Allergan Reply to Request for Expedited Proceedings

7/21/2019 Allergan Reply to Request for Expedited Proceedings

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ATTORNEYS AT LAW

ORANGE COUNTY

CASE NO. 8:14-CV-01214-DOC (AN

REPLY ISO PLAINTIFFS REQUEST FOEXPEDITED PROCEEDIN

LATHAM & WATKINS LLPPeter A. Wald (Bar No. 85705)

[email protected] Montgomery Street, Suite 2000San Francisco, California 94111-6538Telephone: +1.415.391.0600Facsimile: +1.415.395.8095

LATHAM & WATKINS LLPMichele D. Johnson (Bar No. 198298)[email protected]

650 Town Center Drive, 20th FloorCosta Mesa, California 92626-1925Telephone: +1.714.540.1235Facsimile: +1.714.755.8290

Attorneys for PlaintiffsALLERGAN, INC. andKARAH H. PARSCHAUER

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

SOUTHERN DIVISION

ALLERGAN, INC., a Delawarecorporation, and KARAH H.

PARSCHAUER, an individual,Plaintiffs,

v.

VALEANT PHARMACEUTICALSINTERNATIONAL, INC., VALEANTPHARMACEUTICALSINTERNATIONAL, AGMS, INC.,PERSHING SQUARE CAPITALMANAGEMENT, L.P., PSMANAGEMENT, GP, LLC, PS

FUND 1, LLC and WILLIAM A.ACKMAN, an individual, and Does 1-10,

Defendants.

CASE NO. 8:14-cv-01214-DOC (ANx)

REPLY IN SUPPORT OFPLAINTIFFS REQUEST FOREXPEDITED PROCEEDINGS

Judge: Hon. David O. CarterCtrm: 9DDate: August 20, 2014Time: 8:30 a.m.

Case 8:14-cv-01214-DOC-AN Document 37 Filed 08/18/14 Page 1 of 30 Page ID #:1285


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ORANGE COUNTY iCASE NO. 8:14-CV-01214-DOC (AN


TABLE OF CONTENTS

Page

I. INTRODUCTION .......................................................................................... 1

II. ARGUMENT ................................................................................................. 4

A. Defendants Do Not Oppose Expedited Proceedings ........................... 4

B. Defendants Fundamentally Mischaracterize the Reasonsfor Plaintiffs Request .......................................................................... 5

1. Plaintiffs Seek Expedited Proceedings to Preservethe Stockholder Vote, Not to Undermine It............................... 6

2. This Court Is the Appropriate Forum for Plaintiffs

Claims ...................................................................................... 10

C. Defendants Misconstrue Rule 57, Which Provides forExpedited Proceedings in Exactly These Circumstances .................. 11

1. Plaintiffs Are Entitled to Declaratory Relief ........................... 11

2. Rule 57 Expedited Proceedings Are Warranted ...................... 15

3. Plaintiffs Did Not Delay in Bringing This Action .................. 19

4. Allergan Has Standing to Bring an Insider TradingClaim ........................................................................................ 20

D. Expedited Proceedings Are Available Whether or NotPlaintiffs Pursue Preliminary Injunctive Relief ................................. 21

III. CONCLUSION ............................................................................................ 24



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ATTORNEYS AT LAW

ORANGE COUNTY iiCASE NO. 8:14-CV-01214-DOC (AN


TABLE OF AUTHORITIES

Page(s)

CASES

Am. Trim, LLC v. Oracle Corp.,

383 F.3d 462 (6th Cir. 2004) ............................................................................ 15

Apache Corp. v Chevedden,No. 4:12-cv-00137-LHR (S.D. Tex. Feb. 3, 2012) .......................................... 19

Apache Corp. v. New York City Employees Ret. Sys.,No. CIV. A. H-08-1064, 2008 WL 1775221 (S.D. Tex. Apr. 15,2008) ................................................................................................................. 12

Avon Prods., Inc. v. Chartwell Assocs. L.P.,738 F. Supp. 686 (S.D.N.Y. 1990) ................................................................... 22

