M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, December 14, 2007

URI: The Path Ahead

Chancellor Chandler's denial of URI's summary judgment motion yesterday means that there will now be a full trial starting next Monday on the merits.  For those who like to parse language and speculate, Chandler's letter order stated: 

Having reviewed your briefs and supplemental letters regarding URI’s motion for summary judgment, I have concluded that while the question is exceedingly close, summary judgment is not an effective vehicle for deciding the contract issues in dispute in this case. Although I am today denying URI’s motion for summary judgment, I will provide more fully my reasons for doing so in the context of the post-trial opinion that will follow promptly after the conclusion of trial on Wednesday, December 19.

There are a number of readings of the "exceedingly close" language.  A few of the most likely are: 1)  URI almost made their case but the continuing ambiguity required a trial, 2) Cerberus, on their limited affidavits and other documents, almost made their case but the continuing ambiguity required a trial, 3) Chandler still hasn't made any definitive determination other than that, given the high standard here (undisputed evidence supporting a judgment at law), it is ambiguous, 4) Chandler has made a decision but wants a trial to protect himself on appeal, and 5) the language is just comfort language and doesn't mean very much. 

I can't even begin to speculate on which one it is [Addendum:  my bet is 3 & 4], but I do think we have some data coming out of Cerberus's (successful) opposition brief and affidavits.  Assuming URI is a smart, rational actor at this point -- something I think you have to do -- they knew that their summary judgment motion would have serious problems.  So, rather than slug it out in a contest of affidavits which would only highlight the ambiguity, they decided to let Cerberus put forth its entire case and wait until trial for its factual points.  At trial, URI will now put forth their best case which appears likely to be the legal one made in their summary judgment brief -- i.e., section 9.10 has to mean something, and hope it defeats Cerberus's legal and evidentary arguments.  But, given the parol evidence we have right now, I think URI, absent any countering evidence, will still have a hard time given the evidence on Cerberus's side.  I eagerly await URI's opposing evidence, if any.  I want to emphasize that I still think things are very fluid-- and have not seen URI's evidence -- but if they have any, it may change my thinking at least, as Cerberus's evidence had similarly done.      

On Cerberus's opposition brief unsealed Wednesday I have one brief point.  Cerberus makes an argument (pp. 31-33) that URI's claim that the merger agreement contemplates specific performance does not meet the clear and convincing evidence standard required under Delaware law. Here, Cerberus is conflating the award of the remedy as opposed to the standard to interpret the contract.  To decide whether the contract requires specific performance Delaware courts use regular tools of contract interpretation.  But, once they have decided a breach (i.e., the contract required specific performance), then they will look to the clear and convincing evidence standard to decide if specific performance is actually warranted. As I have written elsewhere, I believe it is if URI wins, but others dispute this.  Otherwise, Cerberus builds on the parol evidence of Ehrenberg and the drafting record to show their side of the story.  I was particularly struck by Cerberus's claim that the limited guarantee and equity commitment letter had Delaware choice of law and choice of forum clauses, and that was changed at the request of Lowenstein Sandler. 

Finally, showing that this trial has Law & Order beat hands down, the expert opinion of John C. Coates, IV was rule inadmissible by Judge Chandler today.  The decision is under seal so we don't know the reason why.  Very interesting . . . .    


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How can it be "2) Cerberus, on their limited affidavits and other documents, almost made their case but the continuing ambiguity required a trial, ", if Cerberus didn't request a Summery Judgment?

Posted by: Twistelton-Twistelton | Dec 14, 2007 10:43:18 AM

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