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EXHIBIT A

Case 8:14-cv-01214-DOC-AN Document 50-3 Filed 08/26/14 Page 1 of 35 Page ID #:1554


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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION AT SANTA ANA
HONORABLE DAVID O. CARTER, JUDGE PRESIDING

CERTIFIED TRANSCRIPT

ALLERGAN, INC., ET AL., )
)
PLAINTIFFS, )
)
vs. ) SACV NO. 14-1214-DOC
)
VALEANT PHARMACEUTICALS )
INTERNATIONAL, INC., ET AL., )
)
DEFENDANTS. )
___________________________________)


REPORTER'S TRANSCRIPT OF PROCEEDINGS
SANTA ANA, CALIFORNIA
WEDNESDAY, AUGUST 20, 2014
8:30 A.M.




DEBORAH D. PARKER, CSR 10342
OFFICIAL COURT REPORTER
UNITED STATES DISTRICT COURT
411 WEST FOURTH STREET
SUITE 1-053
SANTA ANA, CALIFORNIA 92701
(657) 229-4305
transcripts@ddparker.com
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
that allowed Valeant to discuss its potential transaction
with Allergan and with Pershing Square.
At 14(a) and at 15 U.S.C. 78n(a) and Rule 14(a)-9
and 17 CFR 240, they prohibit the use of false or misleading
statements or omissions in soliciting proxies. At
Section 14(e), the language prohibits the making of a
material false statement or omission or to engage in
fraudulent practices in connection with a tender offer.
Plaintiffs allege that, first, the Defendants' proxy
solicitation materials and other public statements failed to
fully disclose the nature of the relationship and their
intentions towards Allergan; second, Defendants have been
overstating the certainty that Valeant will succeed in
acquiring Allergan in their press statements and third, the
Defendants have made misleading statements about the
anticipated cost synergies from the proposed acquisition in
their press statements and the SEC filings and have failed
to disclose that one of Valeant's directors, Robert Ingram,
had a conflict of interest because he was also a director of
Allergan in late 2012 when Valeant first began internal
discussions about potentially acquiring Allergan.
Section 20A of SEA creates a private right of
action, of course.
Now, let me turn the lectern over to each of you,
and I'm going to begin with Allergan. First of all, I want
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
you to make any presentation, Mr. Wald, that you have in the
order that you would like. But just to start us off on the
right footing, what's the rush?
We haven't even gotten to a situation where
there's 25 percent share group to call a 50 percent
shareholder meeting to replace your board members. Why is
this court seemingly stepping in in what may be perceived by
some as to be a good-faith tactical effort as well as legal
effort to nip this in the bud.
MR. WALD: Thank you, your Honor.
THE COURT: This court shouldn't be used that way.
MR. WALD: And we agree with that, your Honor.
THE COURT: Okay. Now your presentation.
MR. WALD: So, your Honor, I think the flip side
of the question of what's the urgency is the question of why
we find ourselves here today as opposed to at some prior
point in time. The timeline that we submit is relevant. It
starts with the tender offer on June 18th. Statements made
by Mr. Pearson, which are quoted in our complaint, the day
before which acknowledge, I think, for the first time, what
we had suspected all along, which was that this was part of
a plan to launch a tender offer right from the very
beginning.
THE COURT: Instead of a merger.
MR. WALD: Correct, your Honor. That is correct.
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
And that's laid out in our complaint.
The tender offer itself, of course, could be
launched but not closed for the reasons set forth in the
Court's opening remarks; that is, a shareholder rights plan
had been adopted by the board. And before the defendants
could close on their tender offer, they needed to remove
that rights plan. The way to do that, of course, would be
to wait for the annual meeting which is in May, so just
pass, or to call a special meeting at which time they could
seek to remove, as the Court noted, six of the nine
directors and, hopefully, replace them with directors who
would be more sympathetic to the Defendants' position.
The ability to call a special meeting, as your
Honor pointed out, turns on the tendering or the submission
of special meeting requests in the amount of 25 percent of
the total outstanding shares. That has not yet occurred.
The Defendants went to market, if you will, in
soliciting those 25 percent requests after their final proxy
went effective on July 11 of 2014. So up until July 11,
there was no final set of statements, there was no final
proxy on which they could go out and solicit these consents.
Our lawsuit followed within three weeks, because
we believed -- even though no special consents had yet been
filed, we believed that with the effectiveness, if you will,
of the final proxy on July 11th, there was now a real case
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Ex. A
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THE COURT: Mr. Wald, a couple quick questions;
and then, I'll turn to your opposition and then we'll have
another round.
