Legal News

Super Battles: Giants-Pats, Obama-Clinton . . . Malone-Diller!?

By Peter Lattman

Law Blog colleague Dan Slater weighs in this morning with an item on a good ‘ole fashion courtroom showdown in Delaware:

We’re titillated by a battle brewing down in the First State between media titans Barry Diller and John Malone. And we’re not alone. “The brouhaha between former best buds Diller and Malone has delighted the press,” explains the Deal. “IAC’s dismissal of Liberty’s legal maneuvers as ‘a desperate sideshow’ ensures even more tabloid-type coverage. Trials by the press, however, can overlook the simplest legalities. So let’s get it out that in this case Diller would be hard-pressed to satisfy a basic legal duty-negotiating in good faith . . . Indeed, after reading the complaint Liberty filed . . . one is left wondering if, not what, Diller was thinking.” (For more on what Diller might be thinking, here’s a NYT story from today.)

For all of you out there distracted by other matters, like, say, the Super Bowl or Super Tuesday, dust off your corporations casebooks. Here are the essentials: On January 22, IAC filed for a declaratory judgment approving a plan to break up its Internet empire into four pieces. Liberty objects to the move, alleging that Diller improperly wants to dilute Liberty’s interest in the spun-off companies and wipe out the control premium that Liberty could’ve commanded for its stake in the spun-off companies.

Liberty filed a countersuit, trying to replace Diller and IAC’s remaining board members last week, including Edgar Bronfman Jr., Steve Rattner and Diller’s wife, Diane Von Furstenberg, whose famous wrap dresses have her embroiled in litigation of her own. Liberty insists that there’s an “equal treatment provision” in the stockholder’s agreement which means that, in a breakup of IAC, the capital structure must remain the same.

For Vice Chancellor Stephen Lamb, the Delaware judge on the case, things here are far from black and white. On Friday, Lamb refrained from issuing an immediate decision, instead sending the case to trial. In the meantime, Lamb approved an order that keeps IAC’s current board in place but requires IAC to notify Liberty if it does anything outside the normal course of business.

Full post as published by Law Blog - WSJ.com on February 04, 2008 (boomark / email).