Giles et al v. ICG, Inc. et al

Filing 25

MEMORANDUM OPINION AND ORDER granting in part and denying in part 5 MOTION to Proceed in One Jurisdiction, Dismiss or Stay Litigation in the Other Jurisdiction, and Organize Counsel for the Putative Class; the Court Stays this action with respect to the Plaintiffs' Claims alleging breaches of Delaware law; further the Court Denies the Plaintiffs' Motion for Expedited Proceedings and Discovery 10 and the Plaintiffs' Motion for Expedited Hearing 13 as moot and Without Prejudice; Finally, the Court Holds In Abeyance the Plaintiffs' Motion for a Preliminary Injunction 9 . Signed by Judge Robert C. Chambers on 5/27/2011. (cc: attys; any unrepresented party) (skm)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION

STEVEN M. GILES and MAYER FRIEDMAN,
individually and on behalf of all others similarly
situated,
Plaintiffs,
v.

CIVIL ACTION NO. 3:11-0330

ICG, INC., f/k/a INTERNATIONAL COAL
GROUP, INC., WILBUR L. ROSS, JR.,
BENNETT K. HATFIELD, WENDY L.
TERAMOTO, MAURICE E. CARINO, JR.,
STANLEY N. GAINES, SAMUEL A. MITCHELL,
CYNTHIA B. BEZIK, WILLIAM J.
CATACOSINOS, ARCH COAL, INC., and
ATLAS ACQUISITION CORP.,
Defendants.

MEMORANDUM OPINION AND ORDER
This is a shareholder challenge to a two-step acquisition in which a third-party corporation
has agreed to commence a tender offer for a majority of the target corporation’s stock, followed by
a back-end merger into a subsidiary of the acquirer. Pending are various motions filed by the
parties. For the reasons that follow, the Court GRANTS in part and DENIES in part the
defendants’ Motion to Proceed in One Jurisdiction, Dismiss or Stay Litigation in the Other
Jurisdiction, and Organize Counsel for the Putative Class. [Doc. 5]
Further, the Court DENIES as moot and WITHOUT PREJUDICE the plaintiffs’ Motion
for Expedited Proceedings and Discovery [Doc. 10] and the plaintiffs’ Motion for Expedited

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Hearing [Doc. 13]. Also consistent with the reasoning of this Opinion, the Court HOLDS IN
ABEYANCE the plaintiffs’ Motion for a Preliminary Injunction. [Doc. 9]
I.

Background and Procedural History
This is a putative shareholder derivative class action brought on behalf of the stockholders

of International Coal Group, Inc. (“ICG” or the “Company”) to enjoin a proposed tender offer and
merger transaction between ICG and Atlas Acquisition Corp. (“Atlas”), a wholly-owned subsidiary
of Arch Coal, Inc. (“Arch”). The Court discusses the material facts as detailed by the parties’ briefs
and attached material.
ICG is a corporation whose shares are traded publicly on the New York Stock Exchange
(“NYSE”). It is organized under the laws of Delaware with its principal executive offices in Scott
Depot, West Virginia. Arch is a Delaware corporation with its principal executive offices in St.
Louis, Missouri, while Atlas is a Colorado corporation with its executive offices located in
Braintree, Massachusetts. The individual defendants include officers and directors of ICG, Atlas,
and Arch.
On February 4, 2011, John W. Eaves, the President and Chief Operating Officer of Arch,
received a call from Bennett Hatfield, the Chief Executive Officer (“CEO”) of ICG, to discuss a
potential acquisition in an asset-swap transaction between the two companies. Mr. Hatfield stated
that he would discuss this possibility with the ICG Board of Directors (the “Board”) at its regularly
scheduled meeting on February 23, 2011.
In light of his discussions with Arch executives, Mr. Hatfield and other ICG representatives
independently contacted the representatives of various companies to explore other potential
acquisition options. Mr. Hatfield thereafter discussed with the Board the details of Arch’s proposal,

