SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 11)
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Wallace Computer Services, Inc.
(Name of Subject Company)
FRDK, INC.
MOORE CORPORATION LIMITED
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS
(Title of Class of Securities)
932270101
(CUSIP Number of Class of Securities)
JOSEPH M. DUANE, ESQ.
FRDK, INC.
1 FIRST CANADIAN PLACE
TORONTO, ONTARIO, CANADA M5X 1GF
(416) 364-2600
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Bidder)
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COPY TO:
DENNIS J. FRIEDMAN, ESQ.
DAVID M. WILF, ESQ.
DAVID M. SCHWARTZBAUM, ESQ.
CHADBOURNE & PARKE LLP
30 ROCKEFELLER PLAZA
NEW YORK, NY 10112
(212) 408-5100
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FRDK, Inc. and Moore Corporation Limited hereby amend and
supplement their Tender Offer Statement on Schedule 14D-1 (as amended, the
"Statement"), originally filed on August 2, 1995, as amended by Amendment Nos.
1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 with respect to their offer to purchase all
outstanding shares of Common Stock, par value $1.00 per share, of Wallace
Computer Services, Inc., a Delaware corporation (together with the associated
preferred stock purchase rights), as set forth in this Amendment No. 11.
Capitalized terms not defined herein shall have the meanings assigned thereto in
the Statement.
ITEM 10. ADDITIONAL INFORMATION.
On September 27, 1995, the United States District Court for
the Southern District of New York (the "New York Court") issued a Memorandum
Opinion and Order (the "Order") granting Moore's motion to dismiss the Wallace
Action. Moore had moved to dismiss the Wallace Action or, alternatively,
transfer it to the Delaware Court on the grounds that the claims raised by the
Company should be litigated as part of the Moore Action.
In granting the motion to dismiss the Wallace Action, the New
York Court concluded that the Moore lawsuit against the Company and its
directors alleging, among other things, a breach by the Company's directors of
their fiduciary duties to the Company's shareholders, deserves priority over the
Wallace Action "as the first filed suit" and that the Company's "allegations in
this case should have been brought as counterclaims" in the Moore Action. A copy
of the Order is attached hereto as Exhibit (g)(13) and the foregoing description
is qualified in its entirety by reference to such exhibit.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(g)(13) Memorandum Opinion and Order, dated September 27,
1995, issued by the United States District Court
for the Southern District of New York.
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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.
Dated: September 29, 1995
FRDK, Inc.
By: /s/ Joseph M. Duane
Name: Joseph M. Duane
Title: President
MOORE CORPORATION LIMITED
By: /s/ Joseph M. Duane
Name: Joseph M. Duane
Title: Vice President and
General Counsel
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EXHIBIT INDEX
(g)(13) Memorandum Opinion and Order, dated September 27,
1995, issued by the United States District Court
for the Southern District of New York.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------x
:
WALLACE COMPUTER SERVICES, INC., : 95 Civ. 6379 (CSH)
:
Plaintiff : MEMORANDUM OPINION
: AND ORDER
-against- :
:
MOORE CORPORATION LIMITED and :
FRDK, INC., :
:
Defendants. :
- --------------------------------------x
HAIGHT, Senior District Judge:
The above-captioned matter concerns the legality of a hostile tender
offer made by defendants to plaintiff on July 30, 1995. On July 3l, 1995,
defendants commenced an action against plaintiff in the United States District
Court for the District of Delaware. On August 15, 1995, plaintiff began an
action in this court, which defendants now move to dismiss or to transfer to the
District of Delaware. These two actions are further described in this Court's
Memorandum and Order dated September 12, 1995, familiarity with which is
presumed.
I. DISCUSSION
A. First Filed Suit
This case presents the familiar scenario of two parallel, coexisting
actions filed in separate federal courts by opposing parties. See, e.g.,
Employers Insurance of Wausau v. Duplan Corporation, 1994 WL 637710 (S.D.N.Y.);
First City National Bank and Trust Company v. Simmons, 1988 WL 125682
(S.D.N.Y.), affirmed
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878 F.2d 76 (2d Cir. 1989).
The Second Circuit's long-settled principle is that "where there are
two competing lawsuits, the first suit should have priority, absent the showing
of balance of convenience...or special circumstances...giving priority to the
second." Adam v. Jacobs, 950 F.2d 89, 92 (2nd Cir. 1991) (citations omitted);
Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2nd Cir. 1978), cert.
denied, 440 U.S. 908 (1979). Plaintiff acknowledges this principle, but has
argued that it should not be followed in this instance because defendant's
Delaware action is a prematurely filed "sneak attack" which does not warrant the
deference usually accorded to a "first filed" case. Plaintiff's Memorandum in
Opposition to Defendant's Motion to Dismiss or Transfer at 2-7 (herinafter
"plaintiff's Opp. Mem.").
