This morning on CNBC, North Carolina State Treasurer Richard Moore referred to Wells Fargo’s pending acquisition of Wachovia as a "shotgun marriage," "highway robbery," and as not being fair to Wachovia shareholders.

The State Treasurer has a significant interest in this merger.  The North Carolina Retirement System was holding 2,275,664 shares of Wachovia stock as of June 30, 2008, which were then worth $35,341,062, per the State Treasurer’s Annual Report.  At the $7 per share to be paid by Wells Fargo, that investment has lost nearly $20 million in value since June.

Moore said in a follow-up interview today with the Charlotte Observer that the shares held by the Retirement System will vote against the merger, and that he will send a letter supporting the shareholder lawsuit seeking to enjoin the merger.  He stated “I hope that the shareholders of Wachovia will vote against this deal, and I hope that every politician that North Carolina has at the state and federal level works as hard as they can for an independent Wachovia.” 

He’ll presumably send that letter directly to Judge Diaz, who is presiding over the lawsuit brought by Irving Ehrenhaus.  Moore won’t be the first prominent citizen to do so, and he also won’t be the first to use the word "robbery" to describe the pending deal. [Update: Moore did send his letter, on November 12, 2008].

The first person I know of to do that was John Georgius, who was President of First Union National Bank until 1999, two years before First Union became the surviving entity in its merger with Wachovia.  Georgius has already written a letter to Judge Diaz, expressing his objection to the merger, and stated that:

TO ALLOW THIS ACTION TO STAND WOULD CONDONE AND SUPPORT THE LARGEST ‘BANK ROBBERY’ IN OUR NATION’S HISTORY!

The capital letters are in the original.

And in another communication to Judge Diaz, William B. Greene, Jr., the Chairman of Bank of Tennessee, said that the only reason the Wachovia Board agreed to the merger was that they had been "beaten down and buggy whipped by the Regulators."

These letters, whether written or unwritten, obviously aren’t evidence of anything probative to the legal issues raised by the shareholder class action.  But they certainly display a public sentiment that is strongly against this transaction, and make one wonder whether this deal would get the approval of  the majority of Wachovia shareholders if Wells Fargo didn’t already have 40% of the vote locked up.

If you are following the shareholder class action seeking to enjoin the Wachovia-Wells Fargo merger, Plaintiff filed his Brief in support of his Motion for Preliminary Injunction yesterday. 

The focal point of Plaintiff’s argument is that the deal protection devices in the Wachovia-Wells Fargo Merger agreement were too hastily negotiated by the Wachovia board, and that the Board violated its fiduciary duties in agreeing to them.  As Plaintiff puts it, "the Board rolled over and accepted all of these provisions ‘in derogation of their unyielding fiduciary duties.’" Brf. at 22. 

Wachovia’s response to Plaintiff’s Brief is due November 17th; and Plaintiff’s reply is due November 21st.  A hearing is set for 2:00 p.m on November 24th.

 

Mediation often devolves into the mediator shuttling back and forth between two rooms, carrying alternating declining and increasing offers to the parties.

There are times during this ping ponging of offers when I wish the mediator was pushing harder on the other party to explain the absolute rightness of my client’s position, inevitably to result in summary judgment in our favor, or explaining to me why my client and I have missed the boat in evaluating the case.  Most mediators won’t do that, and dismiss the concept of informing the parties of the mediator’s perception of the quality of their case or defense as being unacceptably "evaluative."

I’m prompted to write about this subject based on a one paragraph Order by Judge Tennille earlier this year in Bank of America Corporation v. Beazer Morgage Corp., granting the Joint Motion of the parties to have a "neutral evaluation" instead of a mediation.  

What is a "neutral evaluation?"  In short, it’s "a process in which a third party neutral examines the evidence and listens to the disputants’ positions, and then gives the parties his or her evaluation of the case."  Here’s a good article on the subject, and also the American Arbitration Association’s description of the procedure and how it works.  Neutral evaluation apparently led to a settlement of the Beazer case, because the parties filed a joint dismissal with prejudice a few weeks after the evaluation, in which a state court Judge in Georgia served as the neutral.

