My take on current lay of the land in Delaware. Si
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Posted On: 08/14/2021 2:30:41 PM
My take on current lay of the land in Delaware. Since I have always regarded the 13D challenge as an unnecessary distraction to management and a burden on the sp, I was hoping the Rosenbaum team would default in CYDY's Delaware District Court lawsuit due to cost and final outcome considerations. But it's now clear that won't be happening, as 2 heavyweight international law firms have locked horns over which side will receive a favorable preliminary injunction.
No doubt several helpful board members will do their best to keep us aware of the latest ongoing developments related to 13D, both in and out of court. I'm sure I will find these posts of interest., but, owing to the current status of the lawsuit, as I will comment on below,I don't expect to be a frequent participant in those discussions. (Even after all these years, my golf game still needs a lot of time and work.)
First of all, the jointly requested Protective Order will effectively seal any meaningful document production content or deposition testimony that may be submitted through discovery. Nevertheless, it is possible that MarkS, and/or one of our other computer savvy posters, may be able to link us to the parties briefs ( styled as a Memorandum of Law) filed for or against the competing motions for issuance of a preliminary injunction re the BOD ballot. And while these briefs would make interesting reading. I doubt that analyzing the them would allow any lawyer to reliably foretell Judge Noreika's ultimate decision on the pi motions.
I say this because the only opinion that will matter on the merits of the parties' positions is Judge Noreika's, and she will have a suitable rationale to favor either side. Going simply by the dueling letters from Sidley Austin (CYDY) and Baker Botts (13D), each side has advanced rational, well articulated argument's in support of their. respective positions.That will undoubtedly prove true with the competing briefs as well. (I find CYDY's position more compelling. but my opinion obviously doesn't count. )
Essentially, CYDY argues that the 13D BOD nominating notice, delivered at the 11th hour timing wise, contained several material deficiencies, chiefly exemplified by the Incell proposed sale and patent application omissions, which were in violation of CYDY's corporate bylaws and justify disqualification of the 13D slate of candidates. In response, 13D argues that any allegedly misleading statements or omissions in its nominating notice and supplements thereto either were not material or have been subsequently cured, and that the BOD election should be decided by the shareholders and not the court.
Given these outcome determinative choices it would be helpful to have a sense of Judge Noreika's judicial temperament. But based on my limited resources, I have little insight to offer. Judge Noreika was nominated to the Delaware District Court in 2017 by President Trump. She is a registered Democrat, whose nomination was supported by both of Deleware's Democrat senators, and her nomination was approved on a voice vote in the Senate in 2018. So politics is unlikely to play a role in her decision here. When in private practice, she was a commercial litigator with significant trial experience, and an emphasis on patent infringement disputes. I would therefore expect her to carefully consider both sides' arguments before deciding,
In the end, however, Judge Noreika, I suspect, will respond to the evidence like any juror does. Faced with 2 rational alternative outcomes, her decision making process will be influenced by her prior life experiences and sense of values. I have no idea how that will play out, but her decision will come down to "respect for the established rules" or "let the shareholders decide" regardless of prior compliance deficiencies and perhaps even the necessity to delay the BOD election. Moreover, under the provisions of 28 U.S. Code, section 1292, Judge Noreiks's decision on the pi would be directly appealable to the 3rd Circuit Court of Appeals by the disappointed party. Any appeal would likely lead to an order staying the BOD election process pending the 3rd Circiut's decision. So, barring a settlement, the possibility of which can never be ruled out, but which I don't anticipate, the current stalemate may, and probably will, endure for several more months.
While I'm certainly dismayed by the possibility that the potentially drawn out process described above might ultimately result in the 13D slate being on the ballot, I remain sanguine that the court's ultimate final decision will be on favor of CYDY. Even if not, I still find it hard to imagine that with the various recent revelations regarding the 13D principals, and even in the face of the past missteps by CYDY management, that many informed shareholders would cast their votes for the Rosenbaum slate at this critical time and given the many Leronlimab catalysts on the horizon.
