SECURITIES AND EXCHANGE COMMISSION
Washington, D.c. 20549
SCHEDULE 14D-1
Amendment No. 11
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
RENTAL SERVICE CORPORATION
(Name of Subject Company)
UR ACQUISITION CORPORATION
United Rentals, Inc.
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
76009V 10 2
(CUSIP Number of Class of Securities)
United Rentals, Inc.
Four Greenwich Office Park
Greenwich, Ct 06830
Attn.: Bradley S. Jacobs
Chairman of the Board and
Chief Executive Officer
Telephone:(203) 622-3131
Facsimile:(203) 622-6080
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of Bidders)
Copy To:
Milton G. Strom, Esq.
Skadden, Arps, Slate, Meagher & Flom Llp
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
UR Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of United Rentals, Inc., a Delaware
corporation ("Parent"), and Parent hereby amend and supplement their Tender
Offer Statement on Schedule 14D-1 (as amended from time to time, the
"Schedule 14D-1"), filed with the Securities and Exchange Commission (the
"Commission") on April 5, 1999, with respect to the Purchaser's offer to
purchase all of the shares of common stock, par value $0.01 per share
(collectively with the associated preferred stock purchase rights issued
pursuant to the Rights Agreement, dated as of April 16, 1999, between
Rental Service Corporation and ChaseMellon Shareholder Services, L.L.C.,
the "Shares"), of Rental Service Corporation, a Delaware corporation (the
"Company"), at a price of $22.75 per Share, net to the seller in cash (such
price, or such higher price per Share as may be paid in the Offer, the
"Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"). Unless
otherwise indicated herein, each capitalized term used but not defined
herein shall have the meaning ascribed to such term in the Schedule 14D-1
or in the Offer to Purchase referred to therein.
Item 10. Additional Information.
The information set forth in Item 10(e) of the Schedule 14D-1 is
hereby amended and supplemented by the following information:
On May 4, 1999, Parent and Purchaser filed a motion for an order
restraining NationsRent from prosecuting the Florida Action and a
supporting memorandum of law (collectively the "Motion to Restrain the
Florida Litigation") in the Chancery Court of the State of Delaware (the
"Delaware Court") to restrain NationsRent from further prosecuting its
action filed on April 30, 1999 (the "Florida Litigation"), against Parent,
Purchaser, Bradley S. Jacobs, John N. Milne and Goldman, Sachs & Co. in the
Circuit Court of the 17th Judicial Circuit in and for Broward County,
Florida.
On May 5, 1999, the Delaware Court, after a hearing, issued a
preliminary injunction that enjoined NationsRent from taking any steps in
connection with, or proceeding further with, the Florida Litigation until
further order of the Delaware Court. As a result of the Delaware Court's
ruling, NationsRent was ordered to withdraw its pending motions in the
Florida Litigation.
The foregoing is qualified in its entirety by reference to the
complete text of the motion to restrain the Florida Litigation, a copy of
which is filed as Exhibit (g)(10) hereto, and the complete text of the
order restraining NationsRent, Inc. from prosecuting the Florida Action
issued by the Delaware Court, a copy of which is filed as Exhibit (g)(11)
hereto, each of which is incorporated by reference herein.
The information set forth in Item 10(f) of the Schedule 14D-1 is
hereby amended and supplemented by the following information:
On May 5, 1999, Parent issued a press release regarding the Delaware
Court's ruling regarding the Florida Litigation. The full text of the press
release is filed as Exhibit (a)(18) hereto and is incorporated by reference
herein.
Item 11. Materials to be Filed as Exhibits.
(a)(18) Press Release of Parent dated May 5, 1999.
(g)(10) Motion for an Order Restraining NationsRent, Inc. from
Prosecuting the Florida Action and a Memorandum of Law in
Support of Plaintiffs' Motion to Restrain Defendant
NationsRent, Inc. from Prosecuting a Subsequently Filed
Action, filed May 4, 1999, by Parent and Purchaser in the
Chancery Court of the State of Delaware.
(g)(11) Order Restraining NationsRent, Inc. from Prosecuting the
Florida Action.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
UR ACQUISITION CORPORATION
By: /S/ JOHN N. MILNE
-----------------------------------
Name: John N. Milne
Title: President
UNITED RENTALS, INC.
By: /S/ BRADLEY S. JACOBS
-----------------------------------
Name: Bradley S. Jacobs
Title: Chairman and Chief Executive
Officer
Date: May 6, 1999
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
(a)(18) Press Release of Parent dated May 5, 1999.