MR. WALD: Sure.
THE COURT: First of all, check with your counsel
for just a moment. As a courtesy from the Court, make sure
that you covered your arguments. So just have a meeting.
MR. WALD: Thank you very much, your Honor.
(Pause.)
MR. WALD: Your Honor, Mr. Savitt wants to make
sure that I have responded to the Court's question about why
this Court should weigh into this dispute. I've tried to
cover that, but I want to make sure that I do cover that,
and I would ask that the Court tell me what you would
like -- what more you would like to hear from me on that
issue.
THE COURT: Well, the first question I had is:
Why? And I think you've attempted in good faith to answer
that. But why isn't this what I call anticipated harm as an
overall view and not a specific ruling the capitalist
marketplace we're blessed to live in is a very dynamic and
changing corporate and business engine? And not only can
the facts change quickly, but when the courts get involved
in what I call forward-looking decisions, there can be not
only changing facts but unanticipated facts which cause the
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
judiciary to seemingly react to the changing strategies,
needs of the parties. And when I'm dealing with these
sections, I don't know that the judiciary should be in that
position.
I'm curious when we have federal agencies also and
these kinds of claims are made, if the federal agencies
don't end up reacting to a district court's rulings without
carrying out their regulatory function because the court has
acted quickly. And usually act -- we react when the harm
has occurred and along the way there are so many
opportunities for you to bring this matter to the court, if
the 25 percent was reached, if the 50 percent was reached
but within three days of filing, you're at my doorstep.
And, by the way, you're very welcome to be here. But you're
at my doorstep. It's reflected in the way the filings have
taken place. When I start getting filings the night
before -- and we've already spent the weekend -- we already
have a changing scenario where the Court is going to read
that, but it's not the way to conduct business.
And in your arguments today, you'll notice
everything is expedited. We're going to have an early
summary judgment motion. We usually don't do those. We
usually have complete discovery. And it's not an expedited
discovery. So those are the concerns, holistically, that
the judiciary as a whole gets involved in. We're supposed
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
to be the wisest branch of the government, because we're
like the Monday-morning quarterback. We get to look back
and tell everybody what went wrong, only because we have the
facts. So those are some holistic concerns and I think that
this anticipation on your part may have merit in terms of a
section. But I've got the discretion, and I'm going to ask
you one more time: Why now?
MR. WALD: Fair enough, your Honor.
Listening to the Court's questions and the
explanation for the questions, I really heard two separate
and very important observations.
THE COURT: The role of the judiciary.
MR. WALD: Yes.
THE COURT: Do we intervene and why?
MR. WALD: Exactly. And then also, your Honor,
the second part of my remarks I would like to address to the
question of: Other fail-safes built into the system so that
the Court can have confidence that if it does set this on an
expedited basis that if, at the end of the day, whenever the
end of the day ends up being, the Court doesn't feel that it
has the information it needs to make an informed judgment
that will withstand the test of time, if you will, there are
offramps, there are safety ramps that are built into Rule 56
that are built into Rule 57, and I'd like to address those
as well.
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
weighed in.
THE COURT: Not like this. I don't think that
there's an analogy to this particular fact situation. I see
it in ERISA cases. My colleague, Terry Hatter, one time had
to decide if the Dodgers were going to play a Sunday
baseball game back in the 1980s, and he had to issue an
order on a Saturday. And that's serious, Counsel. Now, I'm
just joking.
MR. WALD: I'm a huge baseball --
THE COURT: But the precedence of this -- the way
these kinds of interventions get read by the marketplace has
a dynamic effect and repercussions. And, of course, you
hear my concern to tread in precipitously and not to have
fully developed discovery and not to see the harm that is
not perceived or anticipated to occur but to actually occur.
And we're not even at the 25 percent, you know, bellwether
mark yet to this Court's knowledge to even call for a
shareholder meeting, to even get 50 percent of the vote and
the machinations of the marketplace to the offers being made
are going to be dynamic, valiant. And the other entity is
going to have to persuade people to, you know, buy into
this. This price is going to change dynamically over a
period of time in the marketplace in what's being offered.
Those are my holistic concerns. They are not only
concerns in statute, but how is the judiciary reacting, the
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
legislative, executive and dynamic capitalist free market
society?
MR. WALD: Well, your Honor, I would say just a
couple of things, and I appreciate this dialogue very much.
The first thing I would say is that the Exchange Act does
provide a private right of action. And the purpose of that
is to allow target companies, such as Allergan --
THE COURT: Regulates it and enforces that.
MR. WALD: Yes.
