vrx agn psq transcript no highlights

7/21/2019 VRX AGN Psq Transcript NO Highlights

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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 10342OFFICIAL COURT REPORTER

UNITED STATES DISTRICT COURT411 WEST FOURTH STREET

SUITE 1-053SANTA ANA, CALIFORNIA 92701

(657) [email protected]

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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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 Winstoncase 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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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, Beaconcase, 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 Beaconcase

was a declaratory relief case from California where the

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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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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 theex 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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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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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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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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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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was in our emergency ex partebrief with, like, on 10 hours'

notice. We cited the TravelCenter versus Brogwhere 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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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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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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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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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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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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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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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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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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