(g)(10) Motion for an Order Restraining NationsRent, Inc. from
Prosecuting the Florida Action and a Memorandum of Law in
Support of Plaintiffs' Motion to Restrain Defendant
NationsRent, Inc. from Prosecuting a Subsequently Filed
Action, filed May 4, 1999, by Parent and Purchaser in the
Chancery Court of the State of Delaware.
(g)(11) Order Restraining NationsRent, Inc. from Prosecuting the
Florida Action.
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
UNITED RENTALS WINS MOTION
TO STOP NATIONSRENT SUIT
GREENWICH, CT, MAY 5, 1999 -- United Rentals, Inc. (NYSE: URI)
announced today that the Delaware Chancery Court enjoined NationsRent, Inc.
(NYSE: NRI) from continuing its legal action against United Rentals in
Florida. As a result of the court's ruling today, NationsRent must withdraw
its pending motions against United Rentals that it announced yesterday.
At the conclusion of today's hearing, the court ruled that
NationsRent improperly ignored Delaware's jurisdiction by bringing legal
action against United Rentals in State Circuit Court in Broward County,
Florida in connection with United Rentals' $22.75 per share all cash tender
offer for Rental Service Corp. (NYSE: RSV). United Rentals, Rental Service
and NationsRent are each incorporated in Delaware.
"We're pleased that the court recognized the merits of our arguments
and issued a preliminary injunction against NationsRent," said Bradley
Jacobs, chairman and chief executive officer of United Rentals. "If
NationsRent chooses to pursue its allegations in Delaware, we believe that
we can demonstrate their frivolous nature and we will move for prompt
dismissal. NationsRent's legal maneuvers were nothing more than a desperate
attempt to try to prevent Rental Service stockholders from choosing between
our all cash premium offer or transferring control to NationsRent in a no
premium stock transaction of uncertain value."
United Rentals also said that it was continuing its tender offer for
Rental Service and will shortly begin its solicitation to unseat the Rental
Service board.
United Rentals, Inc. is the largest equipment rental company in North
America and serves over 900,000 customers through its network of 482
locations in 41 states, Canada and Mexico.
###
Certain Information Concerning Participants
United Rentals, Inc. ("United Rentals"), UR Acquisition Corporation
("UR Acquisition") and the following persons named below may be deemed to
be "participants" in the solicitation of consents and/or proxies from
stockholders of Rental Service Corporation ("Rental Service"): the
directors of United Rentals (Bradley Jacobs (Chairman of the Board and
Chief Executive Officer), Wayland Hicks (Vice Chairman and Chief Operating
Officer), John Milne (Vice Chairman, Chief Acquisition Officer and
Secretary), William Berry (President), John McKinney (Vice President,
Finance), Leon Black, Richard Colburn, Ronald DeFeo, Michael Gross, Richard
Heckmann, Gerald Tsai, Jr. and Christian Weyer); the following executive
officers and employees of United Rentals: Michael Nolan (Chief Financial
Officer) and Robert Miner (Vice President, Strategic Planning); and the
nominees of United Rentals (the "Nominees") to stand for election to the
Board of Directors of Rental Service (Messrs. Richard Daniel, Raymond
Troubh, William Aaron, David Bronner, Peter Gold, David Katz, Elliot Levine
and Jeffrey Parker and Ms. Stephanie Joseph).
As of the date hereof, United Rentals is the beneficial owner of 100
shares of common stock, par value $0.01 per share (the "Common Stock"), of
Rental Service. Other than set forth herein, as of the date hereof, neither
United Rentals, UR Acquisition nor any of the persons listed above, has any
interest, direct or indirect, by security holding or otherwise, in Rental
Service.
