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FILED: NEW YORK COUNTY CLERK 08/27/2013 INDEX NO. 652817/2013
NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 08/27/2013
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
X
MICHELLE SABATTINI, On Behalf of Herself
:
and All Others Similarly Situated,
:
: Index No. 652817/2013
Plaintiff,
:
: Motion Seq. #2
v.
:
:
SAKS INCORPORATED, STEPHEN I.
:
SADOVE, DONALD E. HESS, FABIOLA
:
ARREDONDO, ROBERT B. CARTER,
:
MICHAEL S. GROSS, MARGUERITE W.
:
KONDRACKE, JERRY W. LEVIN, NORA P.
:
MCANIFF, JACK L. STAHL, HUDSON’S
:
BAY COMPANY and HARRY ACQUISITION
:
INC.,
:
X
Defendants.
PLAINTIFF MICHELLE SABATTINI’S MEMORANDUM OF LAW IN SUPPORT OF
HER ORDER TO SHOW CAUSE FOR CONSOLIDATION OF THE ACTIONS AND
APPOINTMENT OF A LEADERSHIP STRUCTURE
SAMUEL T. COHEN, Individually and on X
behalf of all others similarly situated, :
:
Plaintiff, : Index No. 652724/2013
:
v. :
:
SAKS INCORPORATED, FABIOLA :
ARREDONDO, ROBERT B. CARTER, :
MICHAEL S. GROSS, DONALD E. HESS, :
MARGUERITE W. KONDRACKE, JERRY W. :
LEVIN, NORA MCANIFF, STEPHEN I. :
SADOVE, JACK L. STAHL, HUDSON’S BAY :
COMPANY and HARRY ACQUISITION INC., :
:
Defendants. :
X
X
THOMAS H. JENNINGS, individually and on
:
behalf of all others similarly situated,
:
: Index No. 652725/2013
Plaintiff,
:
:
v.
:
:
FABIOLA ARREDONDO, ROBERT B.
:
CARTER, MICHAEL S. GROSS, DONALD E.
:
HESS, MARGUERITE W. KONDRACKE,
:
JERRY W. LEVIN, NORA MCANIFF,
:
STEPHEN I. SADOVE, JACK L. STAHL,
:
SAKS INCORPORATED, HUDSON’S BAY
:
COMPANY and HARRY ACQUISITION INC.,
:
Defendants. :
X
(additional captions on next page)
ROBERT OLIVER, on behalf of himself and X
those similarly situated, :
:
Plaintiff, : Index No. 652758/2013
:
v. :
:
SAKS INCORPORATED, FABIOLA :
ARREDONDO, ROBERT B. CARTER, :
MICHAEL S. GROSS, DONALD E. HESS, :
MARGUERITE W. KONDRACKE, JERRY W. :
LEVIN, NORA MCANIFF, STEPHEN I. :
SADOVE, JACK L. STAHL, HUDSON’S BAY :
COMPANY and HARRY ACQUISITION INC, :
:
Defendants. :
X
X
JOSHUA TEITELBAUM,
:
:
Plaintiff,
: Index No. 652793/2013
:
v.
:
:
FABIOLA R. ARREDONDO, ROBERT B.
:
CARTER, MICHAEL S. GROSS, DONALD E.
:
HESS, MARGUERITE W. KONDRACKE,
:
JERRY W. LEVIN, NORA P. McANIFF,
:
STEPHEN I. SADOVE, JACK L. STAHL,
:
SAKS INCORPORATED, HUDSON’S BAY
:
COMPANY and HARRY ACQUISITION INC.,
:
:
Defendants.
:
X
(additional captions on next page)
X
JACK and WANDA OLIVER, individually, and
:
on behalf of all others similarly situated,
:
: Index No. 652854/2013
Plaintiffs,
:
:
v.
:
:
SAKS INCORPORATED, FABIOLA
:
ARREDONDO, ROBERT B. CARTER,
:
MICHAEL S. GROSS, DONALD E. HESS,
:
MARGUERITE W. KONDRACKE, JERRY W.
:
LEVIN, NORA MCANIFF, STEPHEN I.
:
SADOVE, JACK L. STAHL, HUDSON’S BAY
:
COMPANY, and HARRY ACQUISITION INC,
:
:
Defendants.
X
TABLE OF CONTENTS
I. PRELIMINARY STATEMENT ........................................................................................ 1
II. STATEMENT OF FACTS AND PROCEDURAL HISTORY.......................................... 2
III. ARGUMENT ...................................................................................................................... 4
A. The Actions Should Be Consolidated ..................................................................... 4
B. The Court Should Appoint a Leadership Structure................................................. 5
1. The Faruqi Firm Has Already Done Substantial Work
to Advance the Litigation............................................................................ 6
2. The Faruqi Firm Has Extensive Experience in Transaction
Litigation ..................................................................................................... 7
3. The Faruqi Firm Will Commit Sufficient Resources to
Effectively Represent the Proposed Saks Class .......................................... 9
IV. CONCLUSION ................................................................................................................. 10
i
TABLE OF AUTHORITIES
CASES Page(s)
Amtorg Trading Corp. v. Broadway & 56th St. Assocs.,
191 A.D.2d 212, 594 N.Y.S.2d 204 (1st Dep’t 1993) ...............................................................4
In re Cogent, Inc. Shareholders Litigation,
No. 5780-VCP (Del. Ch. 2010) .................................................................................................8
In re Fox Entertainment Group, Inc. Shareholders Litigation,
No. 1033-N (Del. Ch. 2005) ......................................................................................................8
In re International Coal Group, Inc., Shareholders Litigation,
No. 6464-VCP (Del. Ch. 2011) .................................................................................................9
Knee v. Brocade Communications Systems, Inc.,
No. 1-12-CV-220249, slip op. (Cal. Super. Ct. Apr. 10, 2012) .................................................8
In re McCormick & Schmick’s Shareholder Litigation,
No. 7058-VCL (Del. Ch. 2011) .................................................................................................9
Rich v. Reisini,
25 A.D.2d 32, 266 N.Y.S.2d 492 (1st Dep’t 1966) ...................................................................5
Sollins v. Alexander,
No. 601272/2006, 2006 N.Y. Misc. LEXIS 2889 (N.Y. Sup. Ct. July 13, 2006) .....................6
OTHER AUTHORITIES
22 N.Y.C.R.R. § 202.69(c)(2)..........................................................................................................5
Fed. R. Civ. P. 23(g) ........................................................................................................................6
N.Y. C.P.L.R. § 907 .........................................................................................................................5
N.Y. C.P.L.R. § 602(a) ....................................................................................................................4
Manual for Complex Litigation (Third) § 20.22 (1995) ..................................................................5
ii
Plaintiff Michelle Sabattini (“Sabattini”), by and through her undersigned counsel, Faruqi
& Faruqi, LLP (the “Faruqi Firm”), submits this memorandum of law in support of her order to
show cause for consolidation of the above-captioned actions and designation of a leadership
structure for plaintiffs.
I. PRELIMINARY STATEMENT
Presently pending before this Court are six class actions (the “Actions”)1 brought on
behalf of a putative class (the “Class”) of investors who were record and/or beneficial holders of
Saks Incorporated (“Saks” or the “Company”) common stock on July 29, 2013 through the date
of the close of the Proposed Buyout (defined below). The Actions arise out of Saks’s board of
directors’ (the “Board”) breaches of fiduciary duties in connection with its agreement to sell the
Company to Hudson’s Bay Company (“HBC”), via Harry Acquisition Inc. (“Merger Sub”), for
an unfair price by means of an unfair process.
As a threshold matter, it is undisputed that the Actions involve substantially identical
facts and assert the same claims against the same named defendants. Consolidation is therefore
appropriate to avoid unnecessary duplication, save unnecessary costs, and prevent divergent
decisions based on the same set of operative facts.
Sabattini further submits that her choice of counsel, the Faruqi Firm, is best suited to
challenge the Proposed Buyout. Indeed, the Faruqi Firm has:
i. Made efforts to coordinate with all plaintiffs to no avail;
ii. Analyzed the Proxy (defined below) and filed an amended complaint challenging
certain material omissions in the Proxy; and
1
The Actions are: Cohen v. Saks Inc., Index No. 652724/2013; Jennings v. Arredondo, Index No.
652725/2013; Oliver v.Saks Inc., Index No. 652758/2013; Teitelbaum v. Arredondo, Index No. 652793/2013;
Sabattini v. Saks Inc., No. 652817/2013; Oliver v. Saks Inc., Index No. 652854/2013.
1
iii. Filed an order to show cause for limited expedited discovery.
For these reasons, Sabattini respectfully submits that the Actions should be consolidated
and the Faruqi Firm should be appointed to lead the Class.
II. STATEMENT OF FACTS AND PROCEDURAL HISTORY
Saks has been a world-renowned retail icon for approximately 90 years, providing the
finest quality in fashion throughout the United States. ¶ 37.2 The Company also operates Saks
Fifth Avenue OFF 5TH stores, a luxury off-price retail store located in upscale mixed-use and
off-price centers. Id. As of April 23, 2013, there are 43 Saks Fifth Avenue stores and 66 Saks
Fifth Avenue OFF 5TH stores. Id.
On July 29, 2013, HBC and Saks jointly announced that they entered into a definitive
merger agreement (the “Merger Agreement”) by which HBC will acquire all outstanding Saks
common stock for $16.00 in cash per share (the “Proposed Buyout”). ¶¶ 56–57.