Bauman v. U.S. Dist. Ct.,557 F.2d 650 (9th Cir. 1977) ............................................................................ 16

Bautista-Perez v. Holder,No. C 07-4192 TEH, 2009 WL 2031759 (N.D. Cal. July 9, 2009) ................. 15

Beacon Looms, Inc. v. S. Lichtenberg & Co.,552 F. Supp. 1305 (S.D.N.Y. 1982) ........................................................... 14, 15

Brody v. Transitional Hospitals Corp.,280 F.3d 997 (9th Cir. 2002) ............................................................................ 21

Burlington Indus., Inc. v. Edelman,

666 F. Supp. 799 (M.D.N.C. 1987) .................................................................. 20Chamberlain v. Allstate Ins. Co.,

931 F.2d 1361 (9th Cir. 1991) .......................................................................... 17

Chevron Corp. v. Donziger,800 F. Supp. 2d 484 (S.D.N.Y. 2011) ............................................ 12, 16, 17, 18

CNW Corp. v. Japonica Partners, L.P.,776 F. Supp. 864 (D. Del. 1990) ...................................................................... 13

Diamond Offshore Co. v. A & B Builders, Inc.,302 F.3d 531 (5th Cir. 2002) ............................................................................ 14

Essex Chem. Corp. v. Gurit-Heberlein AG,No. 88-2478, 1988 U.S. Dist. LEXIS 19515 (D.N.J. June 24, 1988) .............. 20

Express Scripts Holding Co. v.Chevedden,No. 4:13-cv-02S20-JAR (E.D. Mo. Jan. 3, 2014) ............................................ 19

Flores v. EMC Mortg. Co.,-- F. Supp. 2d --, No. CV F 14-0047 LJO GSA, 2014 WL 641097(E.D. Cal. Feb. 18, 2014).................................................................................. 13



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ORANGE COUNTY iiiCASE NO. 8:14-CV-01214-DOC (AN


Florida Commercial Banks v. Culverhouse,772 F.2d 1513 (11th Cir. 1985) ........................................................................ 21

Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading, Inc.,697 F.3d 59 (2d Cir. 2012) ............................................................................... 16

GEM Acquisitionco, LLC v. Sorenson Grp. Holdings, LLC,

No. C 09-01484 SI, 2009 WL 3246747 (N.D. Cal. Oct. 8, 2009) ................... 18Grand Isle Shipyard, Inc. v. Seacor Marine, LLC,

589 F.3d 778 (5th Cir. 2009) ............................................................................ 14

Hanes Dye & Finishing Co. v. Caisson Corp.,309 F. Supp. 237 (M.D.N.C. 1970) .................................................................. 16

Hasbro Bradley, Inc. v. Sparkle Toys, Inc.,780 F.2d 189 (2d Cir. 1985) ............................................................................. 14

Klungvedt v. Unum Grp.,No. 2:12-CV-00651 JWS, 2012 WL 2368623

(D. Ariz. June 21, 2012) ....................................................................... 12, 15, 22

Leu v. Intl Boundary Commn,605 F.3d 693 (9th Cir. 2010) ............................................................................ 13

MedImmune, Inc. v. Genentech, Inc.,549 U.S. 118 (2007) ......................................................................................... 15

Neuberger Berman Real Estate Income Fund, Inc. v. Lola Brown TrustNo. 1B,342 F. Supp. 2d 371 (D. Md. 2004) ................................................................. 19

Newdow v. Roberts,603 F.3d 1002 (D.C. Cir. 2010) ................................................................. 22, 23

Notaro v. Koch,95 F.R.D. 403 (S.D.N.Y. 1982) ........................................................................ 16

Pac. Realty Trust v. APC Invs., Inc.,685 F.2d 1083 (9th Cir. 1982) .................................................................... 21, 23

Pincay v. Andrews,389 F.3d 853 (9th Cir. 2004) ............................................................................ 16

Planned Parenthood of the Heartland v. Heineman,

724 F. Supp. 2d 1025 (D. Neb. 2010) .............................................................. 22Polaroid Corp. v. Disney,

