In response to the plaintiff’s request for expedited proceedings, the defendants contended that expedited proceedings were “not warranted here because Plaintiff was seeking to prohibit or modify a merger necessary to ensure Wachovia’s continued viability-and equally necessary to avoid the damage to customers, depositors, employees, shareholders and the public that would occur if the merger were to be put in doubt, delayed, or blocked.”
In a recent ruling in the Wachovia Action (Ehrenhaus v. Baker et al., No. 2008 NCBC 19, 2008 WL 4928824 order issued (N.C. Super. Ct. Nov. 3, 2008)), the judge agreed to put the Wachovia Action on track for an expedited resolution but refused to order expedited discovery. The judge said that since most of the key facts in the case were a matter of public record, he could render a quick decision on the injunction request without discovery.
In considering the plaintiff’s request for expedited proceedings, the Court noted that it “must not lose sight of plaintiff’s burden on the merits.” On one hand, “Plaintiff may well be unable to overcome the high hurdle imposed on him here by the business judgment rule.” However, in concluding that it may resolve the Wachovia Action on an expedited basis, the court found that the Wachovia shareholder presents a colorable claim as to irreparable harm and “Plaintiff appears to have alleged colorable claims as to his contentions that (1) the Share Exchange transferring a nearly 40% voting bloc to Wells Fargo in advance of a vote on the Merger Agreement is unduly coercive, and (2) the limited “fiduciary out” clause contained in the Merger Agreement violates the Wachovia board’s continuing responsibility to exercise its fiduciary duties.”
The Court heard argument on the motion for preliminary injunction on November 24, 2008 and is expected to issue a decision before the shareholder meeting scheduled for December 23, 2008. We will monitor the Wachovia Action and will report on the court’s decision on whether it will enjoin the Well Fargo-Wachovia merger.