There is clear approval of alternative resolution procedures to mediation in North Carolina’s statute on mediated settlement conferences. N.C. Gen. Stat. Sec. 7A-38.1:

Promotion of other settlement procedures — Nothing in this section is intended to preclude the use of other dispute resolution methods within the superior court. Parties to a superior court civil action are encouraged to select other available dispute resolution methods. The senior resident superior court judge, at the request of and with the consent of the parties, may order the parties to attend and participate in any other settlement procedure authorized by rules of the Supreme Court or by the local superior court rules, in lieu of attending a mediated settlement conference. Neutral third parties acting pursuant to this section shall be selected and compensated in accordance with such rules or pursuant to agreement of the parties. Nothing in this section shall prohibit the parties from participating in, or the court from ordering, other dispute resolution procedures, including arbitration to the extent authorized under State or federal law.

 Id. at i.

Also, the North Carolina Rules Implementing Statewide Mediated Settlement Conferences in Superior Court Civil Actions contain a specific provision (Rule 10) permitting the parties to request the use of procedures other than mediation, including neutral evaluation (Rule 11), non-binding arbitration (Rule 12), or non-binding summary jury or non-jury trials (Rule 13).  I don’t hear much about these alternative procedures being used in North Carolina even though they are specifically allowed by the Rules.

There is no special certification necessary to become a neutral evaluator.  In Mecklenburg County, for example, the Court maintains a list of approved neutrals.  You are qualified to serve if you have five years of experience as "a judge, practicing attorney, law professor, arbitrator or mediator, or have equivalent experience" and you are of "good moral character," and you "adhere to ethical standards."

The cartoon at the top is by Charles Fincher, a lawyer who is also a cartoonist.  His very funny comics and comic strips are what he calls "inside baseball" humor for lawyers.  He has a number of different cartoons and strips, which you can find at lawcomix.com.  The one I used, with his permission, is from a series of one-panel cartoons called Scribble-in-Law. 

The Court had mandatory jurisdiction over a case involving Internet advertising, holding "[t]hat issue falls squarely within the definition of N.C. Gen. Stat. § 7A-45.4(a)(6) which covers material issues related to the Internet and electronic commerce. It also involves issues that would have implications for use of the Internet by others, both consumers and advertisers, who are not parties to this lawsuit."

Full Opinion

The Business Court held that it had mandatory jurisdiction over a case involving the sale of financial products, holding "It is sufficient for purposes of removal to the Business Court that there are issues concerning which law applies which will have industry-wide application. The potential thus exists for the establishment of case law which may prove useful to consumers of and businesses selling financial products." issues which would have industry wide application, with the potential to establish case law which might prove useful to consumers of and businesses selling financial products).

Full Opinion

The Business Court held that it had mandatory jurisdiction over a case involving complex tax matters.  The Court also noted that its decision "could have implications for other companies, and thus the publication of a written opinion by this Court could prove beneficial to the State and those companies."

Full Opinion

The Business Court found that a case raising claims for receivership, securities law violations, piercing the corporate veil, and unfair and deceptive practices fell within its mandatory jurisdiction.  Among other things, the Court held that "claims based on piercing the corporate veil clearly fall within" its mandatory jurisdiction because they involve a material issue related to the law governing corporations under N.C. Gen. Stat. sec. 7A-45.4(a)(1).

Full Opinion

Today, the North Carolina Court of Appeals said that it did not have the authority to adopt the "new" standard for consideration of a Rule 12(b)(6) Motion articulated last year by the United States Supreme Court in Bell Atlantic Corp. v. Twombly, __ U.S. __, 167 L.Ed.2d 929 (2007). 

If Twombly is to become the law of North Carolina, that is now up to the North Carolina Supreme Court.  Given the pace of appeals in North Carolina, it’s going to take a while to see whether that will happen.

The Court’s decision came in a rather bizarre case, Holleman v. Aiken, which was brought by a very enthusiastic fan of Clay Aiken, of American Idol fame.  Plaintiff, the author of a book about Aiken’s life, claimed that Aiken and others had defamed her by saying that her book was not authorized by them and by refusing to endorse her book. Among other things, Plaintiff wanted an injunction requiring Aiken to endorse her book on his website, to write an endorsement for the back of the book, and to write an introduction to her book thanking her for writing it.

The Court affirmed the dismissal of virtually all of Plaintiff’s claims, including claims for libel per se and libel per quod, notwithstanding its refusal to adopt the Twombly standard.  Judge Stroud, writing for the Court of Appeals, said that "our courts cannot be used to force celebrities or their family or friends into making endorsements for another person’s profit."