319 F.Supp. 1256 (S.D.N.Y. 1970), 69 Civ. 4790, Leasco Data Processing Equipment Corp. v. Maxwell
|Docket Nº:||69 Civ. 4790.|
|Citation:||319 F.Supp. 1256|
|Party Name:||LEASCO DATA PROCESSING EQUIPMENT CORPORATION, Leasco World Trade Company (U.K.) Limited, Plaintiffs, v. Robert MAXWELL, M.C.M.P., et al., Defendants, v. Saul P. STEINBERG et al., Additional parties with respect to the counterclaim.|
|Case Date:||September 16, 1970|
|Court:||United States District Courts, 2nd Circuit, Southern District of New York|
[Copyrighted Material Omitted]
Willkie Farr & Gallagher, New York City, for plaintiffs.
Stroock & Stroock & Lavan, New York City, for defendant Isidore Kerman.
Shaw, Bernstein, Scheuer, Boyden & Sarnoff, New York City, for defendant Maxwell.
Kramer, Lowenstein, Nessen & Kamin, New York City, for defendants Isthmus Enterprises, Inc., Maxwell Scientific International, Inc., and MSI Publishers, Inc.
LASKER, District Judge.
In this action brought under Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 of the Securities and Exchange Commission promulgated thereunder, Isidore Kerman, a defendant, moves for an order pursuant to Rule 12(b)(3), F.R.Civ.Proc., dismissing the complaint on the ground that the court lacks personal jurisdiction over him. The motio n is granted.
This case stems from the much-publicized collapse of a merger agreement reached in 1969 between plaintiff Leasco Data Processing Equipment Corporation ('Leasco') 1 and defendant Robert Maxwell, a British businessman and Member of Parliament who controlled an international publishing group built around Pergamon Press, Ltd. ('Pergamon'), a United Kingdom company. Early in 1969 Maxwell and Saul Steinberg, Chairman of the Board of Leasco, began discussing the possibility of engaging in joint business ventures in Europe. Eventually they came to consider the possibility of having Leasco, an aggressive conglomerate concern, acquire Pergamon. Negotiations took place both in England and in New York. Two rounds of discussion are particularly important with respect to this motion: the first occurred in England, over a four-day period in early June 1969, and the second in New York shortly thereafter, from about June 11 to June 17. The negotiations culminated in an agreement executed by Leasco and Maxwell on June 17 in New York, providing in relevant part for (a) the purchase by Leasco of Pergamon stock from Maxwell; (b) a tender offr by Leasco for the stock of Pergamon held by the public; and (c) the sale by Leasco of its own securities to Maxwell in partial payment for its purchase of Pergamon stock. Following the execution of the June 17th agreement, Leasco purchased on the open market over 5,000,000 shares of Pergamon stock, at a cost of approximately $22 million.
In August of 1969 the Leasco-Pergamon courtship turned sour. Leasco gave public notice of its refusal to go forward with the June 17th agreement, trading on the London stock exchange of Pergamon shares was suspended, the British Board of Trade instituted an investigation into the business affairs of Pergamon, and a struggle was waged for control of Pergamon's board of directors, which resulted in the ouster of the Maxwell leadership. This suit followed.
The pleadings are fraught with charges and countercharges of fraud. Leasco alleges that during the negotiations leading to the June 17th agreement it was misled by defendants as to the financial status of Pergamon and other of Maxwell's companies and also as to the commercial relations between Pergamon and the other companies. It further alleges that defendants deceived it into making the post-June 17 purchases of Pergamon shares on the open market, and in particular, that 600,000 of those shares were secretly sold by the defendants themselves. Maxwell, in turn, has
counterclaimed, charging that the Leasco companies and certain of their officers engaged in a conspiracy to defraud him, that their aim was to depress Pergamon's market price so that they could acquire control of Pergamon at a cost far below Pergamon's real value, and that, in pursuance of the conspiracy, they made false and misleading statements with regard to Leasco's financial status.
The movant Kerman's role in this battle between international business titans is, at most, peripheral. He is an English solicitor, the senior partner of a large London law firm which represents Pergamon and the Maxwell family interess, among numerous clients. During the period of the Leasco-Maxwell negotiations and until October 1969, he was a director of Pergamon. He is named as a co-conspirator in the complaint; and in plaintiff's answers to the defendants' interrogatories the acts which he is said to have performed in furtherance of the conspiracy consist of (1) making 'numerous misrepresentations' to Leasco's representatives during the four days of negotiation in England in early June 1969, and (2) supplying N. M. Rothschild & Sons, an English banking firm, with a breakdown (presumably misleading) of the Maxwell interests' holdings of Pergamon shares and with information concerning the sale of Pergamon shares by the Maxwell family thrust. It is further asserted, in affidavits submitted by Leasco's chairman Steinberg and other of its officers, that (1) in the New York negotiations culminating in the June 17th agreement 'Maxwell represented that Kerman was involved in these transactions and that Maxwell was acting on his behalf also'; (2) during the four days of discussions in England in early June at which Kerman was present he gave Leasco's officers 'reason to believe that he, Kerman, was aware of the previous meetings and communications which had taken place * * * and of the statements that had been made to plaintiffs by Maxwell and others * * * and appeared to be aware that Maxwell had acted and would continue to act with respect to...
To continue readingFREE SIGN UP