(Reuters) - At the beginning of this month, Randall Baron of Robbins Geller Rudman & Dowd was running all out. In just the second week of March, Baron was in New York for meetings about a shareholder breach-of-duty suit against Tesla CEO Elon Musk that was scheduled to go to trial on March 23; in New Orleans for the annual Corporate Law Institute gathering at Tulane; back home in Southern California; and in Phoenix for a visit with his son. Then he arrived in Delaware, where a Robbins Geller team had set up shop for the Musk trial, which was due to last for two weeks in Chancery Court before Vice-Chancellor Joseph Slights.
The final pre-trial hearing was on Friday, March 13. The vice-chancellor said he and his courtroom staff wanted the trial to proceed, even though Delaware’s governor had already barred gatherings of more than 100 people. He asked lawyers on both sides what they thought. Already in warrior mode, Baron said, the lawyers told Vice-Chancellor Slights that they, too, were ready to go.
Then, Baron told me, he hung up the phone and saw the faces of other people on his team. “They looked physically shaken, a little bit, because I think they were expecting it to be canceled,” he said. Baron decided he’d do whatever he could to get the trial put off. He called Musk’s lead counsel, Evan Chesler of Cravath Swaine & Moore, to talk about asking the court for a postponement. They never had to make the request. While they were on the phone – and no more than an hour or two after the end of the pre-trial conference – Vice-Chancellor Slights issued an order postponing the trial.
In retrospect, of course, it’s obvious that the Musk trial could not have taken place over the last two weeks. The storm clouds, as Baron puts it, were already gathered. In fact, on the same day as the final Musk pre-trial conference, defense lawyers in a shareholders’ derivative suit against Oracle board members informed a different Delaware Chancery judge that a Quinn Emanuel Urquhart & Sullivan partner who’d appeared at a March 11 Oracle hearing had developed COVID-19 symptoms. Baron had been at the Oracle hearing, he told me, but kept his distance from other lawyers.
When the Musk trial was called off, Baron flew to Oregon for a memorial service, then home to San Diego where he’s been holed up ever since, in a self-imposed quarantine after touching ground in so many airports in cities struck by the virus. Not that he could go into the office anyway. All of Robbins Geller’s offices are closed, he said, with all lawyers and staff under instruction to work from home.
It’s been slow, Baron said, with many courthouses closed and hearings and depositions postponed. Settlements talks aren’t happening, he said, because neither side is facing the pressure of imminent litigation developments. “The world is moving at about half the pace that it normally does for us, at least for my group,” he said. “Everyone is trying to keep busy.”
Baron reached out to me after I wrote Tuesday about a call by William Savitt of Wachtell Lipton Rosen & Katz for shareholders’ lawyers to stop filing books-and-records demands and class actions over M&A disclosures so that corporate boards and officers can concentrate on guiding their businesses during the pandemic and economic crisis.
The Robbins Geller lawyer pushed back hard against the premise that shareholders’ and plaintiffs’ lawyers should relax their vigilance now. To the contrary: “Our job, if we take our job seriously, is not to say, ‘Well, it’s a horrible time so you guys get to do horrible mergers or self-interested mergers,’” Baron said. “The corporations don’t get a free pass because of COVID-19.”
Sure, he said, there are plaintiffs’ lawyers who will try to take advantage of the crisis, just as there are defense lawyers and companies who will do the same. But as long as companies continue to announce M&A deals and schedule shareholder votes on the transactions, Baron said, “it would be naïve to believe that now they are going to be only legitimate when before they may not have been.” Robbins Geller, he said, is going to continue to protect shareholders’ rights to inspect corporate books and records – which means the firm will keep sending books-and-records demand letters to lawyers like Savitt at Wachtell, he said.
Baron said he and his team will be reasonable if companies say they can’t gather documents because of the virus. But if shareholder votes are pending, he said, plaintiffs’ lawyers have to go to court to preserve shareholders’ standing. Shareholders’ lawyers, he said, are like cops patrolling the streets during a blackout to guard against looters. “We’re the only people who can (do that),” he said. “Whether you think we do a good job or not, there isn’t another force out there.”
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