THE COURT: The courts can, usually, when the harm
has occurred, 10B, class actions. Here, the harm hasn't
occurred yet. It's anticipated.
MR. WALD: Well, your Honor, let me ask this
question.
THE COURT: And aren't I giving your Board what I
call guidance? In other words, what you're really saying
is, that the argument, on behalf of Allergan, is: This is
such a weighty responsibility for the Board. Judge, they
need a ruling now so that they can conduct themselves in
such and such a way.
Yet, your opposition is going to argue in just a
moment that the Court is being manipulated.
MR. WALD: Your Honor, I don't think so, for
several reasons. We're not at all asking for an advisory
opinion. We're asking for declaration that they violated
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
the insider trader laws. That will be useful in several
contexts. One context is at the Board level on the bylaws.
Another context, your Honor, is that if we win that issue we
will be back in front of this court asking for relief that
sequesters Mr. Ackman's shares, that strips them of their
beneficial ownership rights and then enjoins -- very
possibly that enjoins further proceedings.
THE COURT: Well, explain to me the letter to the
Chancery Court. Of course, I haven't reached out to the
Delaware court, nor would it be appropriate. But you've
notified my Delaware colleagues about the action in this
court and, apparently, your position is that you believe
that the Delaware court should decide any state law
questions.
Now, right away, since I had the Anna Nicole Smith
case, I get into a whole problem concerning state and
federal jurisdiction. There is the probate exception. Here
I've got one court potentially making rulings that can
affect this court and this court's rulings can
effectively -- or can have great credence with a state
court.
How are we going to sort out that comity of
relationship between the state and the federal courts?
MR. WALD: As we tried to explain in our brief,
your Honor -- and let me take another stab at it -- we think
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
to file a suit in Delaware, I'm not sure what it's going to
say, your Honor. But what I do know is that the Delaware
court -- that if the Defendants are unhappy with what the
directors do, based on this court's rulings, we expect that
they will file a lawsuit in Delaware.
And so, I see this less as -- and I spent all my
time doing securities class actions -- not quite, your
Honor, but lots of it. I see this less as analogous to that
and more as a sequential complementary set of proceedings,
one, which takes place in federal court on the federal
issues and on the remedies that are available should the
Court find a violation. Not simply disclosure remedies,
your Honor, but the full panoply of remedies that we've set
forward and armed with that information. Not only the
Board, but the Delaware court can then decide whether there
are live issues of Delaware law that require intervention by
the Delaware court. That's not at all clear to me as I
stand before you, that depending on what this court does,
this is anything other than a theoretical construct that the
defendants have thrown up.
THE COURT: Then tell me, lastly -- and I
appreciate the discussion with you -- other than this broad
and heartfelt generalization that the Board needs guidance,
why? In other words, you let a board that's supposedly
knowledgeable in a corporate entity and as such, as board
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
members, they are elected for a purpose. What harm or
ramifications other than the guidance you've requested
befall this board? Are you concerned about individual
liability? I don't think so. They are acting in good
faith.
So what harm other than this guidance that you're
seeking what I view as with somewhat anticipatory fashion
befalls these board members?
MR. WALD: Two things, your Honor. First of all,
on the anticipatory part, I just want to ask the question,
or at least make the observation that if the consents are
indeed submitted on Friday, as we've been told that they
will be --
THE COURT: Do I have them in front of me now?
MR. WALD: No.
THE COURT: Why am I acting now?
MR. WALD: The question I suppose, your Honor, is
whether it will -- if you were to deny the motion today,
whether in the Court's view it would be open to the
Plaintiffs to come back on Monday.
THE COURT: And you see, there's a problem. It's
a rolling stone, right now. I don't have what you
anticipate even in front of me. It's this whole cascading
effect of, Judge, they've told us privately that they're
going do that; but from a court's perspective, they haven't
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
done it.
MR. WALD: I think it's more than private. I do
think it was in their moving papers, under penalty of
Rule 11 they've made this representation to the Court. But
in any event, your Honor, I don't think that that makes it
illusory. I don't think it makes it anticipatory in the
sense of not being justiciable. I believe that there is a
real case in controversy and that the declaratory judgment
cases recognize that when you get to the point in litigation
that we are now at where announcements have been made and
this is being said to happen imminently, that real rights
are at stake. And so, again, from our point of view, we
moved in as quickly as possible precisely because we didn't
want delay. Precisely because we did want to fit this
within a time period that no one could be critical of us.
So that's point one.
With respect to the Board, your Honor, again, I
apologize, but I resist the notion that it's advisory. What
we're asking for is --
THE COURT: I'm sorry. This is bad on my part.