862 F.2d 987 (3d Cir. 1988) ............................................................................. 20

Pratt v. Wilson,770 F. Supp. 539 (E.D. Cal. 1991) ................................................................... 22

Professional Programs Group v. Department of Commerce,29 F.3d 1349 (9th Cir. 1994) ............................................................................ 18



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ATTORNEYS AT LAW

ORANGE COUNTY ivCASE NO. 8:14-CV-01214-DOC (AN


Robertson v. Dean Witter Reynolds, Inc.,749 F.2d 530 (9th Cir. 1984) ...................................................................... 20, 21

Seattle Audubon Socy v. Moseley,80 F.3d 1401 (9th Cir. 1996) ............................................................................ 15

Sherwood Med. Indus., Inc. v. Deknatel, Inc.,

512 F.2d 724 (8th Cir. 1975) ............................................................................ 16Sierra Foothills Pub. Util. Dist. v. Clarendon Am. Ins. Co.,

No. CV-F-05-736 REC/JLO, 2005 WL 2089832(E.D. Cal. Aug. 29, 2005) ................................................................................. 13

Southwind Aviation, Inc. v. Bergen Aviation, Inc.,23 F.3d 948 (5th Cir. 1994) .............................................................................. 14

Steel Co. v. Citizens for a Better Envt,523 U.S. 83 (1998) ........................................................................................... 13

Steffel v. Thompson,

415 U.S. 452 (1974) ......................................................................................... 22

Stein v. KPMG, LLP,486 F.3d 753 (2d Cir. 2007) ............................................................................... 9

StreamCast Networks, Inc. v. IBIS LLC,No. CV 05-04239 MMM (Ex), 2006 WL 5720345(C.D. Cal. May 2, 2006) ................................................................................... 13

Super Tire Engg Co. v. McCorkle,416 U.S. 115 (1974) ......................................................................................... 22

Tri-State Generation & Transmission Assn, Inc. v. BNSF Ry. Co.,No.CV08-272-PHX-MHM, 2008 WL 2465407(D. Ariz. June 17, 2008) ............................................................................. 15, 22

Turner Indus. Grp., LLC v. Intl Union of Operating Engrs, Local 450,No. Civ. A. H-13-0456, 2013 WL 2147515 (S.D. Tex. May 10, 2013) .......... 17

U.S. Philips Corp. v. KBC Bank N.V.,590 F.3d 1091 (9th Cir. 2010) .......................................................................... 22

United States v. Stein,452 F. Supp. 2d 230 (S.D.N.Y. 2006), vacated on other grounds subnom. Stein v. KPMG, LLP, 486 F.3d 753 (2d Cir. 2007) ............................. 9, 18

United States v. Washington,759 F.2d 1353 (9th Cir. 1985) .......................................................................... 11

STATUTES

15 U.S.C. 78aa .............................................................................................. 10, 12

28 U.S.C. 2201(a) ..................................................................................... 3, 12, 14



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ATTORNEYS AT LAW

ORANGE COUNTY vCASE NO. 8:14-CV-01214-DOC (AN


RULES

Fed. R. Civ. P. 26 ................................................................................................... 19

Fed. R. Civ. P. 57 ............................................................................................. 14, 18

L.R. Civ. 16-11 ...................................................................................................... 18

TREATISES

10B Charles Alan Wright & Arthur R. Miller, Federal Practice andProcedure (3d ed. 2014) ................................................................................... 17

Anderson, Actions for Declaratory Judgments, Vol. 1 ......................................... 16



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ATTORNEYS AT LAW

ORANGE COUNTY 1CASE NO. 8:14-CV-01214-DOC (AN


I.

INTRODUCTION

Plaintiffs contend that Defendants have broken the federal securities laws

prohibiting insider trading and the use of false and misleading proxy statements.

Defendants say they have not. Fair enough. But given that Valeant has made a

live hostile tender offer seeking to acquire Allergan, and that Defendants are

actively soliciting the Companys stockholders in an effort to call a special meeting

and remove a majority of Allergans directors, Allergans board and its

stockholders are entitled to a prompt resolution of these questions. Accordingly,

Plaintiffs seek expedited discovery and a prompt adjudication of their claims for

declaratory relief.

