According to the latest docket posted, on February 17, 2006, the plaintiffs filed a notice of appeal of the January 24, 2006 Order which granted the defendants’ motion to dismiss the complaint. The appeal is pending in 3rd Circuit Court of Appeals.
In a press release dated February 28, 2006, the U.S. District Court for the District of Delaware dismissed a securities fraud class action brought by a class of foreign investors against a foreign company based on the foreign company's merger with a U.S. company. The putative class consists of shareholders who are not citizens or residents of the U.S. who purchased securities of DaimlerChrysler AG, a German corporation, including former shareholders of the Chrysler Corp., who surrendered their Chrysler shares in connection with the merger of Chrysler and Daimler-Benz. The class alleged that the merger was falsely identified as a "merger-of-equals" but was actually an acquisition of Chrysler by Daimler-Benz. The class alleged that, after the alleged acquisition, Daimler-Benz managers replaced all Chrysler employees, and the shareholders did not receive control premium payments as warranted by an acquisition. The class sued pursuant to §14(a) of the Securities Exchange Act of 1934, § 12(a)(2) of the Securities Act of 1933, and § § 10(b) and 20(a) of the Securities Exchange Act (see 2 S.Cl.Act.Rep. 10-2, June 15, 2004). Daimler-Benz moved the district court to dismiss the case for lack of jurisdiction over foreign entities. Securities laws silent as to extraterritorial application of law. Generally, courts avoid exercising extraterritorial application of law in order to protect clashes between U.S. laws and laws of other nations. …The district court dismissed the claims of the putative class, finding that because the class is not comprised of Americans, the outcome of the case will not affect U.S. investors or markets, and the alleged fraud was perpetuated by a German company in Germany, the district court lacked jurisdiction.
The complaint charges that Defendants misrepresented the nature of the 1998 merger between Daimler-Benz AG and the Chrysler Corporation. According to plaintiffs, defendants framed the transaction as a 'merger of equals', rather than an acquisition, in order to avoid paying an 'acquisition premium'. Plaintiffs' Complaint alleges that Defendants made this representation to Chrysler shareholders in the Registration Statement, Prospectus, and Proxy, leading 97% of Chrysler shareholders to approve the merger. The Complaint further alleges that the Defendants made various misrepresentations after the merger to further their scheme.
NOTE: In 2000, a separate securities class action lawsuit was filed on behalf of foreign and domestic investors against DaimlerChrysler (the '2000 lawsuit') pertaining to the same allegations at issue in this action filed on May 24, 2004. DaimlerChrysler AG recently settled the 2000 lawsuit for $300 million. Foreign investors were excluded from the class settlement, and therefore will not receive any of the $300 million recovered. The May 24 action is on the behalf of these foreign investors.