United Rentals has retained Goldman, Sachs & Co. ("Goldman Sachs") to
act as its financial advisor and the Dealer Managers in connection with the
tender offer (the "Offer") by United Rentals and UR Acquisition to purchase
the shares of Common Stock of Rental Service for $22.75 per share in cash,
for which Goldman Sachs may receive substantial fees, as well as
reimbursement of reasonable out-of-pocket expenses. In addition, United
Rentals has agreed to indemnify Goldman Sachs and certain related persons
against certain liabilities, including certain liabilities under the
federal securities laws, arising out of its engagement. United Rentals has
also entered into a commitment letter with Goldman Sachs Credit Partners
L.P. ("GSCP") relating to the financing of the Offer pursuant to which GSCP
may receive substantial fees, as well as reimbursement of reasonable
out-of-pocket expenses. Goldman Sachs does not admit that it or any of its
partners, directors, officers, employees, affiliates or controlling
persons, if any, is a "participant" as defined in Schedule 14A promulgated
under the Securities Exchange Act of 1934, as amended, in the solicitation
of consents and/or proxies, or that Schedule 14A requires the disclosure of
certain information concerning Goldman Sachs. In connection with Goldman
Sachs' role as financial advisor to United Rentals, the following
investment banking employees of Goldman Sachs may communicate in person, by
telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of Rental Service and may solicit
consents and/or proxies from these institutions, brokers or other persons:
Bruce Evans, Robert Lipman, Jeffrey Moslow and Cody Smith. Goldman Sachs
engages in a full range of investment banking, securities trading,
market-making and brokerage services for institutional and individual
clients. In the normal course of its business Goldman Sachs may trade
securities of Rental Service for its own account and the accounts of its
customers, and accordingly, may at any time hold a long or short position
in such securities. Goldman Sachs has informed United Rentals that, as of
the date hereof, Goldman Sachs holds no shares of the Common Stock of
Rental Service for its own account. Goldman Sachs and certain of its
affiliates may have voting and dispositive power with respect to certain
shares of Rental Service Common Stock held in asset management, brokerage
and other accounts. Goldman Sachs and such affiliates disclaim beneficial
ownership of such shares of Rental Service Common Stock.
###
United Rentals, Inc.
Investor contact: Media contact:
Robert Miner Fred Bratman or Tracy Williams
United Rentals Sard Verbinnen & Co.
Phone: 203-622-3131 Phone: 212-687-8080
Fax: 203-622-6080 Fax: 212-687-8344
E-mail: [email protected] E-mail: [email protected]
or [email protected]
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs, : Civil Action No. 17090
:
v. :
:
MARTIN R. REID, WILLIAM M. BARNUM, JR., :
JAMES R. BUCH, DAVID P. LANOHA, :
CHRISTOPHER A. LAURENCE, ERIC L. MATTSON, :
BRITTON H. MURDOCH, JOHN M. SULLIVAN, :
RENTAL SERVICE CORPORATION, a Delaware :
corporation, and NATIONSRENT, INC., a Delaware :
corporation, :
Defendants. :
MOTION FOR AN ORDER RESTRAINING
NATIONSRENT, INC. FROM PROSECUTING THE FLORIDA ACTION
Plaintiffs hereby move the Court, pursuant to Court of Chancery
Rule 65, for an Order, in the form submitted with this motion, restraining
defendant NationsRent, Inc. from further prosecuting the action commenced
on April 30, 1999 in Broward County, Florida titled NationsRent, Inc. v.
United Rentals, Inc. et al, Case No. 99-07422-CACE-11. The grounds for this
motion are set forth in plaintiffs' memorandum of law submitted herewith.
/s/ Edward P. Welch
--------------------------
Edward P. Welch
Stephen D. Dargitz
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
(302) 651-3000
David J. Margules
WOLF, BLOCK, SCHORR &
SOLIS-COHEN LLP
One Rodney Square, Suite 300
Wilmington, Delaware 19899
(302) 777-5860
Attorneys for Plaintiffs
UR ACQUISITION
CORPORATION and
UNITED RENTALS, INC.
Of The New York Bar:
Jay B. Kasner
Steven J. Kolleeny
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, NY 10022
(212) 735-3000
DATED: May 4, 1999
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs, :
: Civil Action No. 17090
v. :
:
MARTIN R. REID, WILLIAM M. BARNUM, JR., :
JAMES R. BUCH, DAVID P. LANOHA, :
CHRISTOPHER A. LAURENCE, ERIC L. MATTSON, :
BRITTON H. MURDOCH, JOHN M. SULLIVAN, :
RENTAL SERVICE CORPORATION, a Delaware :
corporation, and NATIONSRENT, INC., a Delaware :
corporation, :
Defendants. :
MEMORANDUM OF LAW IN SUPPORT OF
PLAINTIFFS' MOTION TO RESTRAIN DEFENDANT
NATIONSRENT, INC. FROM PROSECUTING
A SUBSEQUENTLY FILED ACTION
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
WOLF, BLOCK, SCHORR &
SOLIS-COHEN LLP
One Rodney Square, Suite 300
Wilmington, Delaware 19899
(302) 777-5860
DATED: May 4, 1999
PRELIMINARY STATEMENT
In an attempt to deprive plaintiffs of their chosen forum
and to deprive this Court of jurisdiction over the controversy that the
parties have actively been litigating for a month, defendant NationsRent,
Inc. ("defendant" or "NationsRent") filed an action in Broward County,
Florida Circuit Court on Friday (the "Florida Action"). The Florida Action
arises from the same chain of events as the litigation presently before
this Court, i.e., the Merger Agreement dated January 20, 1999 between
NationsRent and Rental Service Corporation ("RSC") (the "Merger
Agreement"); the Tender Offer by plaintiff UR Acquisition Corp. for RSC
commenced on April 5, 1999 (the "Tender Offer"), the conduct of the RSC
directors in responding to the Tender Offer and taking action under the
Merger Agreement, and even the very commencement and prosecution of this
litigation. That same day, NationsRent filed a motion for temporary
injunction, an ex parte motion for expedited discovery and an ex parte
motion for case management conference or status conference in the Florida
Action. NationsRent's ex parte motion for case management conference was
granted and a conference in the Florida Action is presently scheduled for
this Thursday, May 6, at 12:00 noon.
