff Raymond Boytim. 2. The Court having found that all prerequisites of law have been satisfied and that this Court has jurisdiction over the parties and the subject matter of this cause, and having considered the pleadings on file, the arguments of counsel, and the evidence offered, finds as follows. 3. Plaintiff asks the Court to enjoin the close of the tender offer by Statoil until ----- ._ = Brigham Exploration discloses a net asset value analysis (~AV") created by Jefferies in June - --' 2011 (the "June 2011 NAV"). Plaintiff argues that Brigham Exploration~s directors breached - = '-- their fiduciary duty to the Brigham shareholders because they did not disclose the June 201 l NA V in the Schedule 140-9, fi1ed with the Securities and Exchange Commission and delivered to the Brigham shareholders. us 709961\.'1 88 88 305 ·····-------·--·······-------------------- DC BK11327 PG690 4. The June 20ll NAV was created by Brigham Exploration's financial advisor. Jefferies. as marketing material to show potential buyers with more capital what could potentially be done with Brigham Exploration's as.sets. Brigham's CEO. Ben Brigham, testified that the June 2011 NAV is not a reliable indicator of Brigham Exploration's current value because Brigham Exploration lacks the capital to execute the model that is the basis fur the June ~Ji> 20ll NAV. The Brigham board of directors did not 111' &u the June 2011 NAV when it recommended that the Brigham Explorati.on sh.areholders accept the tender offer, R,alph Bads, a IA'°" -/61'tlfui~b representative of Jefferies, also testified that theJune 201 l NAV is unrenabQ Jefferies did not rely on the June 20 I l NAV when it issued its fairness opinion in connection with the proposed tender offer. 5. A temporary injunction may only be entered if the rt1oving party demonstrates: ( l} a probable right to the relief sought; (2) a probable, imminent, and irreparable injury in the absence of an injunetion; and (3) that the balance of the equities favors the issuance of an injunction. See Butnaru v. FordMotor Co., 84 S.W. 198, 204 (Tex. 2002). 6. ln order to demonstrate that he has a probable right to the relief sought, Plaintiff is required to show that the June 2011 NAV is likely to be material under Delaware Law. See Solomon v. Arntstrongt 747 A.2d 1098, 1128 (Del. Ch. 1999), a.ff'd, 746 A.2d 277 (Del. 2000). In order to be considered material, theJune 2011 must be reliable. Van de Walle v. Unimation, Inc., Civ. A. No. 7046, 1991 WL 29303. at *17 (Del. Ch. Mar. 7, 1991). "[V]aluations intended solely as sales pitches1• need not be disclosed because they are not "responsible estimates of a company's value." lnre Pennaco, 787 A.2d 691, 713 (Del.Ch. 2001). 7. Plaintiff has not satisfied its burden to demonstrate that he has a reasonable probability of success on the merits. Because the June 2011 NA V constitute marketing US 709%lvl -2- 89 89 306 DC BK11327 PG691 materials, Plaintiff is unUkety to demonstrate that the June 2011 NAV is either material or reliable, and that it therefore should have been disclosed. 8, Plaintiff further failed to $how that there wm be irreparable injury if an injunction is not issued, and that the harm he will suffer absent an injunction is greater than the ha.rm Defendants wm suffer with an injunction. 9. IT IS THEREFORE ORDERED that Plaintiff's Motion fur Temporary Injunction is DENIED. SIGNED this the 1.J... day of ~ A>t''~~-2011 at-··-··: _ o'elock a.m./p.m. US 709961 v I -3- 90 90 307 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4077147. Public record. Not legal advice.