In re DaimlerChrysler Ag Securities Litigation

216 F.R.D. 395, 2003 WL 21698358
CourtDistrict Court, E.D. Michigan
DecidedJuly 2, 2003
DocketNo. 03X70134
StatusPublished
Cited by5 cases

This text of 216 F.R.D. 395 (In re DaimlerChrysler Ag Securities Litigation) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re DaimlerChrysler Ag Securities Litigation, 216 F.R.D. 395, 2003 WL 21698358 (E.D. Mich. 2003).

Opinion

OPINION AND ORDER

WGLALEN, United States Magistrate Judge.

Before the Court is Plaintiffs’ motion to compel compliance with subpoenas duces te-cum served on Respondents Bill Vlasic and Bradley A. Stertz, third parties to federal securities litigation pending in the United States District Court for the District of Delaware, In re DaimlerChrysler AG Securities Litigation, Docket No. 00-0993-JJF (D.Delaware).1 2Respondents filed a brief in oppo[396]*396sition, and the motion was referred for hearing and determination pursuant to 28 U.S.C. § 636(b)(1)(A). Oral argument was held on March 4, 2003. For the reasons set forth below, the Plaintiffs’ motion is denied.

I.

The underlying lawsuit arises out of the 1998 merger of the Chrysler Corporation with the German corporation Daimler-Benz, dubbed the biggest industrial merger in world history. Plaintiffs allege that Chrysler shareholders were misled into approving the merger by the false and fraudulent representations of Daimler-Benz and its then-CEO, Jurgen Schrempp, that this was to be a “merger of equals,” when in fact it was a covert takeover of Chrysler. The fraud was exposed, Plaintiffs say, approximately two years after the merger, on October 30, 2000, when the London Financial Times published an article detailing an interview with Mr. Schrempp, in which he revealed that the transaction was never intended to be a “merger of equals,” but rather that Chrysler would be a standalone division of his company. The Financial Times article stated, in relevant part:

“In a wide-ranging interview ahead of this week’s two-day meeting [of the Daimler-Chrysler Management Board], he [Mr. Schrempp] delivered a passionate defence of both the merger and his ambition to create a global car maker.”
“In doing so, however, he admitted that Chrysler had been relegated to a standalone division. Far from being a ‘merger of equals,’ as originally conceived, the deal has emerged as just one deal among several from the ‘executive war-room’ of Daimler’s Stuttgart headquarters.”
“ ‘Now that most of Chrysler’s old management board has resigned or retired, Mr. Schrempp sees no reason to maintain the fiction. Me being a chess player, I don’t normally talk about the second or third move. The structure we have now with Chrysler (as a standalone division) was always the structure I wanted,’ he says. ‘We had to go a roundabout way but it had to be done for psychological reasons.’ If I had gone and said Chrysler would be a division, everybody on their side would have said: ‘There is no way we’ll do a deal.’ But it’s precisely what I wanted to do. From the start structure, we have moved to what we have today.”

The Complaint alleges, inter alia, Defendants’ violation of Sections 10(b) of the Securities Exchange Act, 15 U.S.C. §§ 78j(b), and 17 C.F.R. § 240.10b-5 (intentional misstatement of a material fact in connection with purchase or sale of a security, upon which the plaintiffs reasonably relied to their detriment), and 15 U.S.C. §§ 77k and 771(a)(2) (untrue or misleading statements in registration statement, prospectus or oral communication, including negligent representations or omissions).2 Plaintiffs claim that as a result of Defendants’ misrepresentations, shareholders who exchanged their Chrysler shares for DaimlerChrysler shares were denied a significant premium which would have been demanded had they known this would be a takeover rather than a “merger of equals,” and that shareholders who purchased Daim-lerChrysler shares on the open market prior to Mr. Schrempp’s public admissions overpaid for those shares.

Respondents Vlasic and Stertz are veteran business reporters for the Detroit News. They have covered the automobile industry for a number of years, including reporting on events related to Chrysler and Daimler-Benz prior to the merger. Following the merger, Vlasie and Stertz took a brief leave of absence from the News to write a book titled Taken for a Ride: How Daimler-Benz Drove Off With Chrysler (William Morrow, [397]*3972000), an account of the merger and the events leading up to it.3

In the course of researching and writing their book, Respondents conducted more than two hundred interviews. In a section of the book labeled “Sources and Bibliography,” Respondents state as follows regarding the scope of their research and their understanding with the interviewees about the use of the information provided:

“Every interview was conducted under one ground rule. All material gathered was for exclusive use in this book and would appear in no other publication. Virtually all material in the book is derived from more than two hundred interviews conducted in Detroit, Chicago, New York, Washington, Las Vegas, Los Angeles, Stuttgart, Munich, and Frankfurt. In addition to the 1999 interviews, the authors drew on hundreds of other interviews done during the course of covering Chrysler since 1994. Several of the quotes used in this book were gathered prior to the February 1996 ‘non-disparagement’ agreement between Chrysler and Kirk Kerkorian, Lee Iacocca, and others. The authors also drew on numerous documents on file with the U.S. Securities and Exchange Commission and in various state and federal courts.” Taken for a Ride, p. 351.

The Respondents go on to identify ninety-seven individuals, by name, as “primary sources” for the book. Id., at 351-53.

On June 3, 2002, the Plaintiffs served Respondents with subpoenas which demanded the production of essentially all notes, recordings, source material, secondary sources and any other material reviewed or utilized in any way in the preparation of Taken for a Ride, along with notes or other documents the Respondents may have used in preparation for speaking engagements or other articles regarding DaimlerChrysler. The Plaintiffs specifically set forth a time frame which encompassed documents or materials gathered or produced from January 1, 1994, through the present date. See Plaintiffs’ Motion to Compel, Exhibit A.

Subsequently, both in written communications to Respondents’ counsel and at oral argument before this Court, Plaintiffs narrowed the scope of their request. In a letter to Respondents’ counsel dated February 27, 2003, counsel for Plaintiffs limited his request to “only those interview materials (notes, recordings, transcriptions, etc.) that support statements or facts disclosed in the book, Taken for a Ride: How Daimler-Benz Drove Off with Chrysler.

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Bluebook (online)
216 F.R.D. 395, 2003 WL 21698358, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-daimlerchrysler-ag-securities-litigation-mied-2003.