Plaintiff had moved to dismiss defendant's Delaware action on precisely
that ground: prematurity and lack of a controversy ripe for decision. Because
the ripeness of defendant's Delaware suit was central to plaintiff's argument in
favor of abrogating the first filed rule, this court chose to conserve judicial
resources by waiting for the District of Delaware to rule on the ripeness of the
suit before it before adjudicating defendant's motion to dismiss this suit. See
Court's Order, September 12, 1995. That ruling has now been made: Judge Schwartz
of the District of Delaware heard arguments on the question of ripeness and on
September 19, 1995 held defendant's action to be ripe and timely filed. While
this court is not, of course, bound by that decision,
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I see no reason to dispute the reasoning of the District of Delaware.
Without the benefit of the argument that defendants' Delaware claim was
unripe, plaintiff can overcome the presumption of the priority of the first
filed suit only by demonstrating that the "balance of convenience" or "special
circumstances" weigh in favor of the second filed suit. The assessment of these
factors is a matter left to the discretion of district court judges. Adam v.
Jacobs, 950 F.2d at 92; First City, 878 F.2d 76, 80 (2d Cir. 1989); Factors
Etc., 579 F.2d at 218.
1. Balance of Convenience
The criteria used to assess the balance of convenience include: (1) the
convenience of witnesses and parties; (2) the availability of relevant
documents; (3) the locus of operative facts; (4) the relative burdens of
expenses on the parties; (5) a forum's familiarity with the governing law; (6)
the weight accorded plaintiff's choice of forum; and (7) trial efficiency and
the interests of justice, based on the totality of the circumstances. J. Lyons &
Company Ltd. v. Republic of Tea, et al., 892 F. Supp 486 (S.D.N.Y. 1995); First
City, 1988 WL 125682 at *5.
The first factor, convenience of witnesses and parties, favors neither
New York nor Delaware as a location for this suit. Plaintiff is incorporated in
Delaware and has its principal place of business in Illinois. Defendant Moore is
an Ontario, Canada corporation with its principal place of business in Toronto;
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defendant FRDK is a New York corporation with its principal place of business in
Toronto. No party has sizable offices or plants in New York. FRDK, a
wholly-owned subsidiary of Moore formed solely for the purpose of making the
tender offer at issue, uses as its New York address that of its attorneys'
offices. Although defendants' counsel and financial advisors are in New York,
the witnesses affiliated with plaintiff and defendants' corporations are all
elsewhere. Thus neither location is particularly convenient or inconvenient for
the parties and witnesses: a trial in either court will require travel and
displacement of all parties. I am not convinced by plaintiff's arguments that
the facts that defendant's CEO, Braun, gave newspaper interviews in New York and
left a New York phone number on the answering machine of plaintiff's CEO,
Cronin, constitute sufficient nexus with New York to justify abrogating the
first filed rule.
The second, third, fourth, and fifth criteria are similarly
non-dispositive. Because none of the parties has strong New York ties, the
burden of producing documents and the expenses associated with that production
will not differ substantially between a New York or a Delaware trial site. Nor
is the locus of operative facts clearly situated in either location. The
District Courts of Delaware and New York are equally able to assess the legal
issues at stake here; mutually familiar federal laws are at the heart of
plaintiff's New York action, and the Delaware corporate laws at the heart of
defendants' suit are well known to New York Federal judges.
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The sixth factor weighs in favor of dismissing this New York suit.
Defendants chose to bring their action in Delaware, and that suit has been
deemed properly and timely brought. When filing their suit against plaintiff and
plaintiff's individual board members, defendants faced legitimate concerns about
a court's ability to obtain personal jurisdiction over all members of the board,
and chose Delaware as the site for their lawsuit for that reason. Defendants'
Reply Memorandum of Law in Further Support of Defendants' Motion to Dismiss or
Transfer at 23 (hereinafter "Defendants' Reply Mem.") Although plaintiff stated
in oral arguments before this court that all members of its board of directors
would be willing to appear in New York, defendants could not have known this at
the time they filed suit in Delaware. Indeed, it is likely that if defendants
had filed first in New York, plaintiff's directors would have contested personal
jurisdiction. Thus defendants' choice of the Delaware forum had reasonable
motives that will be honored by this court.
Lastly, when the court considers the overall interests of justice and
efficiency, this case seems more appropriately situated in Delaware. Had the
Delaware court ruled that defendants' suit there was premature, I would have
seen no need to honor their attempts to bring the suit in Delaware. However,
since that suit will now go forward, and it is clearly in the interests of
efficiency to consolidate these actions in one court, plaintiff's claims should
be brought in Delaware. No injustice will be done to plaintiff by dismissing
this action; plaintiff is free to bring all
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its claims as counterclaims in Delaware.
Nor are there any special circumstances which militate in favor of New
York as the forum for a consolidated action. Defendants argue that plaintiff
brought this action in New York solely to take advantage of the Second Circuit's
favorable antitrust "standing" decision in Consolidated Gold Fields. PLC v.