On August 2, 2013, Plaintiffs Samuel T. Cohen (“Cohen”) and Thomas H. Jennings
(“Jennings”) filed complaints captioned Cohen v. Saks Inc., Index No. 652724/2013 (the “Cohen
Action”) and Jennings v. Arrendondo, Index No. 652725/2013 (the “Jennings Action”),
respectively, alleging that the Board breached its fiduciary duty to Saks shareholders and that
Saks, HBC, and Merger Sub aided and abetted those breaches of fiduciary duty.
On August 6, 2013, Plaintiff Robert Oliver (“Oliver”) filed a complaint captioned Oliver
v. Saks Inc., Index No. 652758/2013, alleging substantially similar claims against the same
defendants as the Cohen and Jennings Actions.
2
All “¶ _” cites herein refer to the Amended Class Action Complaint (“AC”) filed in Sabattini v. Saks Inc.,
Index No. 652817/2013 on August 27, 2013. Capitalized terms, unless otherwise defined, have the same meaning as
those used in the AC.
2
On August 8, 2013, Plaintiff Joshua Teitelbaum (“Teitelbaum”) filed a complaint
captioned Teitelbaum v. Saks Inc., Index No. 652793/2013, also alleging substantially similar
claims against the same defendants as the Cohen and Jennings Actions.
On August 9, 2013, Sabattini filed the Class Action Complaint in Sabattini v. Saks Inc.,
Index No. 652817/2013.
On August 14, 2013, Plaintiffs Jack and Wanda Oliver (the “Olivers”) filed the final
complaint in the Actions captioned Oliver v. Saks Inc., Index No. 652854/2013, also alleging
substantially similar claims against the same defendants as the Cohen and Jennings Actions.
On August 20, 2013, Saks filed the preliminary proxy (the “Proxy”) on Schedule 14A
with the U.S. Securities and Exchange Commission (“SEC”).
On August 27, 2013, Sabattini filed the AC. The AC alleges that the proposed
consideration significantly undervalues the Company because it fails to take into account Saks’
future growth and earnings potential, as well the synergies flowing to HBC as a result of the
deal. ¶¶ 42–45, 58–59. The AC further alleges that Defendants have also exacerbated their
breaches of fiduciary duty by agreeing to lock up the Proposed Buyout with deal protection
devices that discourage other bidders from submitting a superior bid for the Company, including:
(i) a non-solicitation clause that bars Saks from soliciting interest from other potential acquirers;
(ii) a “matching rights” provision that gives HBC access to any competing offers for the
Company and allows HBC to top that offer; and (iii) a$40.1 million termination fee prior to a
certain “cut-off” date and $73.5 million termination fee if the Board terminates the Merger
Agreement pursuant to the lawful exercise of their fiduciary duties. ¶¶ 61–68. Finally, the AC
alleges that the Proxy failed to provide shareholders with material information in contravention
of the Board’s duty of candor. ¶¶ 69–77.
3
Since inception, the Faruqi Firm tried to coordinate with all plaintiffs in the Actions. In
fact, the Faruqi Firm tried to arrange a group call with all plaintiffs, which became impossible
due to all competing plaintiffs’ conflicted schedules. After the group call failed, the Faruqi Firm
started calling each firm individually but that proved even more chaotic and futile. This is the
perfect situation that mandates organization and immediate court intervention now that the Proxy
is out and a shareholder vote will be imminent.
Accordingly, this Order to Show Cause for Consolidation of the Actions and
Appointment of Leadership Structure follows.
III. ARGUMENT
A. The Actions Should Be Consolidated
Consolidation is appropriate when the actions before the court involve common questions
of law or fact. Indeed, Section 602(a) of the N.Y. C.P.L.R. states:
When actions involving a common question of law or fact are pending before a
court, the court, upon motion, may order a joint trial of any or all the matters in
issue, may order the actions consolidated, and may make such other orders
concerning proceedings therein as may tend to avoid unnecessary costs or delay.
“It is well settled that consolidation is generally favored by the courts in the interest of judicial
economy and ease of decision making where there are common questions of law and fact. . . .”
Amtorg Trading Corp. v. Broadway & 56th St. Assocs., 191 A.D.2d 212, 213, 594 N.Y.S.2d 204,
205 (1st Dep’t 1993).
In the instant matter, the Actions allege virtually identical facts in support of substantially
identical claims against nearly identical defendants. Consolidation of the Actions is therefore
appropriate.
Further, in the event the Court consolidates the Actions, Sabattini respectfully requests
that the consolidated case be assigned the master caption “In re Saks Incorporated Shareholder
4
Litigation, Master Index No. 652724/2013.” This request is consistent with the Court’s authority
to manage its docket and would further promote judicial economy and efficiency. See 22
N.Y.C.R.R. § 202.69(c)(2) (“The Coordinating Justice shall have authority to make any order
consistent with this section and its purposes, including to . . . assign[ing] a master caption [and]
create a central case file and docket.”).
B. The Court Should Appoint a Leadership Structure
Pursuant to N.Y. C.P.L.R. § 907, the Court has broad powers to control the course of
class action litigation. C.P.L.R. § 907 (“In the conduct of class actions the court may make
appropriate orders . . . [to] determin[e] the course of proceedings or prescribing measures to
prevent undue repetition or complication in the presentation of evidence or argument[.]”); see
also Rich v. Reisini, 25 A.D.2d 32, 34, 266 N.Y.S.2d 492 (1st Dep’t 1966) (holding that
appointing lead counsel “rests in the sound discretion of the court”).
Appointment of a leadership structure at an early stage of the litigation will also ensure
that the litigation has the necessary leadership in place to move matters forward in a diligent and
efficient fashion. If no lead counsel is appointed, there will be substantial duplication of
discovery and briefing, which will waste the resources of the parties as well as the Court. The
Manual for Complex Litigation recognizes the benefits of appointing lead counsel in complex,
multiparty litigation:
Complex litigation often involves numerous parties with common or similar
interests but separate counsel. Traditional procedures in which all papers and
documents are served on all attorneys, and each attorney files motions, presents
arguments, and conducts witness examinations, may result in waste of time and
money, in confusion and indirection, and in unnecessary burden on the court.
Special procedures for coordination of counsel are therefore needed and should be
instituted early in the litigation to avoid unnecessary costs and duplicative
activity.
Manual for Complex Litigation (Third) § 20.22, at 30 (1995).
5
Although there is no specific standard in New York for appointing lead counsel in a class
action challenging mergers, Federal Rule of Civil Procedure 23(g) provides the following useful
framework that courts must consider: (1) the work counsel has done in identifying or
investigating potential claims in the action; (2) counsel’s experience in handling class actions,
other complex litigation, and claims of the type asserted in the action; (3) counsel’s knowledge
of the applicable law; and (4) the resources that counsel will commit to representing the class.
Fed R. Civ. P. 23(g).
Based on the aforementioned factors, the Court should appoint the Faruqi Firm as Lead
Counsel for the consolidated action.
1. The Faruqi Firm Has Already Done Substantial Work to Advance
the Litigation
The “principal factor to be considered in making such selection [and appointing lead
counsel] is whether the appointment will serve the best interests of the shareholders.” Sollins v.
Alexander, No. 601272/2006, 2006 N.Y. Misc. LEXIS 2889, at *9 (N.Y. Sup. Ct. July 13, 2006)
(citing Katz v. Clitter, 58 A.D.2d 777, 396 N.Y.S.2d 388 (1977)).
Here, as soon as the Proposed Buyout was announced, the Faruqi Firm worked diligently
and efficiently to investigate the circumstances of the transaction to determine potential breaches
of fiduciary duties on behalf of Saks shareholders. For example, attorneys at the Faruqi Firm
reviewed all publicly available information, including the Merger Agreement and the Company’s
press releases. The Faruqi Firm therefore properly investigated the claims, and then drafted and
filed the initial complaint on August 9, 2013.
Additionally, given that the Company wants to close the Proposed Buyout in the fourth
quarter of 2013, time is of the essence. See ¶ 57. Recognizing the short time frame within which
to conduct discovery, the Faruqi Firm tried to coordinate with other plaintiffs in order to form a
6
leadership structure and move the case forward. These efforts however proved fruitless. On
August 20, 2013, Defendants filed the Proxy and time is now of the essence. Accordingly, the
Faruqi Firm has filed an amended complaint and has moved by order to show cause for
expedited discovery in order to advance the litigation.
The Faruqi Firm has thus worked diligently on behalf of Saks shareholders and will
continue to do so until the requested relief is obtained. The Faruqi Firm is also willing to lead
the case and include other plaintiffs firms in the Actions that are willing to move the litigation
forward on behalf of the Class.
2. The Faruqi Firm Has Extensive Experience in Transaction Litigation
The Faruqi Firm has already demonstrated its ability, resources, and commitment to
diligently prosecute the Actions, as it has done in many other similar actions on behalf of
shareholders. The Faruqi Firm’s resume submitted herewith provides additional details
regarding the firm’s attorneys, their credentials, and the firm’s record of successfully litigating
transactional cases on behalf of shareholders. See Ex. A to the JEM Aff.3
The purpose of merger and acquisition cases such as this one is threefold: (1) to make
shareholders whole by ensuring that they receive adequate compensation for their shares in the
transaction; (2) to ensure that shareholders possess all material information reasonably necessary
to reach an informed decision on whether to vote in favor of a merger; and (3) to ensure that the
terms of the transaction are fair and the process by which such terms are negotiated maximize
shareholder value. The Faruqi Firm has achieved all three of these goals in the successful
resolution of numerous transactional and other cases seeking to vindicate shareholders’ rights.