In response, Defendants perplexingly seek to characterize Plaintiffs request

for expedition as an attempt to delay. Nonsense. Precisely the reverse is true:

Plaintiffs seek to move this case forward promptly to an adjudication on the merits,

while Defendants oppose that requestsort of. While styling their submission as

an Opposition, Defendants agree that expedition is warrantedbut only if

Plaintiffs file a preliminary injunction motion rather than seek expedited

proceedings under Rule 57. Defendants position reflects a substantial retreat from

their prior statement that they were prepared to prove the absence of merit to this

case under any procedure or schedule convenient for the Court. Regardless, there

is no basis for Defendants sudden insistence that Plaintiffs pursue preliminary

injunctive relief. While such relief may be appropriate, it is not the only relief

available under the Federal Rulesand it is not Defendants prerogative to dictate

the relief that Plaintiffs may seek. Courts routinely order expedited proceedings

under Rule 57, regardless of whether other remedies, including injunctive relief,

might be available.

The reason for Defendants opposition to Plaintiffs proposal is readily

understood: Defendants hope to delay the adjudication of Plaintiffs Exchange Act



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ATTORNEYS AT LAW



claims so that they can secure a vote of Allergans stockholders without having to

disclose all of the facts surrounding their conduct. And the facts disclosed thus far

are striking. Valeant secretly tipped Pershing Square about its intention to launch a

tender offer for Allergan, and armed with that information, Pershing Square

through its newly created entity PS Fund 1bought up almost 10% of Allergans

shares for over $3 billion. When Valeant announced its plans, PS Fund 1s stake in

Allergan shot up in value by more than $1 billion. For Defendants, their ability to

delay an adjudication of Plaintiffs claims on the merits while seeking to convene a

special meeting of stockholders and remove a majority of the Allergan board is

critical.

In their attempt to portray Plaintiffs as the architects of delay, Defendants

make much of a lawsuit in Delawarea lawsuit that does not exist. Defendants

have publicly stated that by mid- to late August, they plan to submit request forms

from the holders of record of at least 25% of Allergan shares, calling for a special

stockholder meeting. The Companys bylaws direct the Secretary of Allergan to

call such a meetingunless Defendants have violated the Exchange Act or other

applicable law, or have otherwise not complied with the Companys charter or

bylaws. If the Secretary does not set the special stockholder meeting within a

reasonable period of time, Defendants say they will file suit in Delaware. Plaintiffs

have filed this application to expedite an adjudication of their claims (Dkt. No. 11)

(hereinafter, the Motion), expressly to avoid any unnecessary delay of the special

meeting.

Because the bylaws provide that the Secretary of Allergan shall not accept

a special stockholder meeting request if the request forms were made in a manner

that involved a violation of applicable law, Plaintiffs seek an adjudication of that

question from this Courtthe only court with jurisdiction to adjudicate Plaintiffs

federal claims. Plaintiffs thus ask this Court for a schedule that contemplates

expedited discovery, a narrow window for summary judgment, and, if necessary, a



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trial on any question of material fact that remains. The schedule Plaintiffs seek is

designed to produce an expedited resolution of their claims on the merits

something in which Defendants profess to be interested as well. Indeed, in

response to the press announcement of an investigation by the Securities and

Exchange Commission (SEC) into insider trading issues surrounding

Defendants conduct, Defendants claim to welcome the SECs review of the

facts. Supplemental Declaration of Colleen C. Smith (Supp. Smith Decl.) Ex.

A (David Gelles, SEC Reviews Bid for Botox Maker by Valeant and Ackmans

Hedge Fund, N.Y.TIMES(Aug. 14, 2014, 3:27 p.m.)). Defendants should

welcome a review by this Court as wellyet their Opposition to Plaintiffs Motion

suggests otherwise.

Defendants also claim that Allergan could have filed this lawsuit earlier.

