Opinion ID: 2346742
Heading Depth: 1
Heading Rank: 2

Heading: court of chancery decision to certify the class

Text: The present case was filed in the Delaware Court of Chancery in January 1979, sub nom., Botney v. Teledyne, Inc., Del. Ch., C.A. No. 5786-NC (Jan. 18, 1979). Prior to the filing of this case in the Court of Chancery, four purported class actions had previously been filed against Teledyne in the United States District Court for the Central District of California. Those actions alleged, inter alia, fraud in connection with the February 1976 repurchase offer. Each of the prior cases was dismissed with prejudice, two on motions for summary judgment. [3] The original class representative in the present case, Mr. Botney, was eventually dismissed as the putative class representative and Mr. Gaffin was permitted to intervene in his place. Botney v. Teledyne, Inc., Del.Ch., C.A. No. 5786-NC, Hartnett, V.C. (April 24, 1985). Subsequently, the Court denied Teledyne's motion to dismiss or for summary judgment and certified a class consisting of all the owners who tendered their shares to Teledyne in response to the repurchase offer except the Teledyne Pension Plan Trust. Gaffin v. Teledyne, Inc., Del.Ch., C.A. No. 5786-NC, slip op. at 11, Hartnett, V.C., 1987 WL 18430 (Oct. 9, 1987). The prerequisites for certifying a class are set forth in Court of Chancery Rule 23. Rule 23(a) provides: (a) Requisites to Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. Where the prerequisites of Rule 23(a) are satisfied, a class action may be maintained pursuant to Rule 23(b) if, in addition: (3) The Court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matter pertinent to the findings include: (A) The interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) The extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) The desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) The difficulties likely to be encountered in the management of a class action. Court of Chancery Rule 23(b)(3). In its decision certifying the class in this case, the trial court rejected Teledyne's contention that the class should not be certified because individual questions of law or fact concerning the element of individual shareholder justifiable reliance predominate over common questions of law or fact. Gaffin, Del.Ch., C.A. No. 5786-NC, slip op. at 12, Hartnett, V.C., 1987 WL 18430 (Oct. 9, 1987). The court also rejected Teledyne's contention that the claims of the class representative are atypical of the class claims because different shareholders possessed different levels of information prior to tendering their shares. According to Teledyne, at least two types of shareholder plaintiffs were involved in this case, each possessing different levels of information concerning Teledyne's financial status: 1) sophisticated shareholders and 2) all other shareholders. The trial court determined, however, that the differences in the questions of law or fact as to the different types of shareholder plaintiffs were not material since it did not matter whether there were precisely identical questions of law and fact present as to all members of the class; it was the general course of conduct complained of which served to unite the different class members. Id. (citing Kaufman v. Lawrence, 76 F.R.D. 397 (S.D.N.Y.1977). The court stated that, [r]egardless of any alleged investment experience of institutional investors or arbitrageurs, [Teledyne] committed the same acts in the same method against the entire class and the members of both groups have identical claims. Id. at 13-14. The court recognized, however, that if it was determined during the course of the litigation that certain groups within the certified class had attained complete knowledge as to the material facts concerning the repurchase offer before tendering their shares, the court could divide the class into subclasses at that time. Id. at 14. The court found no such occasion to divide the class into subclasses at trial.