Haverhill Retirement System v. Catalyst Health Solutions, Inc.

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EFiled: May 25 2012 4:02PM EDT Transaction ID 44490819 Case No. Multi-case COURT OF CHANCERY OF THE STATE OF DELAWARE JOHN W. NOBLE VICE CHANCELLOR 417 SOUTH STATE STREET DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179 May 25, 2012 Brian D. Long. Esquire Rigrodsky & Long, P.A. 919 North Market Street, Suite 980 Wilmington, DE 19801 Re: Ryan M. Ernst, Esquire 1000 North West Street, Suite 1200 Wilmington, DE 19801 Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN Date Submitted: May 24, 2012 Dear Counsel: These actions have been brought to contest the acquisition of Catalyst Health the Plaintiffs have not been able to agree upon an organization structure that would Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN May 25, 2012 Page 2 asked to designate a lead plaintiff, lead counsel, and liaison counsel.1 The two sides of the debate are: Plaintiff Haverhill Retirement System ; liaison counsel, Rigrodsky & Long, P.A.; lead counsel, Wolf Popper LLP v. Plaintiff Ira Lindell ; liaison counsel, Wallen, LLC; and lead counsel, Levi & Korsinsky, LLP. The other two plaintiffs have endorsed Haverhill and its counsel for the positions at stake. Factors to be considered by the Court in selecting lead plaintiffs and lead counsel were set forth in Hirt v. U.S. Timberlands Service Company, LLC.2 Those factors include: that appears best able to represent the interests of the shareholder class and derivative plaintiffs; lawsuit (to be accorded great weight); 1 All parties agree that the four actions should be consolidated. The motion to consolidate will be granted. 2 2002 WL 1558342, at *2 (Del. Ch. July 3, 2002). Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN May 25, 2012 Page 3 f all the contestants to litigate vigorously on behalf of an entire class of shareholders; and smaller stockholders; nts have prosecuted the lawsuit; prosecute the claims at issue.3 Several of these factors afford the Court no basis for differentiating between the two sides of the present debate. The willingness and ability of the two sets of lawyers to pursue this action with enthusiasm and vigor, their competence, and their access to resources are for both sides clearly adequate to meet the needs of the Plaintiffs and the proposed class and are substantially similar. The amended pleadings submitted by Haverhill are marginally better than the with respect to -4, certain financial metrics that were prepared by it and provided to one of its financial advisors, which seems to be 3 See also Se. Pa. Transp. Auth. v. Rubin, 2011 WL 1709105, at *1-2 (Del. Ch. Apr. 29, 2011) (applying Hirt factors). Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN May 25, 2012 Page 4 far more developed than what appears to be a similar argument presented by Lindell.4 Haverhill has a significantly greater financial interest than does Lindell. Haverhill is a larger, institutional stockholder, with roughly $200,000 of Catalyst stock. Lindell, by contrast, is an individual owning 100 shares of Catalyst, worth less than $9,000. This factor marginally supports Haverhill.5 Another area of concern is whether there is conflict between the institutional and individual stockholders. That Haverhill is supported in its quest for lead plaintiff status by two individual stockholders suggests that Haverhill is better positioned than Lindell. In fairness, however, there is no indication of any conflict between Haverhill, the institutional shareholder, and the individual shareholders, and, indeed, it appears that their interests are well-aligned. 4 Of course, on the other hand, the Defendants have suggested that there is no factual basis for this argument. 5 t holdings may not be material to it, but the record does not Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN May 25, 2012 Page 5 The Court is confronted with a question for which there answer. Assessing the factors is an inaccurate endeavor. Nonetheless, a conclusion must be reached, and, as set forth above, a review of the Hirt factors leads to the conclusion that, only narrowly, the Rigrodsky & Long-Wolf Popper arrangement would likely provide the most benefit to the potential class members. This is not to Ernst-Levi & Korsinsky pairing would not also do a fine job. It is simply that the interests of the plaintiff class are best served by a unitary and cohesive litigation platform.6 For the foregoing reasons, an order will be entered designating Haverhill as the lead plaintiff, Rigrodsky & Long, P.A. as liaison counsel, and Wolf Popper LLP as lead counsel. 6 Although Haverhill and its attorneys filed a motion to expedite, I have given that effort no weight in this analysis. It would be easy to conclude that that motion to expedite was filed as much for these purposes as for the purpose of moving the case along, especially since time does not yet seem to be of the essence. Coyne v. Catalyst Health Solutions, Inc.; C.A. No. 7448-VCN Witmer v. Catalyst Health Solutions, Inc.; C.A. No. 7449-VCN Lindell v. Blair; C.A. No. 7474-VCN Haverhill Retirement System v. Catalyst Health Solutions, Inc.; C.A. No. 7506-VCN May 25, 2012 Page 6 Although the order of consolidation does not give any role to the attorneys who have been unsuccessful, the Court encourages Lead Counsel to attempt to incorporate them into the case management structure. Very truly yours, /s/ John W. Noble JWN/cap cc: Jessica Zeldin, Esquire Kurt M. Heyman, Esquire Gregory P. Williams, Esquire Register in Chancery-K