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and updated it on the status of the Company’s discussions with other entities interested in a potential
combination transaction. The Board instructed management to continue exploratory discussions
with all of the parties. ICG engaged UBS Securities, LLC (“UBS”) to assist in the search process.
The process that followed included additional interactions between ICG’s management and
the management of Arch and other entities with an interest in initiating a combination transaction
with ICG. After further meetings, on March 28, 2011, Arch submitted to ICG a non-binding
indication of interest to acquire all of ICG’s outstanding common stock at a price of $12.25 per
share, to be paid 50% in cash and 50% in Arch’s common stock. Arch engaged Morgan Stanley to
assist in the potential due diligence process.
On March 30, 2011, Steven Leer, Arch’s CEO, contacted Wilbur Ross, the Chairman of the
Board, to discuss the non-binding indication of interest that Arch had transmitted. Mr. Ross
indicated that the Board would soon review the merits of the entire proposal. At a meeting on March
31, 2011, Mr. Hatfield updated the Board on the status of the Company’s discussions with Arch, and
the other entities interested in acquiring ICG. They reviewed the potential risks and benefits of each
transaction. At the meeting, UBS presented background information and financial analysis on each
proposal. ICG’s counsel, Jones Day, further advised the Board on its fiduciary duties throughout
the sale process. The Board concluded that each sitting proposal was inadequate in terms of the
price offers for ICG’s shares. It thus instructed UBS to continue discussions with potential suitors,
and it created a committee to assist and advise management with the details of the process.
On April 1, 2011, pursuant to the instructions given by the Board, Mr. Hatfield informed Mr.
Eaves that the Board had found Arch’s previous offer price of $12.25 per share deficient, and that
Arch would need to improve its position in order for negotiations to continue. After a series of joint

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due diligence sessions, however, Arch submitted to ICG a second revised non-binding indication
of interest to acquire all of ICG’s common stock at a price of $13.25 to $14.00 per share in cash.
ICG provided a draft merger agreement to Arch and its outside counsel at Simpson, Thacher &
Bartlett, LLP on April 20, 2011. Arch’s offer was posted to the other interested parties, and they
were encouraged to provide a markup as “soon as possible.”

See Int’l Coal Group, Inc.,

Solicitation/Recommendation Statement 11 (May 16, 2011) (Schedule 14D-9). Other offers were
submitted. However, on April 28, 2011, Arch relayed an enhanced proposal reflecting an interest
in acquiring all of ICG’s common shares at an all-cash price of $13.90 per share by means of a
tender offer not subject to any financing conditions. The proposal indicated that Arch had
completed due diligence and was prepared to immediately announce a transaction. Arch also
submitted a draft merger agreement including a termination fee of 3.75% of ICG’s equity value. In
response, the Board allegedly continued further investigation into this and other potential options.
On May 1, 2011, Mr. Eaves called Mr. Hatfield to inform him that Arch was prepared to
again increase its proposed price to $14.60 per share. He also stated that this was Arch’s best
possible and final offer, and that it would expire at midnight if not accepted by the Board. The
Board convened on the same evening, and concluded that Arch’s offer was superior to the others that
had been presented due in part to its strong financing commitment. Consequently, the Board
directed UBS to call Arch and confirm whether its latest offer was its “best and final proposal.” Id.
Upon further discussions with UBS representatives, Arch confirmed that the offer was in fact its best
proposal. It did, however, agree to lower the termination fee to 3.4% of ICG’s equity value—down
from the previously proposed rate of 3.75%. Later that evening, the Board unanimously approved
the tender offer, and further concluded that Arch’s proposed merger agreement was fair and in the

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best interests of ICG’s shareholders. The agreements were thereafter executed by all parties at
midnight on May 2, 2011.
On the morning of May 2, prior to the opening of trading on the NYSE, ICG announced that
it had entered into an agreement with Arch under which the latter agreed to acquire ICG in an “allcash” transaction for approximately $3.4 billion. The transaction is structured as a tender offer to
be followed by a back-end merger. Under the terms of the transaction, Arch intends to tender $14.60
per share in cash for all of the outstanding shares of ICG.1 The tender offer is scheduled to close
on June 14, 2011. On May 16, 2011, ICG and Arch filed the applicable disclosure documents
related to this transaction with the Securities and Exchange Commission (“SEC”).
On May 12, 2011, an ICG stockholder filed a putative class action in this Court, seeking to
enjoin the transaction. On May 9, 2011, two nearly identical suits challenging the tender offer and
merger were filed in the Circuit Court for Putnam County, West Virginia (the Walker and Huerta
litigations),2 and one in the Delaware Court of Chancery (the Kirby litigation).3 In addition, on May
11, 2011, two similar actions were filed both in Delaware (the Kramer litigation)4 and in the Circuit
Court of Kanawha County, West Virginia (the Goe litigation).5 Since the filing of these complaints,