3
All references to the “JEM Aff.” refer to the Affirmation of Juan E. Monteverde In Support of Plaintiff
Michelle Sabattini’s Order to Show Cause for Consolidation of the Actions and Appointment of a Leadership
Structure, filed herewith.
7
Just recently, the Faruqi Firm, as co-lead counsel for plaintiffs, obtained monetary relief
for shareholders in In re Cogent, Inc. Shareholders Litigation, No. 5780-VCP (Del. Ch. 2010)
(See JEM Aff., Ex. B) (Stipulation of Settlement)). Specifically, after two years of hotly
contested litigation, the parties reached a cash settlement of $1.9 million to compensate
shareholders. Similarly, in In re Playboy Enterprises, Inc. Shareholders Litigation, Consolidated
No. 5632-VCN (Del. Ch. 2010) ((see JEM Aff., Ex. C) ([Corrected] Stipulation and Agreement
of Compromise, Settlement and Release)), the Faruqi Firm, as co-lead counsel for plaintiffs,
recovered $5.25 million for shareholders. Likewise, in In re Hearst-Argyle Shareholder
Litigation, No. 600926/2009 (N.Y. Sup. Ct. 2009) ((see JEM Aff., Ex. D) (Memorandum of
Understanding)), the Faruqi Firm, as co-lead counsel for plaintiffs, with the assistance of the
Hearst special committee, achieved an increase of over 12.5 percent, or $8,740,648, from the
initial transaction value offered for Hearst-Argyle Television Inc.’s stock by its parent company,
Hearst Corporation. The favorable outcome obtained by the Faruqi Firm in In re Fox
Entertainment Group, Inc. Shareholders Litigation, No. 1033-N (Del. Ch. 2005) ((see JEM Aff.,
Ex. E) (Stipulation of Settlement)) is another notable achievement for the firm. In Fox
Entertainment, the Faruqi Firm served on the executive committee and, in part, was responsible
for creating an increased benefit to shareholders of Fox Entertainment Group, Inc. of $450
million.
The Faruqi Firm also has noteworthy successes in achieving injunctive or declaratory
relief in cases where corporate wrongdoing deprives shareholders of material information. For
example, in April 2012, Faruqi obtained an unprecedented injunction in Knee v. Brocade
Communications Systems, Inc., No. 1-12-CV-220249, slip op. at 2 (Cal. Super. Ct. Apr. 10,
2012) (Kleinberg, J.). In Brocade, the Faruqi Firm, as sole lead counsel for plaintiffs,
8
successfully obtained an injunction enjoining Brocade’s 2012 shareholder vote because certain
information relating to projected executive compensation was not properly disclosed in the proxy
statement. See JEM Aff., Ex. F (Order After Hearing [Plaintiff’s Motion for Preliminary
Injunction; Motions to Seal]).
In In re McCormick & Schmick’s Shareholder Litigation, No. 7058-VCL (Del. Ch. 2011)
(see JEM Aff., Ex. G (Stipulation of Settlement and Agreement of Compromise, Settlement and
Release)), the Faruqi Firm, as co-lead counsel, secured important material disclosures for
shareholders including that the target’s financial adviser had contemplated two sets of discount
rates, but only disclosed one set to shareholders, which revealed substantial differences in the
value ranges for the company. Similarly, in In re International Coal Group, Inc., Shareholders
Litigation, No. 6464-VCP (Del. Ch. 2011) (see JEM Aff, Ex. H (Stipulation of Settlement)) the
Faruqi Firm, acting as co-lead counsel, secured a reduction in the Termination Fee of $10 million
and received additional material disclosures regarding the Company’s financial projections.
The cases referenced above reflect just a few of the Faruqi Firm’s important
achievements and experience in the area of transactional and shareholder rights litigation and
demonstrate that the Faruqi Firm is more than qualified to serve as lead counsel in this case and
liaison counsel in this case.
3. The Faruqi Firm Will Commit Sufficient Resources to Effectively
Represent the Proposed Saks Class
The Faruqi Firm has offices in New York, Los Angeles, Wilmington, and Philadelphia,
and thirty-five (35) attorneys who concentrate their practice exclusively on shareholder and class
action litigation. See JEM Aff., Ex. A. The Faruqi Firm’s attorneys are more than capable of
serving and protecting the interests of the shareholders in this case and the firm’s substantial
9
resources will make it a particularly valuable asset to the leadership structure selected to manage
this litigation.
This litigation will undoubtedly be protracted and vigorously contested by formidable
opposing counsel, as defendants have substantial resources with which to defend the Actions.
Therefore, it is of vital importance that lead counsel for plaintiffs is of the highest caliber. As the
foregoing illustrates, the Faruqi Firm has a proven record of providing skilled and efficient
representation in complex actions of this nature and is more than qualified to act as lead counsel
to the proposed Saks Class.
Accordingly, the Court can be assured that the Faruqi Firm not only has the necessary
resources, but is willing and able to commit them in prosecuting this litigation.
IV. CONCLUSION
For the reasons stated herein, as well as those set forth in the accompanying documents,
Sabattini respectfully requests that the Court consolidate the Actions and appoint Sabattini Lead
Plaintiff and the Faruqi Firm Lead Counsel.
DATED: August 27, 2013 Respectfully submitted,
FARUQI & FARUQI, LLP
By: /s/ Juan E. Monteverde
Juan E. Monteverde
David M. Sborz
369 Lexington Ave., Tenth Floor
New York, NY 10017
Tel: (212) 983-9330
Fax: (212) 983-9331
Attorneys for Plaintiff
10
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Plaintiff moves on the basis ProCare failed to produce any responsive documents in compliance with the lawfully issued subpoena without justification.
(Notice of Motion, pg. 2.)
Meet and Confer
A motion to compel a deposition must be accompanied by a declaration stating facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.
(C.C.P. §§
2016.040
,
2025.480
(b).)
Plaintiffs counsel declares that on March 19, 2024, she sent Defendants counsel Reed a detailed meet and confer letter explaining the deficiencies in ProCares purported objections to the subpoena.
(Decl. of Stassi ¶6, Exh. D.)
Plaintiffs counsels declaration substantially complies with the requirements of C.C.P. §2016.040.
Background
On December 1, 2023, Plaintiff served a notice for the deposition for production of business records to ProCare set for December 19, 2023.
(Decl. of
Stassi
¶3, Exh. A.)
On January 19, 2024, ProCares counsel set forth ProCares purported objections to the subpoena in a letter.
(Decl. of
Stassi
¶5, Exh. C.)
Plaintiff filed the instant motion on March 22, 2024.
ProCare filed its opposition on July 3, 2024.
Plaintiff filed its reply on July 8, 2024.
Discussion
Where a deponent fails to produce any document, the subpoenaing party may move the court for an order compelling the production of documents, upon a showing of good cause.
(C.C.P. §
2025.480
(a);
see also Thai v. Richmond City Ctr., L.P.
(2022) 86 Cal.App.5th 282, 289.)
Good cause may be established where the request is made in good faith and that the documents sought are relevant to the subject matter and material to the issues in the litigation.
(
Associated Brewers Distributing Co. v. Superior Court
(1967)
65 Cal.2d 583, 58
6-587.)
Documents are discoverable from third parties where they are reasonably likely to lead to the discoverable information or aid in evaluation of the claims. In the context of discovery, evidence is relevant if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement.
(
Moore v. Mercer
(2016) 4 Cal. App. 5th 424, 447.)
The broad scope of permissible discovery is equally applicable to discovery of information from a nonparty as it is to parties in the pending suit.
(
Johnson v. Superior Court
(2000) 80 Cal.App.4th 1050, 1062.)
At this stage, relevance is construed broadly and [a]dmissibility is not the test, information unless privileged, is discoverable if it might reasonably lead to admissible evidence.
(
Stewart v. Colonial W. Agency, Inc
. (2001) 87 Cal.App. 1006, 1013.)
Here, good cause exists to compel compliance with Plaintiffs deposition subpoena.
The only documents Plaintiff has requested from ProCare are related to the transactions that form the fraudulent scheme alleged in the operative pleading.
(SAC ¶¶75-92.)
Plaintiff has pursued party discovery, including written interrogatories and requests for production of documents served on New Hope, which has revealed that ProCares arrangement with New Hope is similar to the arrangement New Hope has with Healthcare Financial Solutions, LLC (HFS).
(Decl. of Stassi ¶8.)
Specifically, like HFS, ProCare agreed to (and did) purchase patient accounts from New Hope prior to any patient services (MRIs) having been rendered and paid New Hope up front for the accounts, as set forth in the Accounts Receivable Purchase Agreement Between ProCare Funding, LLC (Buyer) and Adam Avelardo Perez d/b/a New Hope Imaging Services (Seller) dated March 10, 2021 that Defendants produced in discovery.
(Decl. of Stassi ¶8.)
The agreement was subsequently amended in 2019, and Defendants produced the amendment and a bill of sale from 2021 relating to ProCares purchase of New Hope patient accounts.
New Hopes bank account records that Plaintiff subpoenaed from the banks show that ProCare paid New Hope at least $65,710.00 pursuant to this arrangement.
(Decl. of Stassi ¶8; Supp-Decl. of Stassi ¶4, Exh. G.)
Plaintiffs deposition subpoena does not seek documents that would disclose patient information, and to the extent that some patient information may be identified in responsive documents, HIPAA allows such disclosure under an appropriate protective order such as the one that exists in the instant matter.
ProCare claims it need not comply with the subpoena because it requires production of confidential and sensitive business information.
ProCare fails to meet its burden to demonstrate exactly what confidential and sensitive information it would be forced to produce and why the protective order does not provide sufficient protection for that material.
