Monday, July 12, 2010
Once again thanks to the folks at Courtroom View Network, court in Yucaipa v Barnes & Noble is back in session with VC Strine presiding. Nachbar has some initial objections with respect to demonstratives used with those reports.
Kenneth Nachbar making his objections:
VC Strine sounds like a guy who bet on the Netherlands. Not happy about a demonstrative prepared over the weekend. Oh, no. We're back at 6th grade math. The objection is to a demonstrative prepared by the plaintiff to walk through the 6th grade math that caused Strine to break out in a cold sweat on Friday.
VCS: "It's out. ... Honestly speaking, if it's so simple, you could have gotten [the demonstrative] to them on Saturday."
OK, moving on. Now, Daniel Burch, plaintiff's expert, is back on the stand discussing proxy contests and solicitation of proxies. VC Strine is now questioning Burch regarding how one puts together a proxy contest without triggering a 13D filing. Burch is now on cross. Lot's of challenges to the fact that the first draft of his report was prepared by an associate and that he made subsequent corrections to it.
Colloquy between Strine and Burch:
On re-direct. I'm surprised that actual ownership percentages of B&N are really still in issue. Now some discussion about probable votes in the case of a proxy contests. Here's a demonstrative chart comparing Burch's report and the defendant's expert (Harkin). We'll hear from Harkin later.
Nachbar objects to leading questions. Sustained. But, with a warning - if Nachbar wants to be "persnickety" then Strine will let the plaintiffs be persnickety later. I expect there will be fewer of these objections going forward.
VCS to Burch: You are free to stretch your legs and enjoy the Dunkin Donuts on the subterranean level of the courthouse. Burch is excused.
And that's it for the plaintiff's witnesses.
Defense calls their expert, Peter Harkins. While the plaintiff's experts have tried to make the argument that the shareholder rights plan would make it impossible for a dissident to win a proxy contest, Harkins is making the argument that a dissident can win a proxy contest.
On cross: generating these table and charts just requires math, right? Right. Why are we talking about math, again? VC Strine is quiet this morning...maybe mulling the World Cup.
Breaking for lunch.
Back. Harkins is back on the stand under cross. Lots of questions about Alethia's voting (or no-voting) policy.
Strine interrupts to give both sides a hint about what he's thinking. He wants some help with his "limited mind" in post-trial briefings. Specifically, how or why people on either side think that Alethia might at the same time have a policy not to vote its shares and at the same time help finance a proxy contest. It doesn't make sense to him and he'd like people to think about it and explain it to him in post-trial briefs.
Back to cross. Harkins is dismissed after a brief colloquy with Strine regarding the scope of his expert testimony.
Next up for the defense - Jennifer Daniels, former GC for B&N.
She is testifying about the early stages of B&N's adoption of the pill. The argument that the defense is making here is that Jennifer Daniels, as a good GC, moved on her own to start things moving on the adoption of the pill - it's all good corporate stewardship and nothing to do with Riggiio actively seeking to stop Burkle from running a proxy contest.
On cross -
PL Lawyer: Ms. Daniels, did you think you might be a witness in Delaware on this issue?
JD: I was told I might have to give a deposition, and that a I might be required at trial, but was told at the time that "we're not there yet" ...
VCS: Oh, but now the dream has come true and here you are...
Since Daniels is no longer an employee of B&N (she's at NCR now), she's appearing voluntarily. Plaintiffs appear to be trying to make her look like a tool of Cravath and an incompetent lawyer.
You didn't advise the board that Morgan Stanley had been paid $4 million for its work in the College Books transaction? Morgan Stanley also advised on the rights plan.
Don't know if that will fly. Anyway, she's getting annoyed. Strine injects some more levity and then orders a recess.
Back again. Plaintiffs return to the line of questioning suggesting that hiring MS was a conflicted transaction because Riggio had previously hired MS in the College Books transaction and that Daniels is a bad lawyer because she listened to outside counsel on the issue of MS. The independent directors didn't get their own counsel - separate from company counsel - with respect to the question of adopting the rights plan. This issue is potentially problematic, but will it have legs?
On cross, plaintiff's attorneys are now trying to paint Daniels as being motivated by how to protect Riggio's position when she was having discussions with Cravath. She answers that she was thinking about all the possible questions that she might be asked. I wonder if this impresses Strine. Surely, he's hand plenty of contact with GC's like Daniels. We'll see. He's been quiet.
Ouch. Draft minutes of board meeting are in evidence. OK, you're all on notice - never let a junior lawyer draft minutes of a board meeting cause the other side is going to enter them into evidence. And the plaintiffs are done for the day.