Not so. It was not until June 18 that Valeant officially launched its tender offer to

Allergans stockholdersa move that Valeant CEO J. Michael Pearson admitted,

in an unscripted moment, he had suspected would be necessary all along. And

not until July 11, 2014 did Defendants file their final proxy statement, containing

the full set of disclosures that Defendants would use to solicit proxies from

Allergans stockholders. Allergan filed suit shortly thereafter (within three weeks),

and immediately sought expedited proceedings under Rule 57.

Plaintiffs claims are precisely the type that courts routinely resolve by

means of declaratory relief under Rule 57frequently on an expedited basis.

Defendants are incorrect that a declaratory judgment is proper only if it would

resolve the entire case. Rather, a declaration is proper to clarify the rights and

legal relations of the parties, whether or not further relief is or could be sought.

28 U.S.C. 2201(a) (2014). Because Allergans bylaws prohibit the Secretary

from accepting a special meeting request if it was made in a manner that involved a

violation of applicable law, a declaration by the Court as to whether the law has

been violated will resolve a live controversy with critical impact on future events.



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Where, as here, the situation arises amidst a live takeover attempt, the resolution of

the controversy should be expedited.

As a final roadblock to a speedy hearing under Rule 57, Defendants claim

they plan to file counterclaims against Allergan and, therefore, that the case should

not proceed to judgment on an expedited basis. If Defendants want to assert

counterclaims, they should do so. If Defendants want expedition on their

counterclaims, they should request it. Irrespective of Defendants anticipated

filings, Plaintiffs insider trading and disclosure claims should proceed to an

adjudication on the merits expeditiously.

At bottom, the parties agree that some form of expedited proceeding is

needed here so that the issues raised by Plaintiffs complaint can be addressed

promptly. In the absence of any disagreement on this fundamental point, the Court

should order expedited proceedings consistent with Plaintiffs request and Rule 57.

II.

ARGUMENT

A.

Defendants Do Not Oppose Expedited Proceedings

First and foremost, there is no disagreement between the parties as to the

need for expedition. Within days of filing the complaint, Plaintiffs reached out to

Defendants and sought their agreement to an expedited schedule. August 4, 2014

Declaration of Colleen C. Smith (Smith Decl.) 4. Since the expedition motion

was filed, Defendants have repeatedly offered to expedite proceedings and

indicated that they will agree to whatever schedule is necessary if Plaintiffs file a

motion for a preliminary injunction. Opp. at 18;see alsoSupp. Smith Decl. Ex. D.

Based on Defendants recognition that expedition may be appropriate, Plaintiffs

continued to seek a negotiated schedule and proposed a draft joint stipulation and

schedule reflecting Defendants intention to expedite their own responses to

Plaintiffs complaint. Supp. Smith Decl. Ex. B. Even in their Opposition,

Defendants confirm that they are prepared to proceed on an expedited basis by

agreeing, for example, to file their answer and expected Rule 12(c) motion on an



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expedited basis, immediately confer with Plaintiffs regarding mutual expedited

discovery, serve their own discovery requests the day after the August 20 hearing,

accept the appointment of a referee to expeditiously resolve discovery disputes,

and accept any hearing date convenient to the [C]ourt. Opp. at 18.

The parties disagree only on the procedural framework for the expedited

schedule. Plaintiffs are seeking a speedy hearing on the merits under Rule 57,

while Defendants insist that Plaintiffs pursue a preliminary injunction. Id.

Defendants insistence on the course that Plaintiffs should pursue is passing

strange as a matter of principle, and wrong as a matter of law. See infraSection D.

In any event, because the parties agree that expedited proceedings are in order, this

Court should set a schedule that permits resolution of Plaintiffs claims before any

special meeting of stockholders is held.1

B. Defendants Fundamentally Mischaracterize the Reasons forPlaintiffs Request

While acknowledging the need for expedition, Defendants nevertheless seek

to characterize Plaintiffs Motion as an attempt to delay a special meeting and

avoid adjudication of that issue in Delaware. Opp. at 1. On the contrary,Plaintiffs Motion asks this Courtthe only court with jurisdiction over the

Exchange Act claimsto adjudicate those claims promptly on the merits, so that

Allergans board and its stockholders can be properly informed in advance of any

special meeting.