1

As the defendants note, this represents a 32.4% premium considering the closing price
of ICG’s common stock as of April 29, 2011, the last trading day prior to the announcement of
the transaction.
2

Walker v. ICG, Inc., No. 11-C-123 (W. Va. Cir. Ct. 2011); Huerta v. ICG, Inc., No. 11C-124 (W. Va. Cir. Ct. 2011).
3

Kirby v. ICG, Inc., No. 6464-VCP (Del. Ch. 2011).

4

Kramer v. ICG, Inc., No. 6470-VCP (Del. Ch. 2011).

5

Goe v. ICG, Inc., No. 11-C-766 (W. Va. Cir. Ct. 2011).
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moreover, an additional two actions have been filed.6 The Delaware and West Virginia state actions
have been consolidated in their respective courts.
The plaintiffs in all of these actions allege that the proposed transaction between ICG and
Arch is grossly unfair to ICG’s common shareholders for a variety of reasons. First, they complain
that the consideration offered by Arch is inadequate because the intrinsic value of the stock is
substantially higher given ICG’s prospects for future growth and earnings. To that end, they allege
that ICG has performed extremely well in recent years due to spikes in the price of metallurgical and
thermal coal, two products in which it specializes, and its current plan to open a new mine. By all
general accounts, ICG has performed exceptionally well in the current economic environment.
The plaintiffs also suggest that the proposed transaction fails to compensate ICG
shareholders for the tremendous benefit Arch will receive in the event it acquires ICG. Namely,
it is alleged that the acquisition would make Arch the second largest U.S. “coking-coal” producer
with an “unparalleled operational diversification in every major U.S. supply basin and the No. 1 or
No. 2 position in each of its three core operating regions.” Pls.’ Compl. 13-14, No. 1.7
The various complaints also highlight preclusive deal protection devices that appear to be
attached to the transaction. The plaintiffs allege, for example, that as part of the merger agreement,
Arch will receive a “top-up option.” This option essentially allows Arch to purchase at the deal
price upon successful completion of the tender offer the remaining shares sufficient to overcome the
90% threshold to effectuate a short-form merger. Upon arriving at the 90% threshold, in Delaware,

6

See Isakov v. ICG, Inc., No. 6505 (Del. Ch. 2011); Eyster v. ICG, Inc., No. 11-C-131
(W. Va. Cir. Ct. 2011).
7

See Arch to Acquire International Coal for $3.4 Billion for Steelmaking Assets,
Bloomberg News (May 2, 2011).
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the parent-buyer may complete a squeeze-out of the remaining shareholders.8 However, while topup options are not necessarily uncommon, the plaintiffs contend that Arch’s option does not require
a specific threshold prior to its exercise. Furthermore, according to the plaintiffs, Arch may
unilaterally waive minimum conditions attached to the top-up option, making consummation of the
transaction effectively inevitable.
Other preclusive devices the plaintiffs point out include the ability of Arch to receive threeday’s notice of any other offers in order to amend the terms of the agreement so that it can make a
counter-offer. Pursuant to such notice, Arch allegedly is to be given the entire details of any other
unsolicited offer. These devices, in the plaintiffs’ opinion, operate in a way that illegally restrains
ICG’s ability to solicit or engage in negotiations with any other prospective third-party buyer.
Finally, the plaintiffs in the instant action also contend that the defendants have violated their
state-law fiduciary duties as well as §§ 14(d)(4) and (e) of the Securities and Exchange Act (the
“Exchange Act”), 15 U.S.C. § 78n(d)(4), (e), and the rules promulgated thereunder, by
misrepresenting or omitting material information concerning Arch’s proposed tender offer in their
required SEC disclosure materials.
II.