If an objection is based on a claim of privilege or a claim that the information sought is protected . . . the response shall provide sufficient factual information for other parties to evaluate the merits of that claim, including, if necessary, a privilege log. (C.C.P. §2031.240(c)(1);
see also HLC Properties, Limited v. Superior Court
(2005) 35 Cal.4th 54, 59 [The objecting party has the burden to file evidence of the preliminary facts establishing a privilege exists.].)
Here, ProCare has not demonstrated that any such privilege or protection it claims in its objections applies.
ProCares objections do not describe any of these purportedly confidential and sensitive documents with particularity, nor has it produced any privilege log.
Further, any concern ProCare may have is outweighed by Plaintiffs need for the documents and the protections available under the existing protective order.
(
See
Supp.-Decl. of Stassi ¶3, Exh. F.)
ProCares objections that the subpoena is overly broad and oppressive are unavailing because it fails to make a showing of undue burden.
(C.C.P. §2020.220(e) [subpoenaed person bears the burden of demonstrating that the information is from a source that is not reasonably accessible because of undue burden or expense];
Vasquez v. California School of Culinary Arts, Inc.
(2014) 230 Cal.App.4th 35, 42 [stating subpoenaed entity may only oppose production of electronically stored information on the basis that the information is from a source that is not reasonably accessible because of undue burden or expense].)
ProCares conclusory statements do not satisfy its burden to demonstrate undue burden and expense.
The Court grants Plaintiffs motion pursuant to C.C.P. §2025.480 and orders ProCare to
appear for deposition and produce documents and things within thirty (30) days of this Courts ruling
.
Accordingly, Plaintiffs motion is granted.
Conclusion
Plaintiffs motion to compel ProCares compliance with Plaintiffs deposition subpoena for production of business records is granted.
ProCare to appear for deposition and produce the requested documents with 30 days of this ruling.
Moving Party is to give notice of this ruling.
Dated:
July _____, 2024
Hon. Daniel M. Crowley
Judge of the Superior Court
Ruling
KATHRYN BURDGE vs AIRSTREAM, INC.
Jul 18, 2024 |
24CV00800
24CV00800
BURDGE v. AIRSTREAM INC.
AIRSTREAM’S MOTION TO STAY
The motion to stay is denied.
I. BACKGROUND
Kathryn Burdge’s (“Burdge’) amended complaint, filed on March 26, 2024, alleges a
violation of the Song-Beverly Consumer Warranty Act in relation to her purchase of a 2023
Airstream Atlas RV. She purchased the Airstream in Temecula, California and she resided in
Page 6 of 9
Santa Cruz County at the time of the purchase. Burdge asserts various deficiencies/defects with
the RV.
In connection with the purchase of the Airstream, Burdge signed a Limited Warranty
which stated, in part, the following: “LEGAL REMEDIES: EXCLUSIVE JURISDICTION FOR
DECIDING LEGAL DISPUTES RELATING TO THE ALLEGED BREACH OF EXPRESS
WARRANTY AND BREACH OF THE IMPLIED WARRANTIES ARISING BY
OPERATION OF LAW AS WELL AS THOSE RELATING TO REPRESENTATIONS OF
ANY NATURE RESTS IN THE COURTS WITHIN THE STATE OF MANUFACTURE,
WHICH IS OHIO.” (Ex. B to Dec. of March.)
This language is found on the second page of the Limited Warranty and is the second
paragraph before the signature line for the purchaser. The sales contract is 6 pages long and
signatures were required on each page and, on some pages, multiple signatures on each page.
II. MOTION
Airstream seeks to stay this action to allow Burdge to re-file the case in Ohio, the forum
selection state. Airstream bases its motion on the above-referenced forum selection clause
contained in the signed limited warranty. Airstream contends a motion to enforce a forum
selection clause is a motion to stay (or dismiss) the action to allow a plaintiff to file in the proper
court.
Airstream argues the forum selection provision is mandatory and reasonable. Further,
Airstream acknowledges Burdge cannot be compelled to waive her rights under Song-Beverly,
and thus, it will stipulate to have the Ohio courts apply Song-Beverly in this case. Airstream
contends a stay would allow for time to determine if the Ohio courts would apply Song-Beverly.
If they will not, then Burdge could bring the case back to Santa Cruz.
Burdge opposes the stay. She argues Airstream failed to provide evidence demonstrating
she freely and voluntarily agreed to the forum selection clause. Even though Burdge signed the
limited warranty “she had to sign the document even if she did not understand the importance of
the forum selection clause.” (Opp at pg. 3.) That is, Burdge was required to sign the
acknowledgment of document and that does not prove she waived her rights under Song-Beverly
freely and voluntarily.
Burdge asserts Airstream failed to provide evidence that the designated forum will not
diminish her rights afforded under California law. Specifically, she argues, even if the court finds
she freely and voluntarily agreed to the forum selection clause, Airstream cannot show that Ohio
law will not diminish her substantive rights. Burdge contends Airstream’s offer to stipulate to
have the Song-Beverly apply in Ohio is insufficient because the choice of law in the Limited
Page 7 of 9
Warranty states that Ohio law will govern procedural issues and how the express warranty is
construed and interpreted.
III. DISCUSSION
“Trial courts generally have the inherent power to stay proceedings in the interests of
justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33
Cal.App.4th 1484, 1489; see also Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1376-79;
CCP § 128(a)(3) [“Every court shall have the power to do all of the following: To provide for the
orderly conduct of proceedings before it, or its officers.”].)
"The procedure for enforcing a forum selection clause is a motion to stay or dismiss for
forum non conveniens." (Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1294.)
“California law is ‘in accord with the modern trend which favors enforceability of such
[mandatory] forum selection clauses. [Citations.] No satisfying reason of public policy has been
suggested why enforcement should be denied a forum selection clause appearing in a contract
entered into freely and voluntarily by parties who have negotiated at arm's length. For the
foregoing reasons, we conclude that forum selection clauses are valid and may be given effect, in
the court's discretion and in the absence of a showing that enforcement of such a clause would be
unreasonable.’ [Citation.]” (Quanta Computer Inc. v. Japan Communications Inc. (2018) 21
Cal.App.5th 438, 444-445.)
“‘California courts will refuse to defer to the selected forum if to do so would
substantially diminish the rights of California residents in a way that violates our state's public
policy.’ [Citation.]” (Verdugo v. Alliantgroup, L.P. (2015) 237 Cal.App.4th 141, 147.) “The party
opposing enforcement of a forum selection clause ordinarily ‘bears the substantial burden of
proving why it should not be enforced.’ [Citations.] That burden, however, is reversed when the
claims at issue are based on unwaivable rights created by California statutes. In that situation,
the party seeking to enforce the forum selection clause bears the burden to show litigating
the claims in the contractually designated forum ‘will not diminish in any way the
substantive rights afforded … under California law.’ [Citations.]” (Id.) (Emphasis added.)
In this case, while she did sign the limited warranty, the court agrees with Burdge that the
warranty was not signed knowingly as to the forum selection clause and that application of the
clause would be unreasonable and/or unfair. The clause is buried in the second to the last
paragraph and is written in legalese such that a reasonable consumer could not be expected to
understand they were acquiescing to file a lawsuit in Ohio. The exclusive jurisdiction section
does not adequately inform the consumer that they would need to file suit in Ohio for warranty
issues, especially given that Burdge lives in California and purchased the Airstream in
Page 8 of 9
California. The court also notes the length of the sales contract and number of signatures
required as factors which balance in Burdge’s favor.
The court does not find Airstream has carried its burden in demonstrating that Burdge’s
substantive rights will not be diminished in any way if the case is brought in Ohio. Despite the
offer of Airstream’s counsel to stipulate to apply California law in Ohio, there is no guarantee
the Ohio courts will agree to this arrangement; that is, what is the effect of the stipulation in the
Ohio courts? Second, Airstream’s proposal would create two pending actions, which does not
promote judicial economy. Third, having California courts apply California law simply makes
more sense in terms of protecting Burdge’s rights under the Song-Beverly Act and for efficient
case management.
Notice to prevailing parties: Local Rule 2.10.01 requires you to submit a proposed formal order
incorporating, verbatim, the language of any tentative ruling – or attaching and incorporating the
tentative by reference - or an order consistent with the announced ruling of the Court, in
accordance with California Rule of Court 3.1312. Such proposed order is required even if the
prevailing party submitted a proposed order prior to the hearing (unless the tentative is
simply to “grant”). Failure to comply with Local Rule 2.10.01 may result in the imposition of
sanctions following an order to show cause hearing, if a proposed order is not timely filed.
Page 9 of 9
Ruling
CLEMENTS, BOBBY vs ODAY, JEFF
Jul 19, 2024 |
CV-21-002417
CV-21-002417 – CLEMENTS, BOBBY vs ODAY, JEFF – Defendants’ Motion for Terminating and Monetary Sanctions and in the Alternative Evidentiary Sanctions – GRANTED, in part, Denied in part, unopposed.
The Court finds that Plaintiff’s failure to comply with the Court’s order of February 16, 2023, compelling Plaintiff’s responses to Defendant’s properly propounded discovery within fourteen (14) days, as well as Plaintiff’s failure to comply with the Court’s verbal admonishment in that regard at the Case Management Conference of October 30, 2023, constitutes a willful failure to comply with the Court’s orders that warrant the imposition of terminating sanctions against Plaintiff. (Code of Civil Procedure §§2023.010 and 2023.030; Department of Forestry & Fire Protection v. Howell (2017) 226 Cal.Rptr.3d 727, rehearing denied, review denied; Parker v. Wolters Kluwer United States, Inc. (2007), 149 Cal.App.4th 285; Miranda v. 21st Century Ins. Co. (2004), 117 Cal.App.4th 913; Fred Howland Co. v. Superior Court of Los Angeles County (1966) 244 Cal.App.2d 6050.
