It’s been four months since Alden Global Capital sued Emmis Communications, its directors and CEO Jeff Smulyan, charging that the board breached its fiduciary duty to shareholders by lending Smulyan’s company money to sue Alden for abandoning the effort to take Emmis private. So far, the Alden suit hasn’t gotten past the question of where it should be heard.
“This action has utterly no connection with New York,” attorneys for Emmis argued in seeking to have the Alden suit thrown out. The filing says Alden’s claims are without merit, but if Alden insists on pursuing them it should re-file the lawsuit in Indiana, where Emmis is incorporated and headquartered and where all of the alleged board misconduct took place.
In response, Alden’s lawyers argued that the case should be heard in New York because the contract it had with Smulyan’s JS Acquisition to finance the buyout of other Emmis shareholders specified that any dispute over the terms was to be resolved by the state courts of New York. Why that would apply isn’t made clear, since the buyout was abandoned by Alden and the lawsuit doesn’t pertain directly to that contract.
Alden’s attorneys argue that New York is a convenient forum for all of the parties because they all have offices there, conduct business there and that the abandoned going private deal was negotiated in New York, not Indiana.
While JS Acquisition is suing Alden in an Indiana federal court over the nixed buyout deal, Alden says that doesn’t preclude the New York court taking on the separate issue of its lawsuit.
In a further attempt to justify the New York venue, Alden is seeking authority from the court to find out whether any of the eight (out of nine) Emmis directors who don’t live in New York own property in the state, do business there or are owners or investors in any New York businesses. It also wants to know whether any of Emmis’ New York lawyers participated in the board meeting where the decision was made to make the loan.
RBR-TVBR observation: Why does this matter? For some reason Alden’s lawyers think they’re likely to get a better outcome from having a New York judge interpret Indiana corporate law than from having an Indiana judge interpret Indiana corporate law. Meanwhile, Alden seems to be delaying its own attempt to make Emmis rescind the loan to finance Smulyan’s lawsuit against Alden. Hey, at least the lawyers are getting rich!