Stay current on changes and developments in corporate law with a wide variety of resources and tools.
By Michael Greene
Feb. 27 — The defendants in a consolidated lawsuit arising out of Dole CEO David Murdock's take-private transaction of the company cannot designate a corporation to serve as their expert witness, according to a Feb. 27 Delaware Chancery Court ruling.
Vice Chancellor J. Travis Laster held that an expert witness must be a biological person, and therefore, the defendants could not rely on the corporation they designated to serve as their expert for valuing the transaction.
To mitigate the harm that the defendants might suffer if forced to proceed without an expert, Vice Chancellor Laster concluded that the defendants could substitute as an expert witness the biological person whom they intended to call as the corporation's agent.
The defendants identified Stifel, Nicolaus & Co. as their expert witness on the subject of Dole's value at the time of the take-private transaction. The corporation additionally was listed as such on multiple expert reports served by the defendants.
After the plaintiffs noticed a deposition, Stifel produced its managing director, one of the actual humans who signed the report, as the person most knowledgeable about the reports.
When the managing director claimed authorship of the reports the defense counsel objected, asserting that “he's not the expert” and insisting that Stifel was the expert witness.
Vice Chancellor Laster found that even though Delaware law treats corporations as if they are people in many other contexts, Delaware's Rules of Evidence make clear that a witness must be a biological person.
He observed that corporations cannot do many of the actions required under the evidence rules to be capable of serving as a witness.
“Lacking a voice, a corporation cannot testify. Lacking ears, it cannot hear. Lacking a mind, it cannot have personal knowledge or a memory to be refreshed. Lacking a conscience, it cannot take an oath or provide an affirmation. And because of its incorporeal nature, it cannot even meet Delaware's statutory requirement that a person taking an oath do so ‘with the uplifted hand,'” Laster opined.
He additionally found that a corporation could not finesse its away around these problems by seeking to testify through an agent because witnesses are not permitted to testify through agents.
“Even a biological person cannot send another person to testify on his behalf,” he added.
Accordingly, Laster held that Stifel could not serve as the defendant's expert witness, but that to avoid prejudice the defendant could substitute the corporation's managing director who testified during the deposition.
“[The managing director] has a body and brain. Assuming he is otherwise qualified, he can serve as an expert witness. Stifel has neither and cannot,” he wrote.
Investors, including pension funds from Oklahoma and Massachusetts, have brought claims that Murduck's buyout of the company was the result of a sweetheart insider deal.
The investors are asking the chancery court to find that an independent directors' committee didn't fulfill its duty, and they question whether $13.50-a-share was the best possible price for the 60 percent of the world's largest fresh fruit and vegetable producer that the Murdock family didn't already own.
Trial began Feb. 23, and Andrew J. Conrad, the leader of the independent committee, has testified that the special four-member panel did everything it could to get Murdock to pay more when he took the company private.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Kristyn Hyland at email@example.com
The opinion is available at http://www.bloomberglaw.com/public/document/IN_RE_DOLE_FOOD_CO_INC_STOCKHOLDER_LITIGATION_IN_RE_APPRAISAL_OF_.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)