Monetary Sanctions of attorney’s fees and costs in the sum of $1560.00 are hereby awarded against Plaintiff payable to Defendant’s Counsel, Aleshia M. White within thirty (30) days of service of this order on Plaintiff.
Ruling
Verdin vs. Nissan North America, Inc.
Jul 16, 2024 |
23CV-0202892
VERDIN VS. NISSAN NORTH AMERICA, INC.
Case Number: 23CV-0202892
This matter is on calendar for review regarding status of mediation. No status report has been filed.
An appearance is necessary on today’s calendar.
Ruling
OREN BEN ELISHA, ET AL. VS CHRISTINA YING DONG, ET AL.
Jul 18, 2024 |
24STCV08602
Case Number:
24STCV08602
Hearing Date:
July 18, 2024
Dept:
72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE RULING
OREN BEN ELISHA, et al.,
Plaintiffs,
v.
CHRISTINA YING DONG, et al.,
Defendants.
Case No:
24STCV08602
Hearing Date:
July 18, 2024
Calendar Number:
5
Defendants Christina Ying Dong (Dong) and Sylmar Calvert LLC (Sylmar) (collectively, Defendants) move to expunge the notice of lis pendens currently recorded on the property located at 14401 Calvert Street, Van Nuys, California 91311 (the Property). Defendants additionally move for an award of attorneys fees.
The Court GRANTS Defendants motion and ORDERS the expungement of Plaintiffs lis pendens on the Property.
Background
This case relates to failed negotiations between Plaintiffs Oren Ben Elisha and Yosef Ben Elisha (Plaintiffs) and Defendant Dong to purchase real property located at 14401 Calvert Street, Van Nuys, California 91311 (the Property) through Defendant Sylmar.
On July 27, 2023, Dong entered into a purchase agreement to purchase the Property and opened escrow. (Dong Decl. ¶ 5.)
In August of 2023, Dong offered Plaintiffs an opportunity to invest in an entity that would take title to the Property. (Dong Decl. 6.) On August 9, 2023, Dong filed the Articles of Organization for Sylmar for this purpose. (Dong Decl. ¶ 7, Ex. A.) The parties were scheduled to close escrow by February 28, 2024. (Dong Decl. ¶ 8.)
Plaintiffs filed this action on April 5, 2024, raising claims for (1) resulting trust; (2) constructive trust; (3) specific performance; (4) quiet title; (5) accounting; (6) breach of contract; (7) breach of fiduciary duty; and (8) dissolution of partnership.
Request for Judicial Notice
The Court takes judicial notice of Exhibits 1 and 3 to Plaintiffs opposition as public records. The Court does not take notice of the truth of their contents.
Evidentiary Objections
The Court overrules Plaintiffs evidentiary objections.
Legal Standard
A party to an action who asserts a real property claim may record a notice of pendency of action in which that real property claim is alleged. The notice may be recorded in the office of the recorder of each county in which all or part of the real property is situated. The notice shall contain the names of all parties to the action and a description of the property affected by the action. (Code Civ. Proc., § 405.20.)
Except in actions subject to Section 405.6, the claimant shall, prior to recordation of the notice, cause a copy of the notice to be mailed, by registered or certified mail, return receipt requested, to all known addresses of the parties to whom the real property claim is adverse and to all owners of record of the real property affected by the real property claim as shown by the latest county assessment roll. &. Immediately following recordation, a copy of the notice shall also be filed with the court in which the action is pending. Service shall also be made immediately and in the same manner upon each adverse party later joined in the action. (Code Civ. Proc., § 405.22.)
At any time after a notice of pendency of action has been recorded, any party. . . with an interest in the real property affected thereby, may apply to the court in which the action is pending to expunge the notice. (Code Civ. Proc., §405.30.)
A lis pendens may be expunged either (1) if the pleadings do not contain a real property claim, or (2) if the court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim. (Code Civ. Proc., §§ 405.31, 405.32.)
The party asserting the lis pendens has the burden of proof under Section 405.31 and Section 405.32.¿(Code Civ. Proc., § 405.30) The burden is to demonstrate that their pleadings contain a real property claim and that the probable validity of their real property claim can be established by a preponderance of the evidence. (Code Civ. Proc., §405.31; see also McKnight v. Superior Court (1985) 170 Cal. App. 3d 291, 298 [the burden is upon the recording party to demonstrate by a preponderance of the evidence that the action was commenced and prosecuted for a proper purpose and in good faith] .) Probable validity exists when it is more likely than not that the claimant will obtain a judgment on the claim. (Code Civ. Proc., § 405.3.)¿
Any time after a notice of pendency of action has been recorded the court may also upon motion by any person with an interest in the property, require the claimant to give the moving party an undertaking as a condition of maintain the notice in the record title. (Code Civ. Proc., § 405.34)
Discussion
Procedural Defects
Any notice of pendency of action shall be void and invalid as to any adverse party or owner of record unless the requirements of Section 405.22 are met for that party or owner and a proof of service in the form and content specified in Section 1013a has been recorded with the notice of pendency of action. (Code Civ. Proc., § 405.23.)
Defendants contend that the lis pendens is subject to expungement under Code of Civil Procedure, section 405.23 because Plaintiffs did not immediately serve the notice on Defendants or file it with the Court. (Dong Decl., ¶¶ 20-21.)
On July 9, following Defendants filing of this motion, Plaintiffs filed a notice of lis pendens with this Court and served the notice on Plaintiffs counsel.
The notice requirement is intended to assure that property owners receive prompt notice of the recording of a lis pendens. (
Biddle v. Superior Court
(1985) 170 Cal.App.3d 135, 137.) However, where a plaintiff substantially complies with the notice statute and promptly conveys actual notice to the affected party, the purpose of the statute is satisfied. (
Ibid
.) In
Biddle
, the plaintiff filed a notice of lis pendens and mailed a copy to the defendant simultaneously, sent it to the wrong location and did not request a return receipt as required. (
Id
. at pp. 136-137.) The court found that the plaintiff had substantially complied with the notice statute. (
Id
. at p. 137.)
Here, the delay was longer. Plaintiffs served the notice roughly three months after filing it. However, Defendants had actual notice, and the method of Plaintiffs eventual service was otherwise proper. The Court therefore finds that Plaintiffs substantially complied with the notice statute.
Substantive Defects
A lis pendens may be expunged either (1) if the pleadings do not contain a real property claim, or (2) if the court finds that the party claiming the lis pendens has not established by a preponderance of the evidence the probable validity of the real property claim. (Code Civ. Proc., §§ 405.31, 405.32.)
Defendants contend that Plaintiffs claims for breach of contract, breach of fiduciary duty, accounting, and dissolution of partnership are not real property claims. Plaintiffs do not contest this. Plaintiffs rather contend that their claims for resulting trust, constructive trust, specific performance, and quiet title are real property claims that satisfy the test of probable validity.
The Court first notes that Plaintiffs Complaint is exceedingly short, with the factual allegations comprising slightly over one page. The factual allegations themselves only contain general statements that the parties had worked together on real estate opportunities as partners in the past, and that Dong owed Plaintiffs fiduciary duties as a result; that Dong and Plaintiffs agreed to form a partnership to purchase the Property; that Plaintiffs were involved in the negotiation and diligence process; and that Dong then purchased the Property herself under Sylmars name. The Complaint alleges that this purchase breached the parties agreement, as well as Dongs alleged fiduciary duties to Plaintiffs. The Complaint does not expand on the terms of the parties agreement, what performance was obligated of each party, or whether it was oral or in writing. Further, the Complaint does not contain any allegations specific to each of the eight causes of action. Nor have Plaintiffs amended the Complaint in the three months since it was filed to fill out these allegations.
Plaintiffs attempt to expand on the allegations of the Complaint in their opposition brief, stating that the reason the Complaint is so threadbare is because Plaintiffs were in a rush to file the lis pendens and thereby prevent Defendants from selling the Property. (Opposition at p. 12:10-12.) While that may be so, Plaintiffs are certainly not still in a rush three months later.
Specific Performance
To state a cause of action for breach of contract, a plaintiff must be able to establish (1) the existence of the contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendants breach, and (4) the resulting damages to the plaintiff. (
Oasis West Realty, LLC v. Goldman
(2011) 51 Cal.4th 811, 821.)
If a breach of contract claim is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference. (
Harris v. Rudin, Richman & Appel
(1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also plead the legal effect of the contract rather than its precise language. (
Construction Protective Services, Inc. v. TIG Specialty Ins. Co.
(2002) 29 Cal.4th 189, 198-199.)
To obtain specific performance after a breach of contract, a plaintiff must generally show: (1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. (
Real Estate Analytics, LLC v. Vallas
(2008) 160 Cal.App.4th 463, 472 [citation and quotation marks omitted].)
Defendants argue that Plaintiffs cannot satisfy the statute of frauds with respect to the alleged contract.
A contract coming within the statute of frauds is invalid unless it is memorialized by a writing subscribed by the party to be charged or by the party's agent. (
Secrest v. Security National Mortgage Loan Trust 2002-2
(2008) 167 Cal.App.4th 544, 552, citing Civ. Code, § 1624.) An agreement for the sale of real property or an interest in real property comes within the statute of frauds. (
Ibid
, citing Civ. Code, § 1624, subd. (a)(3).)