Anticipatory.
MR. WALD: Okay.
THE COURT: I apologize if I used "advisory."
MR. WALD: Not at all. I think what we want --
what we seek is the Court's declaration about rights and
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
Well, Counsel, I'm going to take break. I need a
cup of coffee. There's a cafeteria downstairs. If you see
me, don't speak to me, okay?
But I'm going to go down and get a cup of coffee.
Come back. We've got unlimited time also. I've got some, I
think, coequally -- coequal questions for you.
But before we start with the Defendant, are you
presenting yourself as to two distinct and separate parties
for the purposes of this argument?
MR. FRAWLEY: Yes, your Honor.
THE COURT: I thought you were. Are you really
two separate and distinct parties, or just retained by two
different entities with, let's say, a common interest,
because trust me, you'll have coequal time. It's not two to
one, from my perception. There may be coalition of interest
here.
MR. FRAWLEY: Yes, your Honor.
THE COURT: Oh, I can't hear you.
MR. FRAWLEY: We won't be duplicating anything,
your Honor. We do have some perspectives on the issue.
THE COURT: Could you go to the lectern?
MR. FRAWLEY: Sorry, your Honor.
It's Brian Frawley. We will not be duplicating
anything. We do have some different perspectives on certain
issues, and --
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
THE COURT: It's okay.
Would you go to the lectern also and stand next to
your -- why don't you two stand together. It's a visual.
Some courts might view you as the same coalesced
interest.
MR. FRAWLEY: Co-authors.
THE COURT: But let me treat you with great
dignity and respect and give you co-equal arguments.
MR. HOLSCHER: If you'll agree we're co-bidders,
your Honor, it will be one argument.
THE COURT: And you can duplicate, so don't worry
about that. Fair enough?
MR. HOLSCHER: We're going to be short.
THE COURT: No, no. I don't want you to be short.
I want to get it right. So there's no time constraint on
you. If you want to be short, so be it.
Just know on Allergan's side, you're not going to
have any time constraints because maybe the interest here
will coalesce, let's say.
Okay. Well, about 15 minutes, would that be okay?
You know, I got Standard & Poor's coming in a
little later today and then some washing machine people. I
forgot the name of the case. But if you can finish before
noon, you're in good shape; if you can't, then I start
running into some afternoon problems, but I'll try to stay
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
with you and we'll go right through lunch.
Fair enough?
MR. HOLSCHER: I expect our part will be done much
shorter than that, or we should be done before noon.
THE COURT: Do you know how many times I've heard
that, Counsel?
Go get some coffee. It's fine.
(Recess.)
THE COURT: We're on the record.
Would you reintroduce yourself to the record.
MR. HOLSCHER: Yes, your Honor.
Mark Holscher -- the last name is
H-O-L-S-C-H-E-R -- of Kirland & Ellis for Pershing Square.
THE COURT: Thank you very much.
Counsel.
MR. HOLSCHER: Your Honor, I think one of your
comments this morning highlights the reason why declaratory
relief is entirely inappropriate here. You asked if there
is going to be "Carter on Corporate Governs" or "Carter on
Mergers and Acquisition." Let's be clear. The answer to
that would be "yes."
THE COURT: Should I be a board member? I'm
joking with you.
MR. HOLSCHER: You would be off-quoted.
Every Delaware corporation, when looking at
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
whole time the Delaware court is supposed to tap its toes.
They cannot manufacture federal jurisdiction relating to the
interpretation of Delaware bylaws. That's not Holscher.
That's Supreme Court, in Gunn, in 2013. You cannot create
federal jurisdiction over interpretation of state
instruments. You can't do it. It's not exclusive
jurisdiction.
In fact, your Honor, I agree 100 percent that you
have exclusive jurisdiction over the Section 14e insider
trading allegations. Agreed, stipulated and embraced. But,
your Honor, you notice when he said that 14e-3 is the
centerpiece and no one on their side has talked to you about
the actual bylaws, a Delaware court is going to have to
decide -- and, by the way, this concern about shareholders
not having full disclosure, and you talked about harm to the
market, the market has been speaking.
When this proposal was announced with 50 percent
premium so every owner of shares will get 6 percent more
than today, the stock went up significantly. As Valeant
files these sorts of lawsuits to block it, you'll see the
stock go up and down.
Now, I'm not here to predict stock movements,
your Honor. I agree with you these are fast-moving events,
but I would say to you, your Honor, the Delaware Chancery
Courts and my colleague, wrestling Valeant who has litigated
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
Delaware Chancery Courts for decades, will give more detail
on this.