1Plaintiffs requested that the Court order expedited proceedings on an ex partebasis because, according to recent public statements, Defendants plan to submitrequests for a special meeting any day, and it is important to resolve Plaintiffsclaims within an approximately four-month (120-day) period. SeeSmith Decl. Ex.E at 17, 39. Recognizing the heavy burden required for an ex partemotion butalso the urgency of the circumstances presented, the Court denied Plaintiffs ex

partemotion but ordered an accelerated briefing schedule on their request forexpedition. Dkt. No. 24.



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1.

Plaintiffs Seek Expedited Proceedings to Preserve theStockholder Vote, Not to Undermine It

As summarized in Plaintiffs Motion (Mot. at 3-4), Plaintiffs claims arise

from Valeants ongoing efforts to acquire Allergan by means of a hostile tender

offer with support from the Pershing Square Defendants. SeeCompl. (Dkt No. 1)

35, 40, 43. In February 2014, Valeant began to take substantial yet undisclosed

steps towards a hostile bid for Allergan, including retaining financial and legal

advisors, holding multiple board meetings, and entering into contractual and

financial arrangements to facilitate the takeover. Id. 63. Following the initiation

of these steps, Pershing Square formed PS Fund 1 and, in violation of the

Exchange Act, rapidly acquired 9.7% of Allergans stock between February 25 and

April 21, 2014, primarily through purchases of over-the-counter call options and

equity futures. Id. 66, 84-88. Attempting to legitimize their conduct,

Defendants concealed material facts regarding their relationship, history, and

intentions in various public statements and SEC filings. Id. 132-58.

On April 22, 2014, once Defendants acquisition of Allergan shares became

known, Allergans board, in consultation with its financial and legal advisors,

adopted a one-year stockholder rights plan, which would be triggered if any single

person or group acquired more than 10% of Allergans stock. Smith Decl. Ex. A

(Allergan Form 8-K, Apr. 23, 2014). Pershing Square, in turn, announced its

intention to seek a special meeting of stockholdersamong other things, to

remove a majority of the current directors and pack the Allergan board with

sympathetic directors who might remove the rights plan and negotiate with

Valeant. Compl. 16, 130. Defendants public statements suggest that Pershing

Square expects to havein the near futurea sufficient number of proxies (25%

of outstanding shares) to require Allergans directors to consider the meeting

request. Mot. at 6.



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As explained in Plaintiffs Motion, Allergans bylaws contain a number of

conditions that must be satisfied in order for the special meeting request to be

valid. Id. at 4-5. Among other things, any such request must comply with the

requirements of the Exchange Act, and if it does not, Allergans Secretary shall

notaccept, and shal l consider ineff ective, a Special Meeting Request if . . .

(f) such Special Meeting Request was made in a manner that involved a violation

of Regulation 14A under the Exchange Act, or other applicable law. Smith

Decl. Ex. C, Art. II, 3(B)(1) (emphasis added);see also id., Art. II, 3(B)(5)

(emphasis added) (In addition to the requirements of this Section 3, each

Proposing Person shall comply with all requirements of applicable law, including

all requirements of the Exchange Act, with respect to any request to fix a Special

Meeting Request.).

Thus, under Allergans bylaws, the validity of Defendants special meeting

request depends upon whether they have complied with the Exchange Act. That

issue is at the heart of this lawsuit.2 Plaintiffs contend that any special meeting

request forms that Defendants may submit were obtained in violation of the

Exchange Actincluding Sections 13(d), 14(a), 14(e), and 20A and the rules

promulgated thereunderand are therefore invalid. Compl. 1, 159-93. Yet,

2Defendants reference to hearsay reports issued by shareholder advisory firmsISS and Glass Lewis regarding Allergans bylaws, Opp. at 1, 4-5, are irrelevant tothis lawsuit and the present motion. Those reports express opinions regarding the

procedural requirements stockholders seeking to call a special meeting must followunder the bylaws, and whether such requirements are overly cumbersome. Id. Butcontrary to Defendants selective presentation of these reports, they say nothingabout Allergans lawsuit or its request for expedited consideration of its claimsand certainly do not address whether Defendants actions have violated the

securities laws. Indeed, one cited section of the ISS report specifically focuses onhow the board may act upon receipt of a validrequest for a special meeting.Shipley Decl. Ex. 1, at 12;see also id.at Ex. 2 (Glass Lewis Report), at 17 (Validsubmission of Written Requests in favor of a special meeting will require fullcompliance with the provisions set forth in Allergans charter, bylaws andapplicable law.). It is precisely to protect the stockholders right toproperlycall aspecial meeting, by determining as early as possible whether any submittedmeeting request is valid, that Allergan has requested expedited proceedings fordeclaratory relief.