Although the parties dispute whether the alleged agreement was for the purchase of land, the Court assumes for the sake of the statute of frauds analysis that it is because the alternative would render Plaintiffs contract claims inappropriate for a lis pendens in any event.
Here, Plaintiffs have not provided evidence of a writing memorializing the contract. Plaintiffs contend that a series of text messages sent between Dong and Yosef Ben Elisha memorialize the contract. Yosef Ben Elisha declares that the text messages state as follows:
Dong:
Hi Yossi, hope all is well. I made an appointment with Armin today to go to his office at 2pm. Thank you for introducing him and his firm. If you are still interested in the project. You are welcome to join me.
Plaintiff Yosef Ben Elisha:
Good morning Christina,
I can follow up with you around 12pm to try to show up. I do have meeting that I will need to schedule to make it happen. I will let you know around 12pm.
Dong:
Thanks so much Yossi. Sorry for the late notice. Just decided to meet with him for final DD before closing :)
Plaintiff Yosef Ben Elisha:
Yes
I will be there 2pm
(Decl. Yosef Ben Elish ¶ 29 [emphasis in original].)
There are two problems with Plaintiffs argument. First, these text messages hardly set forth the key terms of an agreement to purchase the Property. Second, [a]n electronic message of an ephemeral nature that is not designed to be retained or to create a permanent record, including, but not limited to,
a text message
or instant message format communication, is insufficient under this title to constitute a contract to convey real property, in the absence of a written confirmation& (Civ. Code, § 1624, subd. (d) [emphasis added].) The Court therefore concludes that the text messages that Plaintiff provides do not satisfy the statute of frauds.
[F]ull performance takes a contract out of the statute of frauds has been limited to the situation where performance consisted of conveying property, rendering personal services, or doing something other than payment of money. (
Secrest
,
supra
, 167 Cal.App.4th at p. 556.)
Plaintiffs argue that the contract does not fall under the statute of frauds because they substantially performed. (Opposition at p. 14:5-10.) Plaintiffs contend that this substantial performance consisted of completing due diligence, meeting and communicating with the prior agent of the Property, communicating with the Propertys prior owner, communicating with the contamination specialist, communicating with prospective investors, retaining an architect, putting together cost estimates, and putting together a timeline of development. The problem with Plaintiffs argument is that
full
performance, not
substantial
performance, is required. Plaintiffs do not provide any allegations in the Complaint or arguments in their brief indicating what performance was actually required of them. The Court is not prepared to jump to the conclusion that the list of actions Plaintiffs provide constituted the full performance of Plaintiffs obligations under the alleged contract.
The Court therefore finds that the statute of frauds is not satisfied. As a result, there Plaintiffs have not shown the probable validity of their claims for specific performance or breach of contract.
Resulting Trust
There are two problems with Plaintiffs resulting trust claim.
First, [a] resulting trust does not arise from any oral agreement between the parties, but only as a result of the advancement of at least part of the consideration by the one claiming to be the beneficiary. (
Laing v. Laubach
(1965) 233 Cal.App.2d 511, 517.) Plaintiffs have failed to allege or provide a written agreement.
Second, [a] resulting trust cannot be enforced in favor of a person who has paid part of the consideration for the transfer of property unless it is possible to clearly establish the amount of money contributed by him [or her] or the proportion of his [or her] contribution to the whole purchase price &. One who claims a resulting trust in land must establish clearly, convincingly and unambiguously, the precise amount or proportion of the consideration furnished by him [or her] &. If the claimant does not, then the presumption of ownership arising from the legal title is not overcome and a resulting trust will not be declared. (
Lloyds Bank California v. Wells Fargo Bank
(1986) 187 Cal.App.3d 1038, 10441045 [citations and quotation marks omitted].) Here, Plaintiffs do not allege that they paid any of the consideration for the Property, let alone part of it.
For both of these reasons, Plaintiffs have not shown the probable validity of their claim for resulting trust.
Constructive Trust
[A] constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it. (
Communist Party v. 522 Valencia, Inc.
(1995) 35 Cal.App.4th 980, 990.)
As discussed above, Plaintiffs have not provided evidence of a contract giving them a right to the Property. Plaintiffs have not pled or argued a different basis for such a right, either. As a result, Plaintiffs have not shown that they can satisfy the second element, and therefore have not shown the probable validity of this claim.
Quiet Title
Code of Civil Procedure, section 761.020 sets forth the requirements for an action for quiet title:
The complaint shall be verified and shall include all of the following:
(a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.
(b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.
(c) The adverse claims to the title of the plaintiff against which a determination is sought.
(d) The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.
(e) A prayer for the determination of the title of the plaintiff against the adverse claims.
(Code Civ. Proc., § 761.020.)
There are several problems. First, the Complaint is not verified. Second, at its most generous reading, the Complaint alleges that the parties formed a contract to purchase the Property together but as discussed above, Plaintiffs have not satisfied the statute of frauds with respect to this contract, and therefore cannot show the basis for their title to the Property. For both of these reasons, the Court finds that Plaintiffs have not established the probable validity of their quiet title claim.
Conclusion
Plaintiffs have failed to show the probable validity of any of their claims sounding in real property. The Court therefore grants Defendants motion and orders the expungement of Plaintiffs lis pendens on the Property.
Preview
FILED: NEW YORK COUNTY CLERK 08/27/2013 INDEX NO. 652817/2013 NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 08/27/2013 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X MICHELLE SABATTINI, On Behalf of Herself : and All Others Similarly Situated, : : Index No. 652817/2013 Plaintiff, : : Motion Seq. #2 v. : : SAKS INCORPORATED, STEPHEN I. : SADOVE, DONALD E. HESS, FABIOLA : ARREDONDO, ROBERT B. CARTER, : MICHAEL S. GROSS, MARGUERITE W. : KONDRACKE, JERRY W. LEVIN, NORA P. : MCANIFF, JACK L. STAHL, HUDSON’S : BAY COMPANY and HARRY ACQUISITION : INC., : X Defendants. PLAINTIFF MICHELLE SABATTINI’S MEMORANDUM OF LAW IN SUPPORT OF HER ORDER TO SHOW CAUSE FOR CONSOLIDATION OF THE ACTIONS AND APPOINTMENT OF A LEADERSHIP STRUCTURE SAMUEL T. COHEN, Individually and on X behalf of all others similarly situated, : : Plaintiff, : Index No. 652724/2013 : v. : : SAKS INCORPORATED, FABIOLA : ARREDONDO, ROBERT B. CARTER, : MICHAEL S. GROSS, DONALD E. HESS, : MARGUERITE W. KONDRACKE, JERRY W. : LEVIN, NORA MCANIFF, STEPHEN I. : SADOVE, JACK L. STAHL, HUDSON’S BAY : COMPANY and HARRY ACQUISITION INC., : : Defendants. : X X THOMAS H. JENNINGS, individually and on : behalf of all others similarly situated, : : Index No. 652725/2013 Plaintiff, : : v. : : FABIOLA ARREDONDO, ROBERT B. : CARTER, MICHAEL S. GROSS, DONALD E. : HESS, MARGUERITE W. KONDRACKE, : JERRY W. LEVIN, NORA MCANIFF, : STEPHEN I. SADOVE, JACK L. STAHL, : SAKS INCORPORATED, HUDSON’S BAY : COMPANY and HARRY ACQUISITION INC., : Defendants. : X (additional captions on next page) ROBERT OLIVER, on behalf of himself and X those similarly situated, : : Plaintiff, : Index No. 652758/2013 : v. : : SAKS INCORPORATED, FABIOLA : ARREDONDO, ROBERT B. CARTER, : MICHAEL S. GROSS, DONALD E. HESS, : MARGUERITE W. KONDRACKE, JERRY W. : LEVIN, NORA MCANIFF, STEPHEN I. : SADOVE, JACK L. STAHL, HUDSON’S BAY : COMPANY and HARRY ACQUISITION INC, : : Defendants. : X X JOSHUA TEITELBAUM, : : Plaintiff, : Index No. 652793/2013 : v. : : FABIOLA R. ARREDONDO, ROBERT B. : CARTER, MICHAEL S. GROSS, DONALD E. : HESS, MARGUERITE W. KONDRACKE, : JERRY W. LEVIN, NORA P. McANIFF, : STEPHEN I. SADOVE, JACK L. STAHL, : SAKS INCORPORATED, HUDSON’S BAY : COMPANY and HARRY ACQUISITION INC., : : Defendants. : X (additional captions on next page) X JACK and WANDA OLIVER, individually, and : on behalf of all others similarly situated, : : Index No. 652854/2013 Plaintiffs, : : v. : : SAKS INCORPORATED, FABIOLA : ARREDONDO, ROBERT B. CARTER, : MICHAEL S. GROSS, DONALD E. HESS, : MARGUERITE W. KONDRACKE, JERRY W. : LEVIN, NORA MCANIFF, STEPHEN I. : SADOVE, JACK L. STAHL, HUDSON’S BAY : COMPANY, and HARRY ACQUISITION INC, : : Defendants. X TABLE OF CONTENTS I. PRELIMINARY STATEMENT ........................................................................................ 1 II. STATEMENT OF FACTS AND PROCEDURAL HISTORY.......................................... 2 III. ARGUMENT ...................................................................................................................... 4 A. The Actions Should Be Consolidated ..................................................................... 4 B. The Court Should Appoint a Leadership Structure................................................. 5 1. The Faruqi Firm Has Already Done Substantial Work to Advance the Litigation............................................................................ 6 2. The Faruqi Firm Has Extensive Experience in Transaction Litigation ..................................................................................................... 7 3. The Faruqi Firm Will Commit Sufficient Resources to Effectively Represent the Proposed Saks Class .......................................... 9 IV. CONCLUSION ................................................................................................................. 