The Delaware Chancery Courts have specific
expedited rules and procedures to handle these disputes.
Their local rules are diametrically opposed to the Central
District, which is focused on full disclosure, notice. For
example, your Honor, in this case they propose a 70-day
discovery. We have 30 days to get requests for admissions.
I want them to admit they have stated publicly several times
that we're co-bidders. If they refuse, I don't get that
before your Honor for another 38 days, under our local
rules. So with two days left in discovery, I might get some
motions to compel admissions. Their schedule, your Honor,
doesn't allow for any expert testimony. There is no expert
deposition schedule. This is not -- your Honor cited the --
I think it was the Winston case that talks about declaratory
relief for simple facts, undisputed facts. These are hotly
disputed. Hotly contested. And there's going to be expert
testimony on the SEC's practices and procedures. In fact,
we're going to be like an expert, like the Wachtell lawyer,
who wrote the client a letter saying this was lawful, and
the SEC should change its rules. What the SEC's practices
are, not an expert on the law, but the practices.
You look at this schedule, it's a schedule
destined to be a starting point to delay Delaware. Let me
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
show you something else that's kind of buried in their reply
brief. Again, why these proceedings are so dangerous to
insert yourself. You and your law clerks probably thought
it was fairly innocuous that at Footnote 4 of the reply
brief, they say for the first time: Plaintiffs have
requested a trial by jury on all legal claims. Should the
Court determine that any issues remaining for trial
implicate such claims, Plaintiffs request a jury trial as to
those claims.
You hear that reaffirmed for the first time in
their footnote. Well, your Honor, the Supreme Court
disagrees. Either they waive the jury claims or they cannot
go forward first with you deciding a declaratory relief
action on the same issues of insider trading and whether
disclosures were proper. It's not Holscher on the law.
It's Supreme Court, Beacon case, 359 U.S. 500 (1959); Diary
Queen, 369 U.S. 469 (1962). This is a law for 60 years, or
55 years.
You cannot have a judge do a declaratory relief
action to make fact-findings that you may have engaged
insider trading -- by the way, that's centerpiece, which
isn't in the actual bylaw -- and then have a jury trial
later. You can't do it. It violates the Constitutional
right to a jury trial. In fact, your Honor, the Beacon case
was a declaratory relief case from California where the
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
percent.
MR. WALD: Your Honor, what it allowed them to do
was to book a profit of over a billion dollars to use as a
war chest to fund this takeover attempt. It is precisely
the informational imbalance that the SEC in Rule 14e-3 and
the Congress in 14e sought to prevent. And unlike 10(b)(5),
your Honor, with which I know the court is very familiar,
scienter is not an element of 14e-3. It is a disclosed or
abstained rule. Period, full stop. That's what the rule
says. That's what they didn't do. They knew, but instead
of disclosing, they moved forward and they moved forward
rapaciously, quickly to the tune of a billion dollars or
more, which they are now using, your Honor, to effectuate
this bid. And if the court -- this court, which it sees the
jurisdiction, feels uneasy about setting a discovery and
hearing schedule that allows us to get to those facts and to
have an adjudication of whether what they did is lawful --
and we understand they say what they did is lawful. That's
the debate we want to have. They said they're co-bidders.
Your Honor, we say co-bidders matters not at all
under 14e-3. 14e-3 doesn't use the phrase "co-bidders."
Mr. Holscher wants an acknowledgment about what Allergan has
said on co-bidding. "Co-bidding" is a concept in 14(d) and
13(d). It is not a concept in 14e-3. And that is a problem
for them. That's what they are going to need to defend.
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
So those are the critical issues of federal law
which we bring before the court. And in our view, whether
it's through Rule 57 or whether it's through a preliminary
injunction sometime over the next, roughly, 120 days, we
believe that a factual record can and should be developed
that should be brought to this court in a systematic way.
These arguments should be meted out. The Court should have
an opportunity, obviously, to ask the questions that it
wants to ask. And if at the end of that process the Court
believes that there was something wrong that happened here,
something fundamentally wrong --
THE COURT: Let me repeat back to you: Why isn't
this coming to me by way of a more developed record and a
preliminary injunction where there's much more notice to any
interested entity, the last-moment filings coming as late as
last night?
MR. WALD: Let me apologize on behalf of my team
and my client, as the other side did for the ex parte
filing. I promise you that won't happen again. But putting
that issue aside, there is a real need for expedition here,
whether it's through a preliminary injunction or through
Rule 57. We read the rules, your Honor, and what we thought
was appropriate was to get a final determination of rights
and responsibilities under Rule 57, as opposed to a
preliminary assessment of the likelihood of success on the
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
merits.