The logical relationship between the Florida Action and the
instant lawsuit is plain. Both seek to affect consummation of the Tender
Offer. One seeks to further it, the other, to thwart it.
In the Florida Action, defendant seeks injunctive relief,
ostensibly to stop plaintiffs from "tortiously interfering" with the Merger
Agreement. Defendant claims, among other things, that plaintiffs have
committed a tort by pursuing a "sham" Tender Offer, as well as the instant
litigation through "engaging in harassing and abusive litigation tactics."
Stripped to its core, the Florida Action attempts to end run this Court's
jurisdiction to determine the propriety of this litigation, the Tender
Offer, and the Merger Agreement. The discovery that NationsRent purports to
seek, on an expedited basis, in the Florida Action is virtually identical
to the discovery sought by the defendants in this action.
As this Court has recognized, however, "justice is
ill-served when litigation proceeds contemporaneously in a number of
courts." Basner v. Gillette Co., Del. Ch., C.A. Nos. 9080, 9082, slip op.
at 5, Hartnett, V.C. (June 26, 1987). Where, as here, the first and
second-filed actions are closely related and arise out of the same common
nucleus of operative facts, and the parties are substantially the same, all
claims should be resolved in the first-filed forum.
Accordingly, plaintiffs respectfully request that this Court
enter an order enjoining NationsRent from taking any further steps in
prosecuting the Florida Action and requiring NationsRent immediately to
notify the Florida Court that it has withdrawn its pending motions in that
Florida Action. A corporation such as NationsRent that has chosen to avail
itself of the benefits of having incorporated in Delaware should not be
permitted to engage in such an affront to the courts of this State.
STATEMENT OF FACTS
This action was commenced on April 5, 1999, at which time
plaintiffs also filed motions for a preliminary injunction and expedited
scheduling. (Affidavit of Edward P. Welch, sworn to May 4, 1999 (the "Welch
Aff.") P. P. 2-4) On April 12, this Court entered a Scheduling Stipulation
ordering expedited discovery and scheduling briefing and oral argument on
plaintiffs' Motion for a Preliminary Injunction on May 17, 1999. (Welch
Aff. P. 5) Pursuant to the Court's order, the parties engaged in expedited
discovery, which included seeking numerous rulings from the Court regarding
various discovery disputes, producing thousands of pages of documents, and
deposing 16 witnesses. (Welch Aff. P. 6) This Court has also held numerous
telephone conferences concerning discovery disputes that have arisen
between the parties. In addition, the parties are in the midst of briefing
the preliminary injunction motion. Plaintiffs' memorandum in support of
their motion due on May 5, to be followed shortly by defendants' briefs.
(Welch Aff. P. 5)
On April 14, 1999, NationsRent filed its Answer to the
Complaint in this action but asserted no counterclaims. (Welch Aff. P. 7)
On Friday, April 30, 1999, NationsRent commenced the Florida
Action. (Welch Aff. P. 8) Plaintiffs' counsel only received a copy of the
Florida Complaint on Monday, May 3, 1999. (Welch Aff. P. 9) The Florida
Complaint names as defendants the plaintiffs in this litigation as well as
two of their senior executives and URI's financial advisor, Goldman Sachs &
Co. ("Goldman Sachs"), all of whom have been deposed in this action and all
of whom are amenable, or consent, to jurisdiction in this Court.(1) (Welch
Aff. P. 8) The allegations in the Florida Complaint concern the Merger
Agreement between NationsRent and RSC and United Rental's Tender Offer.
(Id.) Specifically, NationsRent alleges that the named defendants are
tortiously interfering with the Merger Agreement by, among other things,
pursuing the Tender Offer and by plaintiffs' litigating their claims in
this Court. NationsRent seeks to enjoin this alleged conduct and an
unspecified amount of money and punitive damages. (Id.) NationsRent also
filed a motion for expedited discovery seeking discovery that is virtually
identical to that sought by defendants in this action and a motion for a
temporary injunction in the Florida Action seeking to enjoin "defendants,
and any person(s) acting on behalf of any defendant, from taking any
further action to interfere with the Merger Agreement." (See Welch Aff. Ex.