Discussion
The defendants move to stay this action so that the parties may combine all of the

aforementioned putative class claims in the Delaware Court of Chancery. In essence, due to the
substantial similarity between all of the concurrently-pending putative class actions, the defendants
contend that considerable problems would arise if each court involved refuses to consolidate the

8

Delaware’s short-form merger statute permits majority stockholders owning at least
90% of a company’s shares to eliminate the minority stockholders without traditional fairness
procedures. See 8 Del. C. § 253.
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cases.
It is of course true that West Virginia state courts retain the discretionary ability to
consolidate or stay civil actions for efficiency purposes. See, e.g., Hanlon v. Joy Mfg. Co., 418
S.E.2d 594, 597 (W. Va. 1992) (“[W]e have traditionally allowed trial courts wide discretionary
power in deciding whether to consolidate cases.”). In federal court, however, “the power to stay
proceedings is incidental to the power inherent . . . to control the disposition of the causes on [the]
docket with economy of time and effort for [the court], for counsel, and for litigants.” Landis v. N.
Am. Co., 299 U.S. 248, 254 (1936). This determination requires the “exercise of judgment, which
must weigh competing interests and maintain an even balance.” Id. at 254-55. In that respect,
“courts [must] look to factors such as the length of the requested stay, the hardship that the movant
would face if the motion were denied, the burden a stay would impose on the nonmovant, and
whether the stay would promote judicial economy by avoiding duplicative litigation.” Mut. Funds
Inv. Litig. v. Putnam Inv. Mgmt. LLC, MDL 1586 No. 04-md-15863, 2011 U.S. Dist. LEXIS 42845,
at *7 (D. Md. April 20, 2011) (citations omitted).
A federal court may abstain from exercising jurisdiction in favor of concurrent and parallel
state proceedings where doing so would serve the interests of “wise judicial administration, giving
regard to the conservation of judicial resources.” Colo. River Water Conservation Dist. v. United
States, 424 U.S. 800, 818 (1976) (“Colorado River”). However, in all cases, “[a]bstention from the
exercise of federal jurisdiction is the exception, not the rule.” Id. at 813. Absent exceptional
circumstances, the “district court has a duty to adjudicate a controversy properly before it.” E.
Assoc. Coal Corp. v. Munson, 266 F. Supp. 2d 479, 484 (N.D. W. Va. 2003) (“Munson”) (citing
New Beckley Mining Corp. v. Int’l Union, 946 F.2d 1072, 1073 (4th Cir. 1991)); see also Moses H.

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Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 15-16, 23 (considering Colorado River
in finding that abstention was not warranted where a party sought a motion to compel arbitration
because no “exceptional circumstances” existed). The court, in determining whether exceptional
circumstances exist sufficient to warrant abstention from exercising jurisdiction in favor of parallel
state court proceedings, should consider the six factors delineated in Colorado River and subsequent
Supreme Court cases. See Vulcan Chem. Techs., Inc. v. Barker, 297 F.3d 332, 341 (4th Cir. 2002)
(citations omitted). Those factors are: “(1) assumption by either court of jurisdiction over a res; (2)
the relative inconvenience of the forums; (3) the avoidance of piecemeal litigation; (4) the order in
which jurisdiction was obtained by the concurrent forums; (5) whether and to what extent federal
law provides the rules of decision on the merits; and (6) the adequacy of the state proceedings in
protecting the rights of the party invoking jurisdiction.” See Galloway & Assocs., PLLC v.
Fredeking & Fredeking Law Offices, LC, No. 3:10-0830, 2010 U.S. Dist. LEXIS 108175, at *14-15
(S.D. W. Va. Oct. 8, 2010) (internal quotation marks and citations omitted).
The defendants, while conceding that they would accept the continuation of this action in
any one of the courts in which the plaintiffs proceed, contend that the Delaware Court of Chancery
is best positioned to resolve the issues presented in this dispute. As a result, they argue that this
matter should be stayed for purposes of permitting all class action claims to be consolidated in
Delaware.
A.

