Giles v. ICG, INC.
789 F. Supp. 2d 706
S.D.W. Va2011Background
- ICG, a Delaware corporation with stock traded on NYSE, enters a fast-track sale process to Arch Coal via Atlas Acquisition Corp.; Arch offers cash and Arch stock, later increasing to all-cash $14.60 per share; ICG's Board approves after considering competing bids and due diligence; plaintiffs allege fiduciary breaches, self-dealing, and misleading disclosures in SEC filings; preclusive deal protections (top-up option, 3-day notice to solicit other bids) are challenged as restraining competitive bidding; multiple parallel suits in WV and DE allege the same core fiduciary-duty and disclosure claims and seek injunctive relief; plaintiffs file in SDWV, while related actions proceed in DE Chancery and WV courts; defendants move to coordinate or stay proceedings in favor of Delaware action to consolidate class claims; court to decide on abstention and scope of relief following a Colorado River framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| whether actions are parallel for abstention | claims substantially identical across forums | Delaware forum best handles fiduciary issues | parallelism established |
| whether partial stay is warranted under Colorado River | stay would delay resolution; not entitled to stay all claims | partial stay preserves efficiency and avoids piecemeal rulings | partial stay granted for Delaware-law fiduciary claims |
| whether Exchange Act claims can be stayed or proceed | Exchange Act claims should be litigated in SDWV | Delaware action can address core issues; Exchange Act closely tied to fiduciary claims | Exchange Act claims not stayed; remain in this court for resolution |
| whether Delaware proceedings should consolidate putative class actions | consolidation would be efficient in DE Court | Delaware already expediting; stay favorable | Delaware action chosen; stay granted for DE-law claims |
Key Cases Cited
- Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (Supreme Court 1976) (abstention is the exception in parallel proceedings)
- Landis v. North American Co., 299 U.S. 248 (Supreme Court 1936) (abstention or stay under judicial economy principles)
- In re Countrywide Fin. Corp. Derivative Litig., 542 F. Supp. 2d 1160 (C.D. Cal. 2008) (six-factor Colorado River test for abstention and stay)
- In re Citigroup, Inc. S'holder Derivative Litig., 964 A.2d 106 (Del. Ch. 2009) (Delaware internal affairs doctrine; court expertise in corporation law)
- Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135 (Del. 1997) (federal disclosure questions analyzed under Delaware law for material omissions)