B) In light of the allegations in NationsRent's Complaint in the Florida
Action, the proposed injunction, if granted, could be argued by NationsRent
to prevent plaintiffs from further pursuing the action in this Court.
- ------------
(1) Bradley Jacobs and John Milne both consent to the personal
jurisdiction of the Court in this action. We are further advised by
counsel for Goldman Sachs - which we understand is now a Delaware
corporation - that it will also consent to the personal
jurisdiction of the Court in this action.
Yesterday afternoon, NationsRent's Florida counsel
telecopied to plaintiffs' counsel a copy of the Order of the Court in the
Florida Action granting NationsRent's Ex Parte Motion For Case Management
Conference or Status Conference. (Welch Aff. P. 10) The Order sets a
conference in the Florida Action for Thursday, May 6 at noon. (Id.)
ARGUMENT
I. THE FLORIDA ACTION IS AN IMPROPER ATTEMPT TO STRIP
THIS COURT OF JURISDICTION AND DEPRIVE PLAINTIFFS OF
THEIR CHOSEN FORUM.
The rules governing this motion "are well developed and non-
controversial. They are designed to promote systematic fairness and
efficiency." Household Int'l, Inc. v. Eljer Indus., Del. Ch., C.A. No.
13631, slip op. at 5, Allen, C. (June 19, 1995). The relative convenience
of the parties cannot overcome the " 'strong preference for the litigation
of a dispute between named parties in [the] forum in which the suit was
first instituted.' " Dura Pharm., Inc. v. Scandipharm, Inc., Del. Ch., 713
A.2d 925, 927 (1998). " '[W]here a court of equity has jurisdiction of the
parties and the subject matter of a suit, it will prevent the defendant
from removing the controversy to another jurisdiction through the device of
a suit later instituted in such other jurisdiction.' " Air Prods. & Chems.,
Inc. v. Lummus Co., Del. Ch., 235 A.2d 274, 276-77 (1967) (quoting
Connecticut Mut. Life Ins. v. Merritt-Chapman & Scott Corp., Del. Ch., 163
A. 646 (1932)). The Florida Action is just such a device. Its intent is to
remove the instant controversy over the Tender Offer and Merger Agreement
from plaintiffs' to defendant's preferred forum. This is improper. Ivanhoe
Partners v. Newmont Mining Corp., Del. Ch., C.A. Nos. 9281, 9221, slip op.
at 14, Jacobs, V.C. (Apr. 7, 1988) (although Chancery Court defendant
predicated its second-filed Texas action upon a theory of contract, as
opposed to fiduciary duty considerations, Vice Chancellor Jacobs regarded
it "as a transparent effort to remove the controversy to a forum of its own
choosing"); Dura Pharm., 713 A.2d at 928 (where first filed action alleged
that merger agreement was wrongfully terminated and second filed action
alleged that merger agreement was properly terminated, the Court viewed the
second action as an impermissible attempt to oust the first filed action).
This is not to say that NationsRent may not litigate its
claims -- only that it must do so in the appropriate forum, the Court of
Chancery.
II. INJUNCTIVE RELIEF IS APPROPRIATE UNDER "CRYO-MAID
AND ITS PROGENY."
Under the guise of a tort action, defendant is seeking a
ruling by the Florida court about the propriety of plaintiffs' conduct and
transaction involved in this litigation. When this happens, Delaware law
provides clear relief. Air Prods., 235 A.2d at 432. It gives the Court the
power to "enjoin a defendant in a Delaware Chancery action from drawing the
subject of the Delaware Complaint to a jurisdiction of his own choosing."
Id. The exercise of this power is not predicated as with other forms
injunctive relief - upon a showing of irreparable harm.
Rather, when deciding whether or not to enjoin a party from
proceeding in a second-filed action in another jurisdiction, the Court of
Chancery considers "the well-established principles in General Foods v.
Cryo-Maid and its progeny." Box v. Box, Del. Supr., 697 A.2d 395, 398
(1997) (quoting General Foods Corp. v. Cryo-Maid, Inc., Del. Supr., 198
A.2d 681 (1964)). The Cryo-Maid principles " 'provide the framework for an
analysis of hardship and inconvenience' " similar to a forum non conveniens
motion. Taylor v. LSI Logic Corp., Del. Supr., 689 A.2d 1196, 1199 n.4
(1997); see also In re Advanced Drivers Educ. Prods. & Training, Inc., Del.