10 i TABLE OF AUTHORITIES CASES Page(s) Amtorg Trading Corp. v. Broadway & 56th St. Assocs., 191 A.D.2d 212, 594 N.Y.S.2d 204 (1st Dep’t 1993) ...............................................................4 In re Cogent, Inc. Shareholders Litigation, No. 5780-VCP (Del. Ch. 2010) .................................................................................................8 In re Fox Entertainment Group, Inc. Shareholders Litigation, No. 1033-N (Del. Ch. 2005) ......................................................................................................8 In re International Coal Group, Inc., Shareholders Litigation, No. 6464-VCP (Del. Ch. 2011) .................................................................................................9 Knee v. Brocade Communications Systems, Inc., No. 1-12-CV-220249, slip op. (Cal. Super. Ct. Apr. 10, 2012) .................................................8 In re McCormick & Schmick’s Shareholder Litigation, No. 7058-VCL (Del. Ch. 2011) .................................................................................................9 Rich v. Reisini, 25 A.D.2d 32, 266 N.Y.S.2d 492 (1st Dep’t 1966) ...................................................................5 Sollins v. Alexander, No. 601272/2006, 2006 N.Y. Misc. LEXIS 2889 (N.Y. Sup. Ct. July 13, 2006) .....................6 OTHER AUTHORITIES 22 N.Y.C.R.R. § 202.69(c)(2)..........................................................................................................5 Fed. R. Civ. P. 23(g) ........................................................................................................................6 N.Y. C.P.L.R. § 907 .........................................................................................................................5 N.Y. C.P.L.R. § 602(a) ....................................................................................................................4 Manual for Complex Litigation (Third) § 20.22 (1995) ..................................................................5 ii Plaintiff Michelle Sabattini (“Sabattini”), by and through her undersigned counsel, Faruqi & Faruqi, LLP (the “Faruqi Firm”), submits this memorandum of law in support of her order to show cause for consolidation of the above-captioned actions and designation of a leadership structure for plaintiffs. I. PRELIMINARY STATEMENT Presently pending before this Court are six class actions (the “Actions”)1 brought on behalf of a putative class (the “Class”) of investors who were record and/or beneficial holders of Saks Incorporated (“Saks” or the “Company”) common stock on July 29, 2013 through the date of the close of the Proposed Buyout (defined below). The Actions arise out of Saks’s board of directors’ (the “Board”) breaches of fiduciary duties in connection with its agreement to sell the Company to Hudson’s Bay Company (“HBC”), via Harry Acquisition Inc. (“Merger Sub”), for an unfair price by means of an unfair process. As a threshold matter, it is undisputed that the Actions involve substantially identical facts and assert the same claims against the same named defendants. Consolidation is therefore appropriate to avoid unnecessary duplication, save unnecessary costs, and prevent divergent decisions based on the same set of operative facts. Sabattini further submits that her choice of counsel, the Faruqi Firm, is best suited to challenge the Proposed Buyout. Indeed, the Faruqi Firm has: i. Made efforts to coordinate with all plaintiffs to no avail; ii. Analyzed the Proxy (defined below) and filed an amended complaint challenging certain material omissions in the Proxy; and 1 The Actions are: Cohen v. Saks Inc., Index No. 652724/2013; Jennings v. Arredondo, Index No. 652725/2013; Oliver v.Saks Inc., Index No. 652758/2013; Teitelbaum v. Arredondo, Index No. 652793/2013; Sabattini v. Saks Inc., No. 652817/2013; Oliver v. Saks Inc., Index No. 652854/2013. 1 iii. Filed an order to show cause for limited expedited discovery. For these reasons, Sabattini respectfully submits that the Actions should be consolidated and the Faruqi Firm should be appointed to lead the Class. II. STATEMENT OF FACTS AND PROCEDURAL HISTORY Saks has been a world-renowned retail icon for approximately 90 years, providing the finest quality in fashion throughout the United States. ¶ 37.2 The Company also operates Saks Fifth Avenue OFF 5TH stores, a luxury off-price retail store located in upscale mixed-use and off-price centers. Id. As of April 23, 2013, there are 43 Saks Fifth Avenue stores and 66 Saks Fifth Avenue OFF 5TH stores. Id. On July 29, 2013, HBC and Saks jointly announced that they entered into a definitive merger agreement (the “Merger Agreement”) by which HBC will acquire all outstanding Saks common stock for $16.00 in cash per share (the “Proposed Buyout”). ¶¶ 56–57. On August 2, 2013, Plaintiffs Samuel T. Cohen (“Cohen”) and Thomas H. Jennings (“Jennings”) filed complaints captioned Cohen v. Saks Inc., Index No. 652724/2013 (the “Cohen Action”) and Jennings v. Arrendondo, Index No. 652725/2013 (the “Jennings Action”), respectively, alleging that the Board breached its fiduciary duty to Saks shareholders and that Saks, HBC, and Merger Sub aided and abetted those breaches of fiduciary duty. On August 6, 2013, Plaintiff Robert Oliver (“Oliver”) filed a complaint captioned Oliver v. Saks Inc., Index No. 652758/2013, alleging substantially similar claims against the same defendants as the Cohen and Jennings Actions. 2 All “¶ _” cites herein refer to the Amended Class Action Complaint (“AC”) filed in Sabattini v. Saks Inc., Index No. 652817/2013 on August 27, 2013. Capitalized terms, unless otherwise defined, have the same meaning as those used in the AC. 2 On August 8, 2013, Plaintiff Joshua Teitelbaum (“Teitelbaum”) filed a complaint captioned Teitelbaum v. Saks Inc., Index No. 652793/2013, also alleging substantially similar claims against the same defendants as the Cohen and Jennings Actions. On August 9, 2013, Sabattini filed the Class Action Complaint in Sabattini v. Saks Inc., Index No. 652817/2013. On August 14, 2013, Plaintiffs Jack and Wanda Oliver (the “Olivers”) filed the final complaint in the Actions captioned Oliver v. Saks Inc., Index No. 652854/2013, also alleging substantially similar claims against the same defendants as the Cohen and Jennings Actions. On August 20, 2013, Saks filed the preliminary proxy (the “Proxy”) on Schedule 14A with the U.S. Securities and Exchange Commission (“SEC”). On August 27, 2013, Sabattini filed the AC. The AC alleges that the proposed consideration significantly undervalues the Company because it fails to take into account Saks’ future growth and earnings potential, as well the synergies flowing to HBC as a result of the deal. ¶¶ 42–45, 58–59. The AC further alleges that Defendants have also exacerbated their breaches of fiduciary duty by agreeing to lock up the Proposed Buyout with deal protection devices that discourage other bidders from submitting a superior bid for the Company, including: (i) a non-solicitation clause that bars Saks from soliciting interest from other potential acquirers; (ii) a “matching rights” provision that gives HBC access to any competing offers for the Company and allows HBC to top that offer; and (iii) a$40.1 million termination fee prior to a certain “cut-off” date and $73.5 million termination fee if the Board terminates the Merger Agreement pursuant to the lawful exercise of their fiduciary duties. ¶¶ 61–68. Finally, the AC alleges that the Proxy failed to provide shareholders with material information in contravention of the Board’s duty of candor. ¶¶ 69–77. 3 Since inception, the Faruqi Firm tried to coordinate with all plaintiffs in the Actions. In fact, the Faruqi Firm tried to arrange a group call with all plaintiffs, which became impossible due to all competing plaintiffs’ conflicted schedules. After the group call failed, the Faruqi Firm started calling each firm individually but that proved even more chaotic and futile. This is the perfect situation that mandates organization and immediate court intervention now that the Proxy is out and a shareholder vote will be imminent. Accordingly, this Order to Show Cause for Consolidation of the Actions and Appointment of Leadership Structure follows. III. ARGUMENT A. The Actions Should Be Consolidated Consolidation is appropriate when the actions before the court involve common questions of law or fact. Indeed, Section 602(a) of the N.Y. C.P.L.R. states: When actions involving a common question of law or fact are pending before a court, the court, upon motion, may order a joint trial of any or all the matters in issue, may order the actions consolidated, and may make such other orders concerning proceedings therein as may tend to avoid unnecessary costs or delay. “It is well settled that consolidation is generally favored by the courts in the interest of judicial economy and ease of decision making where there are common questions of law and fact. . . .” Amtorg Trading Corp. v. Broadway & 56th St. Assocs., 191 A.D.2d 212, 213, 594 N.Y.S.2d 204, 205 (1st Dep’t 1993). In the instant matter, the Actions allege virtually identical facts in support of substantially identical claims against nearly identical defendants. Consolidation of the Actions is therefore appropriate. Further, in the event the Court consolidates the Actions, Sabattini respectfully requests that the consolidated case be assigned the master caption “In re Saks Incorporated Shareholder 4 Litigation, Master Index No. 652724/2013.” This request is consistent with the Court’s authority to manage its docket and would further promote judicial economy and efficiency. See 22 N.Y.C.R.R. § 202.69(c)(2) (“The Coordinating Justice shall have authority to make any order consistent with this section and its purposes, including to . . . assign[ing] a master caption [and] create a central case file and docket.”). B. The Court Should Appoint a Leadership Structure Pursuant to N.Y. C.P.L.R. § 907, the Court has broad powers to control the course of class action litigation. C.P.L.R. § 907 (“In the conduct of class actions the court may make appropriate orders . . . [to] determin[e] the course of proceedings or prescribing measures to prevent undue repetition or complication in the presentation of evidence or argument[.]”); see also Rich v. Reisini, 25 A.D.2d 32, 34, 266 N.Y.S.2d 492 (1st Dep’t 1966) (holding that appointing lead counsel “rests in the sound discretion of the court”). Appointment of a leadership structure at an early stage of the litigation will also ensure that the litigation has the necessary leadership in place to move matters forward in a diligent and efficient fashion. If no lead counsel is appointed, there will be substantial duplication of discovery and briefing, which will waste the resources of the parties as well as the Court. The Manual for Complex Litigation recognizes the benefits of appointing lead counsel in complex, multiparty litigation: Complex litigation often involves numerous parties with common or similar interests but separate counsel. Traditional procedures in which all papers and documents are served on all attorneys, and each attorney files motions, presents arguments, and conducts witness examinations, may result in waste of time and money, in confusion and indirection, and in unnecessary burden on the court. Special procedures for coordination of counsel are therefore needed and should be instituted early in the litigation to avoid unnecessary costs and duplicative activity. Manual for Complex Litigation (Third) § 20.22, at 30 (1995). 