But, your Honor, again, if the court believes that
that's a more appropriate rubric under which we should
proceed, then if and when these consents are finally
delivered, we will be back in front of you on that basis,
seeking to proceed via preliminary injunction to litigate
the same issues.
THE COURT: And what's the harm if this goes by
way of preliminary injunction?
MR. WALD: I don't know that there's a harm,
your Honor. The preliminary injunction inquiry is
different, obviously, than the Rule 57 inquiry.
THE COURT: And I would certainly have a much more
complete record, wouldn't I?
MR. WALD: Your Honor, if that's the Court's
view --
THE COURT: I'm not casting a view. We're having
a discussion.
MR. WALD: I don't know that that's true,
your Honor. I don't know that the record would be any more
or less developed than it would be in the Rule 57 context.
THE COURT: At least there would be notice to
regulatory parties like the SEC. They could choose to act
or not. At least my colleagues in Delaware would have some
indication. At least, I wouldn't be relying upon a rule.
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
Each party would have an opportunity for a more completed
hearing.
MR. WALD: With respect to those issues,
your Honor, in the way that we had envisioned the Rule 57
schedule unfolding, we expected that the SEC would be
invited to give views to the Court's point. The SEC might
or might not decide to do that, but certainly they could be
invited by the Court and by us and, perhaps, by the other
side as well. And we fully agree that the SEC should be in
this court giving its views on 14e-3.
THE COURT: Now, finally, this is only a request
under Rule 57, or an expedited schedule. Even if I felt
that you were wrong across the board, there's no vehicle
that I know of that stops you from renewing this by way of a
preliminary injunction, is there?
MR. WALD: I don't believe there is, your Honor.
THE COURT: So what's really being asked is that I
invoke a rule without a hearing, based upon documents filed
in a good-faith flurry and then pick up the pieces in a
sense at a later time and see if I was right.
MR. WALD: Your Honor --
THE COURT: Why am I uncomfortable?
MR. WALD: So phrased, your Honor, I would be
uncomfortable as well.
All I can say, respectfully, we have at least a
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
different view of what we have been trying to do.
THE COURT: Let's see if Mr. Holscher --
Mr. Holscher, regardless of the Court's ruling in the next
few days -- no, stay together. You're a wonderful visual
together at the lectern.
Regardless of what the Court rules, unless --
assume from your viewpoint that you believe you've
prevailed, which I don't subscribe to, by the way. So when
you get up and argue, argue with fear. What stops the other
side bringing this as a way of preliminary injunction,
rather than Rule 57 motion? In other words, I don't know
how you bar that today in the future, regardless of what the
court does with Rule 57.
MR. HOLSCHER: With great fear, I agree with,
your Honor.
THE COURT: No matter what I rule today, we're
coming back.
MR. HOLSCHER: I believe that's right, your Honor.
And I -- we have a view as the reason why they did not seek
preliminary injunction. It may be a more jaundiced view,
but it's a view that if it's a preliminary injunction, they
have to be more explicit and actually ask you to stop
something in Delaware which then clarifies the issue. It's
a Delaware law issue, and it's an improper remedy.
So your view, your Honor, is that it is learned
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
counsel on the other side. They are quite sophisticated.
The complaint has tremendous time and thought to it. In the
complaint, they did seek preliminary injunctive relief in
two areas. They specifically said they would be seeking it.
Our view, your Honor, and our preview is, yes,
they can file for preliminary injunction. I'll be standing
before you sometime in the next hundred days and say to,
your Honor, they're seeking a remedy having stopped
something in Delaware which they cannot do.
THE COURT: The end result of all of this, is if I
rule favorably towards Allergan today, it still sets up a
whole series of expedited discovery hearing and a rather
shallow record. If I rule against you.
I don't know of any way that your opposition,
Mr. Holscher, can stop a preliminary injunction hearing.
MR. HOLSCHER: Agree. And, again, here,
your Honor --
THE COURT: So --
MR. HOLSCHER: The one caveat I would make,
your Honor, is: Counsel, has again said, you are the only
court that can decide this issue. Respectfully, your Honor,
I won't repeat the case or something on a filing, the
Delaware Chancery Courts have explicitly addressed whether
in a bylaw despite a party complied with the federal
security laws. We cited just one example. Obviously, that
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
was in our emergency ex parte brief with, like, on 10 hours'
notice. We cited the TravelCenter versus Brog where they
said, The Delaware Chancery Court explicitly ruled --
THE COURT: Counsel. Counsel.
You didn't get that.