Ch., C.A. No. 14905, slip op. at 3, Chandler, V.C. (Aug. 16, 1996) ("If the
plaintiff in the Delaware action filed its action first, then Delaware
courts will evaluate the motion to stay with reference to the factors
developed in traditional forum non convenience cases").
Under the applicable principles, a party seeking to proceed
with the second-filed action "must establish with particularity that [it]
will be subjected to overwhelming hardship and inconvenience if required to
litigate in Delaware." Taylor, 689 A.2d at 1199; see also Advanced Drivers,
slip op. at 3; see In re RJR Nabisco, Inc. Shareholders Litig., Del. Ch.,
576 A.2d 654, 662 (1990) ("It is the rule here, as elsewhere, that the
first-filed suit will ordinarily proceed unless a powerful showing of
inconvenience can be made"). "Absent such a showing, plaintiff's choice of
forum must be respected." Id.
For example, in NGP No. I.L.P. v. Solvation Inc., the Court
of Chancery enjoined defendants from prosecuting a later filed Texas action
to the detriment of the first filed Delaware action. The Court determined
that (i) proceeding in Delaware would not impose a hardship on the
defendant; and (ii) there was sufficient identity of parties and claims to
place the Delaware and Texas lawsuits on a "collision course." NGP No.
I.L.P. v. Solvation Inc., Del. Supr., 608 A.2d 729 (1992). In this case,
these two requirements are likewise met. First, defendant will not suffer
hardship if it is required to continue to litigate all claims in this
forum. To the contrary, it will be less burdensome to proceed with one,
instead of two lawsuits involving essentially the same parties, witnesses,
documents and discovery. Second, the claims in the Florida Action are on a
"collision course" with this litigation.
"The case law does not limit the exercise of this Court's
injunctive powers strictly to situations where identical causes of action
are pled in two separate courts." Ivanhoe, slip op. at 11; see also Davis
Ins. Group, Inc. v. Insurance Assocs., Del. Ch., C.A. No. 16575, slip op.
at 2, Steele, V.C. (Dec. 3, 1998) (staying second filed tortious
interference action in favor of first filed breach of contract action
although the parties and issues in the two actions "are not identical").
Although styled as tort claims, the Florida Action arises out of the same
transaction and occurrences as this action: the Merger Agreement, the
Tender Offer, the RSC board's actions in connection with those two
transactions and the commencement of this litigation. Indeed, the Florida
Action is premised in part on plaintiffs' allegedly wrongful pursuit of,
and conduct in, this litigation. Resolution of NationsRent's claim of
tortious interference in the Florida Action will also implicate issues of
Delaware law presently before this Court, including, among other things:
o Whether the Merger Agreement with its coercive and preclusive
Breakup Fee and Lockup Options, unduly restrictive "no-shop"
provisions and "Superior Proposal" clause, "was . . . meant to
foreclose [consideration of ] other mergers or business
combinations . . . ." (Florida Complaint P.P. 3-4);
o Whether "the principal officers and directors of RSC"
that are defendants in this action "acced[ed] to URI's
demand that RSC breach its agreement with NationsRent"
(Florida Complaint P. 45); and
o Whether plaintiffs are "engaging in harassing and
abusive litigation tactics" "so egregious that when the
Delaware Court learned of URI's tactics, it entered a
protective order to stop them." (Florida Complaint P.
6)(2)
- --------------
(2) Of course, this Court is much better suited than the Florida court
to assess the unusual circumstances which led to plaintiffs' limited
surveillance of Mr. Reid referred to in the Florida Action.
The substantive kinship between the two lawsuits is also reflected in the
similarity of the discovery requests propounded in both actions. This Court
has already expended significant resources in addressing the proper scope
of discovery in this matter; to permit NationsRent to seek to avoid those
rulings by forum shopping would be a misuse of the Court's process and a
waste of judicial resources.
The " 'collision course' " set in motion by the defendant's
subsequent filing should be "avoided by entering an injunction, in aid of
[this Court's] jurisdiction to proceed with the first-filed Delaware
action." Williams Natural Gas Co. v. BHP Petroleum Co., Del. Supr., 574
A.2d 264 (1990).
III. DEFENDANT'S CLAIMS, IN THE NATURE OF COMPULSORY
COUNTERCLAIMS, MAY NOT BE ASSERTED IN A SUBSEQUENT
ACTION.
