IDG News Service —
A judge denied shareholders' request to accelerate the start of a trial for the lawsuit they filed alleging Yahoo failed to protect their interests by sabotaging Microsoft's acquisition attempt.
The shareholders failed to prove that the court should expedite the setting of a trial date, Judge William Chandler of Delaware's Chancery Court ruled Monday.
"Aside from the maelstrom of media coverage, very little has changed about plaintiffs' core contentions since I denied plaintiff's previous request for expedition," Chandler wrote, pointing out that the plaintiffs had previously filed a similarly unsuccessful motion to expedite this matter.
Last week, the shareholders in the class-action lawsuit argued in their motion that it was imperative for the trial to be held in July, before Yahoo holds its annual shareholders meeting on Aug. 1.
In particular, the plaintiffs wanted the judge to rule on the legality of a controversial employee severance plan that they allege Yahoo leaders adopted to derail Microsoft's attempt to buy the company.
The employee severance plan is so vague and costly that it amounts to a poison pill "entrenchment device" that is illegal under Delaware law, the plaintiffs argue.
The plan, which was approved shortly after Microsoft's offer, would be triggered by a change in who controls the company, including the election of a new slate of directors, as billionaire investor Carl Icahn seeks.
Thus, the plaintiffs argue that, as long as the severance plan is in place, shareholders will be coerced to vote to reelect the current board, just to prevent the plan from getting activated and triggering a mass employee exodus.
The plaintiffs also argued in another filing last week that Yahoo's deal to outsource part of its search advertising business to Google represents a coercion on shareholders' vote because it gives Google the option to cancel the deal if Icahn succeeds in getting his candidates elected to the board.
But Judge Chandler wasn't convinced that the plaintiffs' case is at risk of irreparable damage unless a trial is rushed and scheduled for next month. He reminded the plaintiffs that in order to expedite the setting of a trial date, the court must accelerate certain proceedings and conduct, among other things, "a truncated determination of the merits of the underlying claims."
"To successfully earn expedition, the movant must show good cause why it is necessary to impose upon the counterparty and the Court these substantially increased burdens of time, effort, and expense," Chandler wrote.
Instead, the plaintiffs and Yahoo should quickly set up a briefing schedule regarding Yahoo's motion to dismiss the lawsuit, Chandler wrote, adding that the court is "willing to and capable of deciding that motion before the Yahoo annual shareholders' meeting."