The instant proceedings are parallel with the Delaware action

As a threshold matter, the Court must determine whether any concurrently pending statecourt actions are sufficiently “parallel” to warrant a stay. See In re Countrywide Fin. Corp.
Derivative Litig., 542 F. Supp. 2d 1160, 1170 (C.D. Cal. 2008). A concurrently-pending action is

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parallel where it involves “‘substantially the same parties . . . contemporaneously litigating the same
issues in different forums.’” Id. (quoting In re Comverse Tech., Inc. Derivative Litig., No. 06-cv1849, 2006 U.S. Dist. LEXIS 80195, 2006 WL 3193709, at *2 (E.D.N.Y. Nov. 2, 2006)).
The merger-related fiduciary duty class action claims are sufficiently similar in each forum.
All of these claims essentially charge the ICG Board and its management with failing to obtain a fair
price for ICG’s common stock, self-dealing, and otherwise violating their fiduciary duties of good
faith and fair disclosure to ICG’s shareholders. They also state that the defendants made false or
misleading disclosures about the instant transaction in official SEC filings, and that Arch and Atlas
aided and abetted in the fiduciary duty breaches. Each complaint, moreover, seeks immediate
injunctive relief halting the pending transaction. These facts more than adequately establish the
“parallelism” requirement with respect to the claims asserting state-law fiduciary duty violations
raised in this Court and in the Court of Chancery.
B.

The Colorado River factors counsel in favor of a partial stay

On balance, the Colorado River factors warrant a partial stay of the fiduciary duty claims
brought under Delaware law. The first factor is not at issue as no court has assumed jurisdiction
over any property. With regard to the second factor, there does not appear to be a clear tactical
advantage for the defendants if the Court were to stay the proceedings so that the plaintiffs may
consolidate their lawsuits in Delaware. Each plaintiff purports to bring claims on behalf of the class
defined as ICG’s common shareholders. Inasmuch as there are currently millions of common shares
outstanding, the burden of defending a suit in a different court would not materially alter the
shareholders’ tactical position in proceeding with this litigation.
On the other hand, the defendants would suffer a substantial burden if their motion is denied.

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Numerous different courts now have control over multiple similar putative class actions seeking to
stop a $3.4 billion transaction. After reviewing the complaints in each case, it is clear that virtually
the same allegations are charged against the same defendants. Furthermore, as already discussed,
the same relief is sought in every action—an injunction against the proposed acquisition and
compensatory damages. Requiring the defendants to defend these lawsuits separately could inject
a great deal of uncertainty into the deal’s already-expedited time line. The defendants could face
duplicative discovery requests and markedly different general litigation schedules in each court.
The third, fourth, fifth, and sixth factors of the Colorado River test similarly support the
grant of a partial stay. First, perhaps most problematic, insofar as each action requests injunctive
relief, there runs a “risk of conflicting results in enjoining a multi-billion dollar merger” that could
potentially impact “innumerable shareholders.” In re Countrywide Fin. Corp. Derivative Litig., 542
F. Supp. 2d at 1172. There is, as discussed, a need to proceed expeditiously. Given the significant
complexity of the issues presented, permitting multiple courts to decide the same issues on whether
the defendants breached their fiduciary duties in approving the Arch deal is judicial overkill, and
harmful to all parties in this action. It would be unjust and unnecessary to impose potentially
incompatible standards of conduct on the defendants.
Furthermore, all of the plaintiffs’ class action merger-related claims allege breaches of the
defendants’ fiduciary duties under state law. Because ICG is a Delaware corporation, these claims
are governed by Delaware law under the “internal affairs” doctrine. See, e.g., In re Citigroup, Inc.
S’holder Derivative Litig., 964 A.2d 106, 118 (Del. Ch. 2009). The Delaware Court of Chancery
“‘has a well-recognized expertise in the field of [its] corporation law.’” In re Countrywide Fin.
Corp. Derivative Litig., 542 F. Supp. 2d at 1173 (quoting Strougo v. BEA Assocs., No. 98 Civ. 3725,