Delaware courts have embraced modern concepts of
jurisdiction and theories of optimal adjudication suggesting that all
claims against an entity or those acting with that entity arising from a
single chain of events should, where practicable, be adjudicated in a
single action if that forum has jurisdiction over all parties and is
capable of doing prompt and complete justice. Household Int'l, slip op. at
2-3; RJR, 576 A.2d at 662; Dura Pharm., 713 A.2d at 930. These requirements
are met here.
It is not only possible, but indeed required by Chancery
Court Rule 13(a)), that defendant assert the Florida claims - if at all -
in this forum. Both actions share the same nucleus of operative facts (the
Merger Agreement and Tender Offer) and are an offshoot of the same basic
controversy (the conduct of the parties relating to the Merger Agreement
and Tender Offer). Litigation of the Florida Action would necessarily
involve adjudications of the Tender Offer, scope and validity of the Merger
Agreement and the propriety of the parties' conduct with respect thereto
and the instant litigation. It would expose plaintiffs to the prospect of
inconsistent adjudications. See Ivanhoe, slip op. at 14; Davis Ins., slip
op. at 9 (to avoid inconsistent interpretations and rulings, second filed
tortious interference claim would be stayed in favor of first filed breach
of contract action).
This is a risk that Chancery Court Rule 13(a) is designed to
avoid.(3) "That Rule requires that a defendant in a civil action assert all
compulsory counterclaims therein, and bars any unasserted compulsory
counterclaims from being brought as direct claims in any subsequent
lawsuit." Mother African Union First Colored Methodist Protestant Church v.
Conference of African Union First Colored Methodist Protestant Church, Del.
Ch., C.A. Nos. 12055, 1674, slip op. at 12, Jacobs, V.C. (July 13, 1995),
aff'd mem., Del. Supr., 683 A.2d 58 (1996), cert. denied, 519 U.S. 1042
(1996). Although no Delaware case has addressed this issue, Federal courts
interpreting the parallel Federal Rule 13(a) in similar circumstances
support the conclusion that defendant in this case may assert its claims,
if at all, only as compulsory counterclaims.
- -----------
(3) Chancery Court Rule 13(a) pertinently provides: "A pleading shall
state as a counterclaim any claim, which at the time of serving the
pleading the pleader has against any opposing party, if it arises
out-of the-transaction or occur rence that is the subject matter of
the opposing party's claim...."
For example, in Crouse-Hinds Co. v. InterNorth, Inc., the
target of a tender offer sued alleging that the tender offer violated
various provisions of the federal securities laws. Crouse-Hinds Co. v.
InterNorth, Inc., 634 F.2d 690 (2d Cir. 1980). The offeror filed a
counterclaim, alleging that a proposed merger of the target lacked a valid
business purpose and that the target's management had proposed the merger
solely to defeat the tender offer. The Second Circuit found "no error in
the district court's conclusion that the two claims have a clear logical
relationship and an adequate factual overlap to warrant classification of
the counterclaim as compulsory." Id. at 700.
Similarly, where a complaint in the main action alleged the
issuance of a false and misleading proxy statement in connection with a
proposed transaction and the defendants alleged in a counterclaim an
unlawful conspiracy to interfere with the contractual rights of the
shareholders, it was held that such a counterclaim was compulsory, rather
than permissive. Vernon J. Rockler & Co. v. Minneapolis Shareholders Co.,
69 F.R.D. 1, 4 (D. Minn. 1975) (noting that "There can be no doubt that the
counterclaim herein has a sufficient 'logical relationship' to plaintiffs'
claims to constitute what has been recognized as a compulsory
counterclaim.")
IV. PRINCIPLES OF COMITY AND EFFICIENCY SUPPORT INJUNCTIVE RELIEF.
In Household International, Chancellor Allen was three times
asked to grant the same relief as plaintiffs request in this case. On two
occasions, the Court declined to grant that relief. In both instances the
denial of the injunction was premised, in part, upon Chancellor Allen's
conclusion "that no irreparable injury was then threatened, since further
judicial applications could foreclose the risk of expense or conflict that
concurrent adjudications of the same matter may entail." Household Int'l,
slip op. at 2. On the third occasion, Chancellor Allen granted the
injunction without an express finding, or even analysis of, irreparable
injury. He emphatically concluded:
At this stage of this dispute I can no longer justify staying the
hand of this court in acting coercively to apply those traditional
rules. The forum maneuvering of the parties to this dispute have
consumed much time, judicial attention and expense.... When these
maneouverings cost public money and delay justice, as is the case
here, they no longer should be tolerated.
Id. at 5. Wistfully, Chancellor Allen added "that much of this waste would have
been saved (and perhaps the case would be closer to trial) if I had granted the
injunction sought in the first instance." Id.