Cite that again. The court reporter didn't get
that.
MR. HOLSCHER: In our supplemental brief, we
cited -- the last case was cited in the brief. It's a
two-and-and-a-half-page brief. It's the last paragraph.
THE COURT: She just didn't get it, because you
slurred your words and dropped your voice.
MR. HOLSCHER: TravelCenter versus, I think, Brog.
THE COURT: Thank you.
MR. HOLSCHER: And I do believe, your Honor, that
the Delaware Chancery Courts have and are equipped to decide
whether someone has complied with a bylaw, even if it
includes the determination of whether they complied with
some regulation -- federal regulation, SEC, or otherwise. I
will --
THE COURT: How imminent, so I understand the
harm, is the ability of the defendants to call for a general
shareholder meeting? In other words, you say in good faith
that you've got the 25 percent of the vote from a number of
institutions but hundreds, let's say, of investors.
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Ex. A
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
MR. HOLSCHER: Right.
THE COURT: How soon can the general shareholder
meeting be called?
MR. HOLSCHER: It's a great issue. We submitted
to Allergan.
THE COURT: Just a moment. I went to law school,
too. I asked you a question. How soon?
MR. HOLSCHER: We don't know.
THE COURT: Okay. You don't know.
MR. HOLSCHER: Because --
THE COURT: A month. See, I used to practice. A
month?
MR. HOLSCHER: We will try for a month.
THE COURT: Two months?
MR. HOLSCHER: We're not certain what the Delaware
court and Allergan will do.
THE COURT: Three months?
MR. HOLSCHER: It may be that long. We're not for
sure.
THE COURT: Four months?
MR. HOLSCHER: May I consult?
THE COURT: Why don't you step over and consult.
(Pause.)
MR. HOLSCHER: Our position is a reasonable time
is 30 to 45 days. We do not set the meeting, your Honor.
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
THE COURT: Okay.
MR. HOLSCHER: Either the Court or Allergan will
set the meeting.
THE COURT: And I'm sure Allergan would want that
meeting as soon as possible. I'm just joking, Counsel.
MR. WALD: May I address that?
THE COURT: Yes. So if I was looking for a time
frame to see when does this harm occur in a nonanticipatory
fashion, 30 days?
MR. WALD: No, your Honor.
THE COURT: 40 days?
MR. WALD: 120.
THE COURT: 30 to 45 days to 120 days. So
therefore we have --
MR. WALD: I think that's right, your Honor. The
Allergan Board will set, as Mr. Holscher said, the meetings
in a reasonable time and if they don't like it --
THE COURT: Just a moment. Reasonable time is
your representation in good faith. You believe that it will
be no longer than 120 days.
MR. WALD: That is my belief, your Honor.
THE COURT: Okay. So now we're tied to some time.
We've got some ideas. 30 to 45 days up to 120 days. So,
therefore, it takes away the fear factor that this is going
to be a stall by the Allergan Board that is going to be out
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
of that unlawful conduct are with respect to shares that
were purchased on the basis of insider trading violations.
So I want to be very clear. We're not seeking to
enjoin Delaware. We've taken federal courts. We understand
the comity issue. That's not what's at issue in this
lawsuit. That's not at what issue in this courtroom. The
issue in this courtroom is an issue of great importance
under the Exchange Act and that, your Honor -- again, I
repeat myself: But if this Court doesn't decide that issue,
if this Court doesn't seize that issue and allow the parties
to get to the bottom of it through discovery and through
whatever hearing schedule the court believes is the
appropriate hearing schedule to get to the truth, that will
not be litigated.
THE COURT: If this Court ruled against Allergan,
hypothetically, on your Federal Rules of Civil Procedure 57
motion, how would you be any better prepared or less
prepared at the time of a preliminary injunction? And
second, what would it take for you to be prepared when I
have these time frames of 30 to 45 days up to 120 days?
Because there's no way to hold you out of court in the
future. So, therefore, I expect, if I ruled against you,
which I'm not saying I'm going right away.
Please, understand that.
MR. WALD: Understood, your Honor.
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
THE COURT: All right. But if I ruled against you
at this juncture, there is no way that Valeant can stop you
from bringing a preliminary injunction. And so my question
is a common sense question, because what you don't want to
do is bring it in a situation where the Court just puts you
off. You know, you're back in a week and the Court says,
Counsel, you were just here. Here you're in December of
2018. And we've got wide discretion about how we hear that.
I know there's some rules.