Finally, my most important take from this whole 13D mess remains that cash strapped CYDY management was able to convince Sidley Austin that it would have the means to satisfy the very hefty statements for services rendered that are likely to be generated in this litigation, and for any potential representations beyond. Bear in mind that while a law firm like Sidley would be willing to accept a new client with the means of paying for representation in a single, significant matter, its willingness to do so would be substantially enhanced by its perception that bigger fish to fry were in the offing going forward.
GLTA
No doubt several helpful board members will do their best to keep us aware of the latest ongoing developments related to 13D, both in and out of court. I'm sure I will find these posts of interest., but, owing to the current status of the lawsuit, as I will comment on below,I don't expect to be a frequent participant in those discussions. (Even after all these years, my golf game still needs a lot of time and work.)
First of all, the jointly requested Protective Order will effectively seal any meaningful document production content or deposition testimony that may be submitted through discovery. Nevertheless, it is possible that MarkS, and/or one of our other computer savvy posters, may be able to link us to the parties briefs ( styled as a Memorandum of Law) filed for or against the competing motions for issuance of a preliminary injunction re the BOD ballot. And while these briefs would make interesting reading. I doubt that analyzing the them would allow any lawyer to reliably foretell Judge Noreika's ultimate decision on the pi motions.
I say this because the only opinion that will matter on the merits of the parties' positions is Judge Noreika's, and she will have a suitable rationale to favor either side. Going simply by the dueling letters from Sidley Austin (CYDY) and Baker Botts (13D), each side has advanced rational, well articulated argument's in support of their. respective positions.That will undoubtedly prove true with the competing briefs as well. (I find CYDY's position more compelling. but my opinion obviously doesn't count. )
Essentially, CYDY argues that the 13D BOD nominating notice, delivered at the 11th hour timing wise, contained several material deficiencies, chiefly exemplified by the Incell proposed sale and patent application omissions, which were in violation of CYDY's corporate bylaws and justify disqualification of the 13D slate of candidates. In response, 13D argues that any allegedly misleading statements or omissions in its nominating notice and supplements thereto either were not material or have been subsequently cured, and that the BOD election should be decided by the shareholders and not the court.
Given these outcome determinative choices it would be helpful to have a sense of Judge Noreika's judicial temperament. But based on my limited resources, I have little insight to offer. Judge Noreika was nominated to the Delaware District Court in 2017 by President Trump. She is a registered Democrat, whose nomination was supported by both of Deleware's Democrat senators, and her nomination was approved on a voice vote in the Senate in 2018. So politics is unlikely to play a role in her decision here. When in private practice, she was a commercial litigator with significant trial experience, and an emphasis on patent infringement disputes. I would therefore expect her to carefully consider both sides' arguments before deciding,
In the end, however, Judge Noreika, I suspect, will respond to the evidence like any juror does. Faced with 2 rational alternative outcomes, her decision making process will be influenced by her prior life experiences and sense of values. I have no idea how that will play out, but her decision will come down to "respect for the established rules" or "let the shareholders decide" regardless of prior compliance deficiencies and perhaps even the necessity to delay the BOD election. Moreover, under the provisions of 28 U.S. Code, section 1292, Judge Noreiks's decision on the pi would be directly appealable to the 3rd Circuit Court of Appeals by the disappointed party. Any appeal would likely lead to an order staying the BOD election process pending the 3rd Circiut's decision. So, barring a settlement, the possibility of which can never be ruled out, but which I don't anticipate, the current stalemate may, and probably will, endure for several more months.
While I'm certainly dismayed by the possibility that the potentially drawn out process described above might ultimately result in the 13D slate being on the ballot, I remain sanguine that the court's ultimate final decision will be on favor of CYDY. Even if not, I still find it hard to imagine that with the various recent revelations regarding the 13D principals, and even in the face of the past missteps by CYDY management, that many informed shareholders would cast their votes for the Rosenbaum slate at this critical time and given the many Leronlimab catalysts on the horizon.
Finally, my most important take from this whole 13D mess remains that cash strapped CYDY management was able to convince Sidley Austin that it would have the means to satisfy the very hefty statements for services rendered that are likely to be generated in this litigation, and for any potential representations beyond. Bear in mind that while a law firm like Sidley would be willing to accept a new client with the means of paying for representation in a single, significant matter, its willingness to do so would be substantially enhanced by its perception that bigger fish to fry were in the offing going forward.
GLTA
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