Likewise, in this case, granting the injunction will avoid
"the wasteful duplication of time, effort and expense that occurs when
judges, lawyers, parties and witnesses are simultaneously engaged in the
adjudication of the same cause of action in two courts." Dura Pharm., 713
A.2d at 928 (quoting McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng'g
Corp., Del. Supr., 263 A.2d 281, 283 (1970).
CONCLUSION
In this case, the plaintiffs -- two Delaware corporations --
have made a choice of forum, a selection which defendant - another Delaware
corporation --hopes to frustrate by commencing reactive litigation in
Florida. Defendant's attempt to end run the prior filed litigation is
improper. The rule giving exclusive jurisdiction to the court which first
obtains possession of a controversy is not only founded in comity, but in
necessity. For the reasons discussed above, the principles of comity, and
the orderly and efficient administration of justice, this Court should
exercise its equitable power in this case. Accordingly, plaintiffs
respectfully request that the Court issue an order enjoining defendant and
all persons in active concert or participation with it, from prosecuting or
otherwise proceeding with the Florida Action.
Respectfully submitted,
/s/ Edward P. Welch
----------------------------
Edward P. Welch
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
David J. Margules
WOLF, BLOCK, SCHORR &
SOLIS-COHEN LLP
One Rodney Square, Suite 300
Wilmington, Delaware 19899
(302) 777-5860
Attorneys for Plaintiffs
Of The New York Bar:
Jay B. Kasner
Steven J. Kolleeny
SKADDEN, ARPS, SLATE
MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
Dated: May 4, 1999
TABLE OF CONTENTS
PAGE
TABLE OF CASES AND AUTHORITIES...........................................i
PRELIMINARY STATEMENT....................................................1
STATEMENT OF FACTS.......................................................3
ARGUMENT.................................................................5
I. THE FLORIDA ACTION IS AN IMPROPER ATTEMPT TO STRIP
THIS COURT OF JURISDICTION AND DEPRIVE PLAINTIFFS OF
THEIR CHOSEN FORUM...............................................5
II. INJUNCTIVE RELIEF IS APPROPRIATE UNDER "CRYO-MAID
AND ITS PROGENY".................................................6
III. DEFENDANT'S CLAIMS, IN THE NATURE OF COMPULSORY
COUNTERCLAIMS, MAY NOT BE ASSERTED IN A SUBSEQUENT
ACTION..........................................................10
IV. PRINCIPLES OF COMITY AND EFFICIENCY SUPPORT
INJUNCTIVE RELIEF...............................................13
CONCLUSION..............................................................15
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs, :
: Civil Action No. 17090
v. :
:
MARTIN R. REID, WILLIAM M. BARNUM, JR., :
JAMES R. BUCH, DAVID P. LANOHA, :
CHRISTOPHER A. LAURENCE, ERIC L. MATTSON, :
BRITTON H. MURDOCH, JOHN M. SULLIVAN, :
RENTAL SERVICE CORPORATION, a Delaware :
corporation, and NATIONSRENT, INC., a Delaware :
corporation, :
Defendants. :
ORDER RESTRAINING NATIONSRENT, INC.
FROM PROSECUTING THE FLORIDA ACTION
Upon the motion of Plaintiffs, UR ACQUISITION CORPORATION., and
UNITED RENTALS, INC., and good cause therefor having been shown,
IT IS HEREBY ORDERED this fifth day of May 1999 that:
1. Defendant NationsRent, Inc. its successors and assigns,
directors, officers, agents, servants, subsidiaries, employees and
attorneys, and all persons in active concert or participation with any of
them are enjoined from taking any steps in connection with, or proceeding
further with, the action filed in the Circuit Court of the 17th Judicial
Circuit in and for Broward County, Florida captioned NationsRent, Inc. v.
United Rentals, Inc., et al, Case No. 99-07422- CACE-11 (the "Florida
Action") until further order of this Court.
2. NationsRent shall forthwith withdraw its Motions for
Temporary Injunction and to Expedite Discovery and for a Case Management
Conference or Status Conference in the Florida Action.
3. Plaintiffs UR Acquisition Corporation and United Rental,
Inc. and defendant NationsRent, Inc. shall, in a joint submission to the
presiding judge in the Florida Action, inform that court of the entry of
this order, supply that court with a copy of this order, and immediately
request that the conference scheduled for May 6, 1999 in the Florida Action
be cancelled.
By: /s/ Leo E. Strine, Jr.
----------------------------
Name: Leo E. Strine, Jr.
Title: Vice Chancellor