And I'm going to ask the same question of
Mr. Holscher in just a moment, because if I ruled for
Allergan in this motion, that's one resolution; but if I
don't, the reason I'm asking these questions, is because
you're going to be right back in and you're hearing that on
a preliminary injunction. So I'm going to ask you to think
about time frames, also, if we got to that place; otherwise
I'm going to get a flurry of papers, make a guess about
what's appropriate. And I need to know what time period you
need to make a cogent and thoughtful presentation.
Why don't you step over and ask your team. Is
there any reason you can't work weekends?
Counsel?
MR. WALD: No, your Honor.
THE COURT: Good. Excellent. Love your attitude.
Counsel, I'm glad to see you volunteered also. So
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
Saturdays and Sundays belong to me, also.
All right. Thank you.
MR. WALD: Your Honor, we had proposed a
schedule -- and we're happy to live with that schedule.
We're happy to tweak the schedule.
THE COURT: Well, I don't have it in front of me.
MR. WALD: Okay. 60 to 70 days for discovery,
followed by the hearing.
THE COURT: Well, I'm not certain that discovery
is appropriate. We'll see. Just a moment. Preliminary
injunctions don't necessarily have discovery. It's already
conducted.
Counsel.
MR. HOLSCHER: Your Honor, our request would be
that the Court and Defendants receive a bare-bones statement
of what injunctive relief they're seeking on what claims,
because they have four claims. Within 24 hours, we give
your Honor an agreed-upon schedule. My concern is, I heard
today they were seeking 14e-3 for declaratory relief. I
don't know the parameters. This is the first we heard of
the parameters.
I submit to your Honor and agree that once we know
what they want to seek, we are prepared to come back here in
the courtroom, in the attorney room, 24 hours, give you a
schedule immediately. We will move quickly, depending on
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
what they seek. We may need discovery. I have to see if
it's just a pure legal issue. I think there are factual
disputes here as well as the conduct.
THE COURT: It's too early. I'm raising these
questions just to get the two of you starting to think about
them. I don't expect answers today. Because discovery
might be called for and you both may end up agreeing to it.
But you're right. It needs to be better defined.
As far as the Court setting a schedule, I'd rather
fit into your needs and agreement, if possible, than just
picking a date. Because once I pick a date, you're
helpless. You're not coming back and negotiating with me
over another date and say, Oh, Judge, by the way, we've just
reached an agreement -- because you set it on Christmas
day -- and we really want to have it a week before. I'm
being facetious about that.
So I'm giving you control now. Once I make a
ruling, I won't back up on it. So you have all the freedom
in the world to negotiate, to talk, to make it comfortable,
to get a fair hearing, if we get there in time frames, as
long as it fits into my calendar. But once I hand it down
and you don't cooperate in that regard, then you won't see
the cooperative court even by stipulation.
Is that understood?
MR. WALD: Understood, your Honor.
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
THE COURT: Well, I want to thank you both. I
really truly have enjoyed your company and look forward to
you, apparently, revisiting with me.
You'll have a decision within the next day to five
years. I'm just joking with you. You'll have a decision as
quickly as we can get back to it with our calendar, okay?
And we'll try to get that out to you just as quickly. But,
right now I've got a very narrow issue, and that's the
Rule 57 issue. That's really what's before me. And the
discretion that the Court chooses or not to exercise at this
point. If I rule in favor of Allergan, we're off to an
expedited schedule and I need to get packaged. Of course,
we'll talk about that a little bit more. If I rule against
Allergan, it sounds to me like we're right back into a
preliminary injunction that neither one of you can avoid.
And the Court needs to set aside some time, and we need to
talk about that time. This isn't going to be a trial. It's
going to be regulated and limited in terms of time also.
Okay. Anything further, Counsel?
Mr. Wald, I want to truly thank you. It's been a
pleasure to have you and your team here.
And, Mr. Holscher, it's a pleasure seeing all of
you.
Counsel, we're going to go through lunch. And if
you don't mind, as a courtesy to counsel who have been
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DEBORAH D. PARKER, OFFICIAL COURT REPORTER
waiting on the Tait and BSH Home Appliances Corporation
matter -- I know you were scheduled for 10:30 this morning.
Why don't you come up and have a seat, and I want
to say I'm truly concerned about the time you've been
waiting.
(At 11:30 a.m., proceedings were adjourned.)

-oOo-

CERTIFICATE
I hereby certify that pursuant to Section 753,
Title 28, United States Code, the foregoing is a true and
correct transcript of the stenographically reported
proceedings held in the above-entitled matter and that the
transcript page format is in conformance with the
regulations of the Judicial Conference of the United States.

Date: August 21, 2014


____________________________________
Deborah D. Parker, Official Reporter
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