The opinion of the court was delivered by: McLAREN, District Judge.
This action arises from an alleged agreement for an exchange of
stock involving plaintiffs, Orthopedic Equipment Company, Inc.
("OEC") and its sole shareholder, F.I. Saemann, and defendant,
Everest & Jennings, International ("E&J International").
Plaintiffs have moved for a preliminary injunction directing all
of the defendants, their officers, agents, and attorneys to
immediately cease their prosecution of Everest & Jennings
International v. F.I. Saemann, 1968 E. No. 2217, in the High
Court of Justice, Chancery Division, of Great Britain. Defendants
have filed an opposing motion to stay the proceedings in this
Court pending the outcome of the British litigation. Hearings
were held on plaintiffs' motion from May 1 to May 5, 1972.
The motion for preliminary injunction is denied. The motion for
stay of these proceedings pending the outcome of the British
litigation is granted. The following constitutes this Court's
findings of fact and conclusions of law for the purposes of the
motion for a preliminary injunction and defendants' motion to
E&J International owns all of the shares in Everest & Jennings,
Inc. ("E&J INC."), which in turn owns all of the shares of
Jennings Investment Company ("Jennings"). Jennings and Saemann
each own 45.3 per cent of the equity, which gives each 50 per
cent voting control, of Zimmer Orthopaedic Ltd. ("ZOL"), a
British corporation. OEC and Jennings each own 46.4 per cent of
the equity, which gives each 50 per cent voting control, of
Orthopedia GmbH ("OK"), a West German corporation.
In 1967, the owners of the several Everest & Jennings companies
decided to make a public offering of stock so that their
interests in E&J INC., Jennings Plating Company, and Bernic Screw
Products Company, Inc. would have a market quotation. E&J
International was formed in 1967 as the holding company through
which the reorganization and public offering would be made.
This action was commenced on December 3, 1971. Count I alleges
that that part of the 1968 reorganization whereby all of E&J
Inc.'s stock was acquired by E&J International constituted, in
effect, the sale of Jennings' interests in ZOL and OK, in breach
of Saemann's right of first refusal created by a 1955 contract.
Count I is a claim for specific performance; it requests that the
defendants be directed to transfer their ZOL and OK shares to
Count III is a bill for declaratory judgment requesting a
determination that no contract is or ever was in existence
requiring Saemann and OEC to exchange their interests in ZOL and
OK for shares in E&J International.
Count II asserts a claim for damages and a declaratory judgment
that defendants have violated § 10(b) of the Securities Exchange
Act (the "Act"), 15 U.S.C. § 78j(b), and Rule 10b-5,
15 C.F.R. § 240.10b-5, promulgated thereunder, and that any
contract based on the February 12, 1968 offer which might otherwise
exist is void under § 29 of the Act, 15 U.S.C. § 78cc.
The instant motion for a preliminary injunction is directed to
To prevail on a motion for a preliminary injunction, plaintiffs
must show (1) that they will suffer immediate irreparable injury
if it is not granted; (2) that the balance of hardships and
conveniences to each side weighs in their favor; and (3) that
there is a reasonable likelihood of their success on the merits.
Midland-Ross Corp. v. Sunbeam Equip. Corp., 316 F. Supp. 171, 173
(W.D.Pa.), aff'd, 435 F.2d 159 (3d Cir. 1970). The plaintiffs
have failed to sustain their burden of proof on any of these
Plaintiffs allege that they will be irreparably injured in
several ways if defendants are permitted to prosecute the 2217
case for specific performance. They complain that the trial of
the case in England will deprive them of a jury trial. This
argument can be accorded little weight considering that Saemann
himself began the English litigation with the A shares case, to
which the 2217 case is primarily a defense (P.Ex. 157). The same
consideration applies to plaintiffs' contention that costs,
including attorney's fees, are normally assessed against the
losing parties in England. Such costs, as well as the
inconvenience and expense of defending the 2217 case, are not, of
course, irremediable by money damages. As to injury through an
adverse decision in that case — such as loss of control of the
foreign corporations and contempt penalties — this does not rise
above the level of harm that "may possibly ensue." Standard
Brands, Inc. v. Zumpe, 264 F. Supp. 254, 267 (E.D.La. 1967).
Indeed, it appears that even the defendants' English counsel has
expressed the opinion that the February 12 document is too vague
to be specifically performed under English law, and that the suit
was brought only to assist in the defense of the A shares case
The fact that there have been settlement discussions in the
2217 case also tends to undermine the allegation of irreparable
harm (Tr. 690-91).
Thus, it appears that any allegation as to irreparable injury
from the English proceedings is ...