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rather than simply refusing to call the special meeting based on such violations (see

Smith Decl. Ex. C, Art. II, 3(B)(1)-(5)),Plaintiffs filed this lawsuit seeking

declaratory relief on their Exchange Act claims so that these issues can be

definitively resolved by this Court.

Plaintiffs are not interested in delay. The entire reason for Plaintiffs

expedition request is to resolve their claims as promptly as possible, and thereby

arm both the board and stockholders with the information they need in determining

how to proceed. No fair-minded person could characterize Plaintiffs attempt to

achieve resolution of their claims beforeany special meeting is held as a delay

tactic. If Defendants submit request forms that have been procured on the basis of

Exchange Act violations, Allergans Secretary is directed notto call a special

meeting. See Smith Decl. Ex. C, Art. II, 3(B)(1)-(5).

With respect to timing, Allergans Secretary will seek to call a special

meeting within a reasonable time following the submission of request forms

provided such forms are valid. A provision in Allergans bylaws provides that in

lieu of Allergans Secretary calling the stockholder-requested special meeting, the

board may set its own meeting within 120 days of receiving a special meeting

request. Id.Art. II, 3(B)(3). While this 120-day provision does not apply to a

stockholder-requested special meeting, Defendants have publicly expressed their

view that Allergan must call the stockholders special meeting within 120 days of a

valid request. Smith Decl. Ex. E at 17 (Mr. Schiller: Pershing Square has

commenced the process called special meeting and expects the votes to call the

special meeting will be presented to Allergan for certification in August.

Assuming we get greater than 25 percent, Allergan will call a special meeting

within 10 to 120 days.); id.at 39 (Mr. Pearson: Pershing is intending to deliver

the requisite number of proxies in mid-August and once theyre certified, Allergan

has nocant call a meeting at any fewer than 10 days and they have up to 120

days.).



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Plaintiffs accordingly propose an expedited schedule that would

accommodate discovery, motion practice, and (if necessary) a trial on the merits of

Plaintiffs claims, all within 120 days (Mot., at Attachment A). In light of

Defendants stated intention to file its answer and counterclaims before the August

25 deadline (Opp. at 16, 18), and certain meet and confer discussions, Plaintiffs

have proposed the following schedule:

No deadline for Defendants anticipated Rule 12(c) motion;

Discovery may commence immediately;

Deadlines for other proceedings will be triggered by the submission of

the special meeting requests, as reflected in Plaintiffs initial

proposal.3

In particular, Plaintiffs ask for briefing on a Rule 57 summary judgment

motion as to their Section 13(d), 14(a), and 14(e) claims (see Compl. at 48-49), and

appropriate declaratory relief, within 98 days of any special meeting request that

Defendants may submit and, if necessary, a trial within 110 days.4 Should the

3Defendants incorrectly contend that Plaintiffs proposed schedule seeks to jam

Defendants while allowing Plaintiffs extra time for briefing. Opp. at 2. To thecontrary, Plaintiffs attempted to craft a proposed schedule allowing for adequatediscovery while maximizing the time available to the parties and the Court toadjudicate their claims. While Defendants assert that Plaintiffs proposal includedan additional week for Plaintiffs opposition briefing, in fact, Plaintiffs proposalcontemplated that Plaintiffs would move for summary judgment, allowingadditional time for Defendants to submit their opposition papers. If, however,Defendants intend to file their own cross motion for summary judgment, Plaintiffsare willing to submit their opposition to Defendants motion within a shortened