5 Although there is no specific standard in New York for appointing lead counsel in a class action challenging mergers, Federal Rule of Civil Procedure 23(g) provides the following useful framework that courts must consider: (1) the work counsel has done in identifying or investigating potential claims in the action; (2) counsel’s experience in handling class actions, other complex litigation, and claims of the type asserted in the action; (3) counsel’s knowledge of the applicable law; and (4) the resources that counsel will commit to representing the class. Fed R. Civ. P. 23(g). Based on the aforementioned factors, the Court should appoint the Faruqi Firm as Lead Counsel for the consolidated action. 1. The Faruqi Firm Has Already Done Substantial Work to Advance the Litigation The “principal factor to be considered in making such selection [and appointing lead counsel] is whether the appointment will serve the best interests of the shareholders.” Sollins v. Alexander, No. 601272/2006, 2006 N.Y. Misc. LEXIS 2889, at *9 (N.Y. Sup. Ct. July 13, 2006) (citing Katz v. Clitter, 58 A.D.2d 777, 396 N.Y.S.2d 388 (1977)). Here, as soon as the Proposed Buyout was announced, the Faruqi Firm worked diligently and efficiently to investigate the circumstances of the transaction to determine potential breaches of fiduciary duties on behalf of Saks shareholders. For example, attorneys at the Faruqi Firm reviewed all publicly available information, including the Merger Agreement and the Company’s press releases. The Faruqi Firm therefore properly investigated the claims, and then drafted and filed the initial complaint on August 9, 2013. Additionally, given that the Company wants to close the Proposed Buyout in the fourth quarter of 2013, time is of the essence. See ¶ 57. Recognizing the short time frame within which to conduct discovery, the Faruqi Firm tried to coordinate with other plaintiffs in order to form a 6 leadership structure and move the case forward. These efforts however proved fruitless. On August 20, 2013, Defendants filed the Proxy and time is now of the essence. Accordingly, the Faruqi Firm has filed an amended complaint and has moved by order to show cause for expedited discovery in order to advance the litigation. The Faruqi Firm has thus worked diligently on behalf of Saks shareholders and will continue to do so until the requested relief is obtained. The Faruqi Firm is also willing to lead the case and include other plaintiffs firms in the Actions that are willing to move the litigation forward on behalf of the Class. 2. The Faruqi Firm Has Extensive Experience in Transaction Litigation The Faruqi Firm has already demonstrated its ability, resources, and commitment to diligently prosecute the Actions, as it has done in many other similar actions on behalf of shareholders. The Faruqi Firm’s resume submitted herewith provides additional details regarding the firm’s attorneys, their credentials, and the firm’s record of successfully litigating transactional cases on behalf of shareholders. See Ex. A to the JEM Aff.3 The purpose of merger and acquisition cases such as this one is threefold: (1) to make shareholders whole by ensuring that they receive adequate compensation for their shares in the transaction; (2) to ensure that shareholders possess all material information reasonably necessary to reach an informed decision on whether to vote in favor of a merger; and (3) to ensure that the terms of the transaction are fair and the process by which such terms are negotiated maximize shareholder value. The Faruqi Firm has achieved all three of these goals in the successful resolution of numerous transactional and other cases seeking to vindicate shareholders’ rights. 3 All references to the “JEM Aff.” refer to the Affirmation of Juan E. Monteverde In Support of Plaintiff Michelle Sabattini’s Order to Show Cause for Consolidation of the Actions and Appointment of a Leadership Structure, filed herewith. 7 Just recently, the Faruqi Firm, as co-lead counsel for plaintiffs, obtained monetary relief for shareholders in In re Cogent, Inc. Shareholders Litigation, No. 5780-VCP (Del. Ch. 2010) (See JEM Aff., Ex. B) (Stipulation of Settlement)). Specifically, after two years of hotly contested litigation, the parties reached a cash settlement of $1.9 million to compensate shareholders. Similarly, in In re Playboy Enterprises, Inc. Shareholders Litigation, Consolidated No. 5632-VCN (Del. Ch. 2010) ((see JEM Aff., Ex. C) ([Corrected] Stipulation and Agreement of Compromise, Settlement and Release)), the Faruqi Firm, as co-lead counsel for plaintiffs, recovered $5.25 million for shareholders. Likewise, in In re Hearst-Argyle Shareholder Litigation, No. 600926/2009 (N.Y. Sup. Ct. 2009) ((see JEM Aff., Ex. D) (Memorandum of Understanding)), the Faruqi Firm, as co-lead counsel for plaintiffs, with the assistance of the Hearst special committee, achieved an increase of over 12.5 percent, or $8,740,648, from the initial transaction value offered for Hearst-Argyle Television Inc.’s stock by its parent company, Hearst Corporation. The favorable outcome obtained by the Faruqi Firm in In re Fox Entertainment Group, Inc. Shareholders Litigation, No. 1033-N (Del. Ch. 2005) ((see JEM Aff., Ex. E) (Stipulation of Settlement)) is another notable achievement for the firm. In Fox Entertainment, the Faruqi Firm served on the executive committee and, in part, was responsible for creating an increased benefit to shareholders of Fox Entertainment Group, Inc. of $450 million. The Faruqi Firm also has noteworthy successes in achieving injunctive or declaratory relief in cases where corporate wrongdoing deprives shareholders of material information. For example, in April 2012, Faruqi obtained an unprecedented injunction in Knee v. Brocade Communications Systems, Inc., No. 1-12-CV-220249, slip op. at 2 (Cal. Super. Ct. Apr. 10, 2012) (Kleinberg, J.). In Brocade, the Faruqi Firm, as sole lead counsel for plaintiffs, 8 successfully obtained an injunction enjoining Brocade’s 2012 shareholder vote because certain information relating to projected executive compensation was not properly disclosed in the proxy statement. See JEM Aff., Ex. F (Order After Hearing [Plaintiff’s Motion for Preliminary Injunction; Motions to Seal]). In In re McCormick & Schmick’s Shareholder Litigation, No. 7058-VCL (Del. Ch. 2011) (see JEM Aff., Ex. G (Stipulation of Settlement and Agreement of Compromise, Settlement and Release)), the Faruqi Firm, as co-lead counsel, secured important material disclosures for shareholders including that the target’s financial adviser had contemplated two sets of discount rates, but only disclosed one set to shareholders, which revealed substantial differences in the value ranges for the company. Similarly, in In re International Coal Group, Inc., Shareholders Litigation, No. 6464-VCP (Del. Ch. 2011) (see JEM Aff, Ex. H (Stipulation of Settlement)) the Faruqi Firm, acting as co-lead counsel, secured a reduction in the Termination Fee of $10 million and received additional material disclosures regarding the Company’s financial projections. The cases referenced above reflect just a few of the Faruqi Firm’s important achievements and experience in the area of transactional and shareholder rights litigation and demonstrate that the Faruqi Firm is more than qualified to serve as lead counsel in this case and liaison counsel in this case. 3. The Faruqi Firm Will Commit Sufficient Resources to Effectively Represent the Proposed Saks Class The Faruqi Firm has offices in New York, Los Angeles, Wilmington, and Philadelphia, and thirty-five (35) attorneys who concentrate their practice exclusively on shareholder and class action litigation. See JEM Aff., Ex. A. The Faruqi Firm’s attorneys are more than capable of serving and protecting the interests of the shareholders in this case and the firm’s substantial 9 resources will make it a particularly valuable asset to the leadership structure selected to manage this litigation. This litigation will undoubtedly be protracted and vigorously contested by formidable opposing counsel, as defendants have substantial resources with which to defend the Actions. Therefore, it is of vital importance that lead counsel for plaintiffs is of the highest caliber. As the foregoing illustrates, the Faruqi Firm has a proven record of providing skilled and efficient representation in complex actions of this nature and is more than qualified to act as lead counsel to the proposed Saks Class. Accordingly, the Court can be assured that the Faruqi Firm not only has the necessary resources, but is willing and able to commit them in prosecuting this litigation. IV. CONCLUSION For the reasons stated herein, as well as those set forth in the accompanying documents, Sabattini respectfully requests that the Court consolidate the Actions and appoint Sabattini Lead Plaintiff and the Faruqi Firm Lead Counsel. DATED: August 27, 2013 Respectfully submitted, FARUQI & FARUQI, LLP By: /s/ Juan E. Monteverde Juan E. Monteverde David M. Sborz 369 Lexington Ave., Tenth Floor New York, NY 10017 Tel: (212) 983-9330 Fax: (212) 983-9331 Attorneys for Plaintiff 10