Tracinda Corp. v. DaimlerChrysler AG

269 F. Supp. 2d 508, 2003 U.S. Dist. LEXIS 10964
CourtDistrict Court, D. Delaware
DecidedJune 25, 2003
DocketNos. CIV.A.00-993, CIV.A.00-984, CIV.A.01-004 JJF
StatusPublished
Cited by1 cases

This text of 269 F. Supp. 2d 508 (Tracinda Corp. v. DaimlerChrysler AG) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tracinda Corp. v. DaimlerChrysler AG, 269 F. Supp. 2d 508, 2003 U.S. Dist. LEXIS 10964 (D. Del. 2003).

Opinion

[510]*510 MEMORANDUM AND ORDER

FARNAN, District Judge.

Defendants DaimlerChrysler AG, Daimler-Benz AG, Jurgen Schrempp and Manfred Gentz have filed Motions For Summary Judgment (D.I.528, 530, 532) against each of the Plaintiffs in this consolidated action: (1) Tracinda Corporation (“Tracinda”) in Tracinda Corp. v. DaimlerChrysler AG et al., Civil Action No. 00-984-JJF; (2) Glickenhaus & Co. and its clients and affiliates (“Glickenhaus”) in Glickenhaus & Co., et al. v. DaimlerChrysler AG, et al., Civil Action No. 01-004-JJF; and (3) The Florida State Board of Administration (“FSBA”), the Policemen’s Annuity Fund of Chicago (“PABF”), and the Municipal Employees Annuity and Benefit Fund of Chicago (“MEAB”) and the Denver Employees Retirement Plan (collectively the “Class Plaintiffs”) in In re DaimlerChrys-ler Securities Litigation, Master Docket No. 00-993-JJF. By this Memorandum And Order, I address that portion of the Motions seeking summary judgment on the ground that these actions are barred by the applicable statute of limitations.1

I. The Parties Contentions2

By their Motions, Defendants contend that Tracinda, Glickenhaus, and Class Plaintiffs’ federal securities laws claims are barred by the one-year statute of limitations set forth in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). In Lampf, the United States Supreme Court concluded that claims brought under the securities laws must be commenced within one year of the discovery of the facts’ constituting the violation. In Tracinda Corporation v. Daimler-Chrysler AG, 197 F.Supp.2d 42, 56 (D.Del. 2002), I concluded that the inquiry notice standard applies to all of the claims asserted by Plaintiffs, including their claims un[511]*511der Sections 10 and 14 of the Exchange Act.

Defendants contend that Plaintiffs had inquiry notice of their claims as early as mid-November 1998, and in any event, no later than September 24, 1999. Yet, the earliest action was filed by Tracinda on November 27, 2000, with the Glickenhaus and other putative class plaintiffs filing their respective complaints subsequently. Thus, Defendants maintain that the Plaintiffs claims are barred by the one-year limitations period.

In support of their contention that Plaintiffs had inquiry notice of their claims, Defendants offer three types of storm warnings: (1) newspaper articles and press releases doubting that the merger would be a merger of equals; (2) shareholders’ concerns voiced at the Merger vote that Schrempp would be the dominant figure within DaimlerChrysler; and (3) monthly reports from DaimlerChrysler referring to Chrysler as a “division.”

Defendants point to approximately 35 newspaper articles and press releases spanning in time from before the merger closed in mid-November 1998 until September 1999, in which analysts and “persons close to the negotiations” questioned whether the merger was really a merger of equals, and reporters commented on certain management structure changes within DaimlerChrysler. For example, before the Merger closed, the New York Times reported that Daimler-Benz was “expected to be the dominant partner in the future” and a source close to the Merger stated that the term “merger of equals” was used to make the transaction “palatable.” (D.I. 540, Ex. 32 at T003609-12). Similarly, the Financial Times stated that the merger was “effectively a takeover by the Germans, whatever the euphemisms used to describe the proposed deal.” (D.I. 540, Ex. 33 at T3576).

Articles of this type continued into January of 1999 with an article in Fortune magazine entitled “The Germans Take Charge,” which asserted that Chrysler was organized as a subsidiary of Daimler-Benz and that the company was mostly owned and run by former Daimler-Benz shareholders and executives. Ex. 68. Similar articles followed, with both named and unnamed sources suggesting that the merger of equals was a ruse. For example, the Washington Post quoted DaimlerChrysler Vice President Bud Liebler as saying:

We should have never called this a ‘merger among equals,’ ... It wasn’t a ‘merger among equals.’ It was an acquisition, and by calling it something else, we confused alot of people on both sides of the Atlantic.

The same article quoted an unnamed “American source familiar with the [Merger] negotiations” as saying:

It was an ego/political thing.... Bob [Eaton] didn’t want Chrysler people to think that he was throwing in the towel, and Schrempp didn’t want Washington to think that the German were taking over a company saved by American tax dollars.

(D.I.542, Ex. 79).

Press releases were also issued concerning changes in the management structure, which Defendants contend, coupled with the articles questioning the viability of the merger of equals, should have raised suspicions in Plaintiffs sufficient to trigger inquiry notice. For example, On September 24, 1999, DaimlerChrysler issued a press release stating that Chrysler President Thomas Stallkamp was leaving and that DaimlerChrysler’s Management Board was “streamlining” with a composition that leaned toward more former Daimler-Benz executives than Chrysler executives. (D.I. 542, Ex. 96 at T9960-68). Articles fol[512]*512lowed suggesting that he management structure changes were the “final blow5’ to the “merger of equals” and expressing the view that the transaction had been an acquisition. (D.I.542, Exs.94, 95, 101, 102, 107).

In response, Plaintiffs contend that these articles and the changes within the corporate structure of DaimlerChrysler were not sufficient to put them on inquiry notice. Plaintiffs maintain that there was a mix of information in the public domain, which offset the comments in the articles that Defendants raise. Specifically, Plaintiffs contend that the merger of equals was reaffirmed in other articles, as well as by the statements and filings made by Daim-lerChrysler and its representatives both publicly and privately. (D.I. 602, Kamps Exs. 26, 27, 43). Plaintiffs further point out that Defendants hired an army of communications experts whose mission it was to spread the “merger of equals” message and emphasize the importance of maintaining the “merger of equals” language. (D.I. 601, Kamps Ex. 1; D.I. 602, Kamps. Exs. 24, 32 at 1, 28, 34; D.I. 603 Kamps Ex. 56 at DCX 52538-52540). That their mission was effective was confirmed by studies indicating that investors, customers and the government believed that the merger was a merger of equals. (D.I. 602, Kamps Exs. 40, 30, 42).

With regard to the changes in the corporate structure, Plaintiffs contend that Defendants couched these changes in terms of legitimate business decisions and engaged in a detailed media strategy to combat suggestions to the contrary. (D.I. 603, Kamps Exs. 93, 76, 82, 90, 69). Because Defendants effectively masked the true nature of these changes as part of the ultimate scheme of Daimler-Benz to acquire Chrysler, Plaintiffs maintain that they could not have known that the changes in the corporation were actually steps toward the implementation of a “de facto takeover” of Chrysler.

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Related

In Re Daimlerchrysler Ag Securities Litigation
269 F. Supp. 2d 508 (D. Delaware, 2003)

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Bluebook (online)
269 F. Supp. 2d 508, 2003 U.S. Dist. LEXIS 10964, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tracinda-corp-v-daimlerchrysler-ag-ded-2003.