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2000 U.S. Dist. LEXIS 346, at *13 (S.D.N.Y. Jan. 19, 2000)). The parties would thus benefit from
the expertise of the Court of Chancery in determining whether the defendants failed to maximize the
value of ICG’s common stock, or otherwise breached their fiduciary duties to ICG’s shareholders
in the disclosure of this deal.
Additionally, while the order in which jurisdiction was obtained is not necessarily
dispositive, the Court notes that the Court of Chancery in the Kirby litigation obtained jurisdiction
over the class action merger-related claims before this Court. That case has been placed on an
expedited discovery schedule.9 As the defendants submit, the parties there have already begun
depositions. Wilbur Ross was deposed on May 20, 2011, and various UBS representatives will be
deposed on the date this Opinion is entered. The plaintiffs wish to conduct the very same
depositions in their request for “expedited” discovery in this Court. Yet, as the defendants point out,
the plaintiffs have been invited to participate in the discovery in Delaware by way of a letter dated
May 17, 2011. Further, the Delaware plaintiffs have filed a motion for prompt treatment of their
claims as well as a motion and proposed order seeking to consolidate every class claim so as to
avoid inefficiently interfering with the deal’s proposed closing date. See Defs.’ Mot. Proceed in One
Jurisdiction, Dismiss or Stay Litig., Ex. G, at 135-36, No. 5-1. The Court of Chancery has also
scheduled a hearing on the plaintiffs’ motion for a preliminary injunction on every issue for June
9, 2011. Id. Clearly, then, the Delaware proceedings have advanced at a considerably quicker pace
than the proceedings in this Court.
Finally, the Court finds unpersuasive the plaintiffs’ argument that a stay is categorically

9

Although ICG maintains its corporate headquarters in West Virginia, any material
documents located in its home office will be easily disclosed through the discovery process in
Delaware.
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impermissible where a plaintiff has asserted both state and federal causes of action. Other courts
have indeed found it appropriate to grant a partial stay under Colorado River in similar
circumstances. See, e.g., In re Countrywide Fin. Corp. Derivative Litig., 542 F. Supp. 2d at 117273 (applying Colorado River abstention in granting a partial stay of litigation in favor of a parallel
Delaware action). Indeed, the third and sixth factors support a partial stay despite the fact that the
plaintiffs in the current action have added claims for federal securities disclosure violations in
connection with ICG’s filing of a Schedule 14D-9. The grant of a partial stay will efficiently sever
the issues to be determined by this Court and the Court of Chancery so that no court renders
duplicative holdings.
It is true that other district courts have recently found abstention on federal claims brought
under the Exchange Act appropriate where the actions are factually indistinguishable from claims
brought in Delaware state court. See, e.g., McCreary v. Celera Corp., No. 11-1618 SC, 2011 U.S.
Dist. LEXIS 41639, at *13-14 (N.D. Cal. Apr. 13, 2011) (staying federal disclosure claims brought
under §§ 14(d)(4) and 14(e) of the Exchange Act in a putative class action shareholder suit in favor
of parallel Delaware proceedings “‘because the relationship and nature of the exclusively federal
claim and the state law claim are so decisively similar.’” (quoting Int’l Jensen Inc. v. Emerson Radio
Corp., No. 96-C-2816, 1996 U.S. Dist. LEXIS 12481, at *18 (N.D. Ill. Aug. 26, 1996)).
Nonetheless, because of significant authority suggesting that a district court may not grant a stay of
claims arising under its exclusive jurisdiction, see, e.g., Krieger v. Atheros Communs., Inc., No.
11-CV-00640-LHK, 2011 U.S. Dist. LEXIS 28348, at *14-15 (N.D. Cal. March 4, 2011)
(chronicling the extensive authority in the Second, Fifth and Ninth Circuits concluding that the
district court may not stay Exchange Act claims arising under its exclusive jurisdiction); SST Global