Minorco, S.A., 871 F.2d 252 (2d Cir. 1989), cert. denied, 492 U.S. 939 (1989).
Defendants' Reply Mem. at 25. Conversely, plaintiff argues that defendants filed
their suit in Delaware to avoid Consolidated Gold Fields. Plaintiff's Opp. Hem.
at 7. While the Court recognizes that both parties may have filed suit with an
eye to the Consolidated Gold Fields opinion, I do not think either side's
behavior constitutes a special circumstance sufficient to warrant abrogation of
the first filed rule.
On the contrary: in the context of plaintiff's efforts to resist a
transfer to Delaware because the law of antitrust standing is arguably less
favorable to it in the Third Circuit than in the Second, the Second Circuit has
condemned that motive. See Green v. MacMahon, 312 F.2d 650, 652 (2d Cir. 1962)
("A plaintiff may not resist the transfer of his action to another district on
the ground that the transferee court will or may interpret federal law in a
manner less favorable to him . . . . [I]f there is a conflict of views among the
circuits, this is a matter for consideration by the Supreme Court on application
for certiorari, not for consideration by a district judge on application for
transfer." (citations and inner quotations omitted), cert. denied, 372 U.S. 928
(1963). See
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also In re Pan American Corp., 950 F.2d 839, 847 (2d Cir. 1991), citing and
quoting Green v. MacMahon at 652 for the related proposition that "federal
courts comprise a single system applying a single body of law, and no litigant
has a right to have the interpretation of one federal court rather than that of
another determine his case."
Nor do the circumstances of this case rise to the level of special
circumstances described in the cases relied upon by plaintiff. In one case cited
by plaintiff, priority was given the second filed case only because the
originally filed case had beaten it to the courthouse door due to an unexpected
snow storm which prevented filing after advance notice of the planned action had
been given. Coastal Mart, Inc. v. Coastal Oil Co., 681 F. Supp. 1090 (S.D.N.Y.
1988). In another action, one party requested a sixty-day extension and then
filed an action within forty-eight hours of the request. Great American Ins. v.
Houston General Ins., 735 F. Supp. 581 (S.D.N.Y. 1990). Defendants have taken no
such egregious steps in this case, and I find no special circumstances favoring
the second filed case.
Having found that the balance of convenience weighs in favor of a New
York trial, and that no special circumstances require otherwise, I conclude that
the present cause of action should not continue in this District.
B. Compulsory Counterclaim
Defendants also argue that plaintiff's cause of action in this
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district involves a compulsory counterclaim that should properly be resolved
within the Delaware action. Memorandum of Law in Support of Defendants' Motion
to Dismiss or Transfer at 8-17. (hereinafter "Defendants' Mem.") Fed. R. Civ. P.
13(a) requires a pleading to state as a counterclaim any claim against any
opposing party that "arises out of the transaction or occurrence that is the
subject matter of the opposing party's claim and does not require for its
adjudication the presence of third parties of whom the court cannot require
jurisdiction." The Second Circuit has established a test which examines "whether
a logical relationship exists between the claim and the counterclaim and whether
the essential facts of the claim are 'so logically connected that considerations
of judicial economy and fairness dictate that all the issues be resolved in one
lawsuit.'" Adam v. Jacobs, 950 F.2d at 92 (citations omitted).
The Second Circuit has examined the situation of competing allegations
in the context of a tender offer and resistance to that offer, allegations in
which the party attempting the takeover alleged breach of fiduciary duty by the
target corporation's directors, and the target alleged violations of securities
and antitrust laws. Crouse-Hinds Co. v. Internorth. Inc., 634 F.2d 690 (2d Cir.
1980). The Second Circuit ruled that "the two claims have a clear, logical
relationship and an adequate factual overlap to warrant classification of the
counterclaim as compulsory." Crouse-Hinds, 634 F.2d at 700. The situation before
the court in this action greatly resembles that in Crouse-Hinds. Therefore I
conclude that the claims brought by plaintiff in this action should
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have been brought as counterclaims in the District of Delaware.
II. CONCLUSION
Defendants' suit before the District of Delaware deserves priority over
this suit as the first filed suit since the balance of convenience favors
bringing the suit in Delaware and no special circumstances exist to the
contrary. In addition, plaintiff's allegations in this case should have been
brought as counterclaims in the Delaware action. For both these reasons, I
hereby grant defendants' motion to dismiss the cause of action. Because I do not
reach the merits, the dismissal will be without prejudice.
In these circumstances, I need not reach defendants' alternative basis
for transfer, grounded upon 28 U.S.C. ss. 1404(a).
The Clerk of the Court is directed to dismiss the action without
prejudice.
It is SO ORDERED.
Dated: New York, New York
September 27, 1995
/s/ Charles S. Haight, Jr.
CHARLES S. HAIGHT, JR.
U.S.D.J.
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