Opinion
4:CV95-3362
August 8, 2000
MEMORANDUM AND ORDER ON THE DEFENDANTS' MOTION FOR TEMPORARY INJUNCTION AND SUBSTITUTION OF PARTIES
This matter is before me on the defendants' motion for a temporary injunction and substitution of parties, filing 208. For the following reasons, I shall deny the motion.
This action was brought against the defendants by the plaintiff, National American Insurance Company, a Nebraska domestic insurer at the time, and the intervening plaintiff, the director of the Nebraska Department of Insurance, because, they alleged, the defendants had acquired a controlling interest in National American in violation of the Nebraska Insurance Holding Company System Act. I agreed and found that the proper remedy for the violation — so as to effectuate the Act's purpose, protect the public and National American policyholders, as well as implement the director's intent — was to divest the defendants of their stock in the National American's parent company, Chandler Insurance Company. See filing 111. The Eighth Circuit affirmed my decision, and I have since divested the defendants of most of their shares. In fact, the divestiture of the defendants' 1988 shares — that stock purchased by certain defendants in 1987 and 1988, totaling 1,142,625 shares, which remain on deposit with this court — is all that is left to this litigation.
The defendants' motion for a temporary injunction seeks to restrain National American's parent company from completion of its announced plan of "going private." But I fail to see that it matters in this case whether the parent company is a private company or a public company. I understand the defendants' concerns, of course. However, whether the parent company has gone private or remains public will not alter divestiture, nor will it alter my decision of how the remaining block of stock will be divested, that is, at what price the defendants should receive in exchange for the stock.
When placed in the context of the four Dataphase factors, see Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1981) (holding that the relevant factors on a motion for a preliminary injunction are (1) the probability of success on the merits; (2) the threat of irreparable harm to the movant; (3) the balance between this harm and the injury that granting the injunction will inflict on other interested parties; and (4) whether the issuance of an injunction is in the public interest), I find that the evidence and argument presented at the preliminary injunction hearing weighs against issuing the preliminary injunctive relief sought by the defendants. Indeed, the balance of equities does not so favor the defendants that justice requires me to intervene to preserve the status quo in this case. The defendants claim that they will suffer irreparable harm in this litigation if the announced plan of "going private" is complete, but offer no explanation of this harm. The reason for this shortcoming, I believe, is that there is no threat of irreparable harm to the defendants' interest in this litigation from the "going private" plan. Instead, as I gather from their brief and oral argument, as well as the evidence that is before me, the harm that the defendants reference lies outside this litigation, namely, the pursuit of more derivative litigation against the plaintiff's parent company, Chandler Insurance, in the United States District Court for the Western District of Oklahoma. As for the other factors, the defendants claim that there is a likelihood that they will succeed on the merits, that the state of balance between the irreparable harm and the potential harm that granting the injunction will inflict on National American and its parent company weights in its favor, and that the public interest is in its favor, but, for similar reasons, these also fall short. Again, the defendants lose sight of the purpose of this litigation and the purpose of the judgment against them. This case has always been about the defendants' violation of the laws of Nebraska and the appropriate remedy for that violation. So the defendants' concerns about derivative claims and the rights of the public shareholders with respect thereto that are the subject of other litigation in another court are simply not relevant to this litigation. In light of the fact there is not one Dataphase factor that counsels in favor of the issuance of a preliminary injunction in this case, I find that the motion for preliminary injunction must be denied.
It is with the same rationale that I find that the defendants' request for substitution of parties must also be denied. The fact of the matter is that the intervening plaintiff maintains interest in this case to ensure that the remedy that has been fashioned for the defendants' violations of Nebraska law is enforced. The director for the department of insurance for the State of Oklahoma has no such interest.
IT IS THEREFORE ORDERED that the Defendants' Motion for Temporary Injunction and Substitution of Parties, filing 208, is denied.
Dated August 8, 2000.