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Tech., LLC v. Chapman, 270 F. Supp. 2d 444, 463-64 (S.D.N.Y. 2003) (finding abstention
inappropriate where a pending Delaware action would have resolved the core factual issues of
claims brought under the Exchange Act), the Court does not grant a stay of the plaintiffs’ Exchange
Act claims.
But the fact that the Court cannot stay the Exchange Act claims does not imply that
deference to the Delaware proceedings will not provide substantial benefits to all of the parties
inasmuch at it will efficiently hasten the resolution of this entire litigation. While the “federal
scheme of disclosure is not replicated in Delaware law,” Loudon v. Archer-Daniels-Midland Co.,
700 A.2d 135, 141 n.18 (Del. 1997), the essential inquiry in analyzing a fiduciary disclosure claim
under Delaware law is whether any alleged omission is “material” as that term is defined by federal
law. See In re Cogent, Inc. S'holder Litig., 7 A.3d 487, 509 (Del. Ch. 2010) (citing TSC Indus. v.
Northway, Inc., 426 U.S. 438, 449 (1976)). Here, the Delaware state-law disclosure claims are
virtually identical to the claims brought under the Exchange Act. Moreover, the majority of the
plaintiffs’ claims concern allegations of fiduciary duty breaches related to ICG’s failure to maximize
the price of its shares in undertaking the proposed transaction with Arch. The plaintiffs’ alleged
disclosure violations concern omitted material that could show evidence of fiduciary breaches. In
other words, the omitted material would essentially illuminate the Board’s failure to adequately
investigate other viable options and its alleged self-dealing. The Court of Chancery will very shortly
decide both whether claims based on these core allegations and the plaintiffs’ state- law disclosure
violations are entitled to preliminary injunctive relief. Thus, although it cannot adjudicate the
Exchange Act claims, it may issue an injunction against the merger—the core relief the plaintiffs
seek—on the same operative facts. “Whether an injunction is granted or denied by this Court or by

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the Delaware Court is unimportant—the effect of preventing or allowing the proposed acquisition
to proceed is the same no matter which court takes action.” McCreary, 2011 U.S. Dist. LEXIS
41639, at *14.
On balance, therefore, the Court believes that Delaware is an appropriate forum in which the
class-action fiduciary claims may be consolidated, and that consolidation would further the interests
of prompt judicial resolution of the entire litigation. Therefore, the Court GRANTS the defendants’
motion and STAYS this action with respect to the plaintiffs’ claims alleging breaches of Delaware
law. The remaining claims brought under the Exchange Act will remain in this Court for resolution.
C.

Remaining Motions

The Court conducted a telephone conference call with the parties on May 25, 2011 during
which the plaintiffs’ Motion for Expedited Proceedings and Discovery [Doc. 10] and the plaintiffs’
Motion for Expedited Hearing [Doc. 13] were discussed. Pursuant to the parties’ agreement, the
Court DENIES those motions as moot and WITHOUT PREJUDICE.
Also pending is the plaintiffs’ Motion for a Preliminary Injunction. [Doc. 9] Consistent with
the reasoning set forth in this Opinion, while the Court will not stay the claims brought under the
Exchange Act pending the final resolution of the Delaware proceedings, it will hold the plaintiffs’
Motion for Preliminary Injunction in abeyance until otherwise directed by the Court, in order to give
the parties in the Delaware action an opportunity to more fully develop the facts pertinent to the
immediate resolution of their state-law claims by the Court of Chancery. Those claims, as alleged,
are sufficiently similar to warrant temporary deference to the Court of Chancery’s determinations.
The plaintiffs may, however, renew their request for expedited consideration in the event an
adequate result is not obtained before the deal’s closing date.

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III.

Conclusion
For these reasons, the Court GRANTS in part and DENIES in part the defendants’ Motion

to Proceed in One Jurisdiction, Dismiss or Stay Litigation in the Other Jurisdiction, and Organize
Counsel for the Putative Class [Doc. 5]. The Court STAYS this action with respect to the plaintiffs’
claims alleging breaches of Delaware law. Further, the Court DENIES the plaintiffs’ Motion for
Expedited Proceedings and Discovery [Doc. 10] and the plaintiffs’ Motion for Expedited Hearing
[Doc. 13] as moot and WITHOUT PREJUDICE. Finally, the Court HOLDS IN ABEYANCE
the plaintiffs’ Motion for a Preliminary Injunction. [Doc. 9]
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to counsel
of record and any unrepresented parties. The court further DIRECTS the Clerk to post a copy of
this published opinion on the court’s website, www.wvsd.uscourts.gov.

ENTER:

May 27, 2011

ROBERT C. CHAMBERS
UNITED STATES DISTRICT JUDGE

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