period of time. Indeed, Plaintiffs have repeatedly reached out to Defendants todiscuss the schedule and expressed their willingness to discuss modifications.Smith Decl. Ex. I; Suppl. Smith Decl. Ex. B, C. Likewise, should the Court prefera shortened briefing period prior to the scheduled hearing date, Plaintiffs willadhere to any proposal that is convenient for the Court.4Plaintiffs have requested a trial by jury on all legal claims (see Compl. at 1).Should the Court determine that any issues remaining for trial implicate suchclaims, Plaintiffs request a jury trial as to those claims. See United States v. Stein,452 F. Supp. 2d 230, 274 (S.D.N.Y. 2006), vacated on other grounds sub nom.Stein v. KPMG, LLP, 486 F.3d 753 (2d Cir. 2007).



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Court grant declaratory relief, then the remaining issues before the Court may be

addressed thereafter in accordance with the Federal Rules.

2.

This Court Is the Appropriate Forum for Plaintiffs Claims

Defendants also attack Plaintiffs request for expedited proceedings as some

sort of attempt to avoid adjudication of these issues in Delaware. Opp. at 1. That

accusation is baseless. As discussed, Allergans bylaws expressly require

compliance with the Exchange Act as the predicate for any special meeting

request. Smith Decl. Ex. C, Art. II, 3(B)(1), (5). Whether Defendants violated

the Exchange Act by engaging in insider trading and issuing false and misleading

proxy statements are issues of federal law within this Courts exclusive

jurisdiction. 15 U.S.C. 78aa (2014). Once those issues are resolved, any further

dispute concerning the special meeting request can be pursued in Delaware.

Accordingly (and contrary to Defendants assertion, Opp. at 1, 12), the present

case acknowledges and honors the different roles to be played by this Court and

the Delaware court in regard to the scheduling of a special meeting.5

Finally, Defendants suggestion that Allergan is seeking a ruling from this

Court in order to later ask the Delaware court to decide the implications of this

5Defendants also mischaracterize previous litigation between the parties inDelaware. Defendants claim that Allergan forced them to file a case in Delawareto adjudicate whether their efforts to solicit meeting request forms would triggerthe stockholder rights plan. Ex Parte Opp., Dkt. No. 15, at 6-7. That is not true.As the record reflects, Pershing Square sent Allergans board a letter seeking broadassurances that any potential interactions with other stockholders would not triggerAllergans rights plan. Supp. Smith Decl. Ex. E. Allergan replied that the meresolicitation and receipt of proxies pursuant to the bylaws and in accordance withthe Exchange Act would not, by itself, trigger the rights plan. Id. Ex. F. Allerganfurther stated that it could not provide full and complete responses to Pershing

Squares questions without a better understanding of the facts, and offered toarrange a conference call to discuss any specific questions. Id. Rather thanaccept Allergans offer to confer, PS Fund 1 filed a lawsuit in the Delaware Courtof Chancery the very next day. See PS Fund 1, LLC v. Allergan, Inc., C.A. No.9760-CB, Compl. 43. Allergan continued to engage with Pershing Square,seeSupp. Smith. Decl. Ex. G, as it had offered to do, and the parties settled the matterand submitted a joint stipulation to the Delaware court on June 27, 2014. ShipleyDecl. Ex. 3 (Stipulation and [Proposed] Order Regarding Application of AllerganRights Plan and Dismissal Without Prejudice).



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Courts decision is mystifying. Id.at 6. Plaintiffs seek a ruling from this Court

on their Exchange Act claims because this Court has exclusive jurisdiction over

those claims and the Allergan bylaws prohibit the acknowledgement and

acceptance of special meeting requests secured and submitted in violation of the

Exchange Act. Once this Court has ruled on the Exchange Act issues, Allergans

board and stockholders will be able to assess any special meeting requests that

Defendants may tender, subject to the Delaware courts oversight.

C.

Defendants Misconstrue Rule 57, Which Provides for ExpeditedProceedings in Exactly These Circumstances

Defendants argue that Plaintiffs claims are not appropriate for declaratory

relief, and that even if declaratory relief were available, Rule 57 does not provide

for expedited proceedings here. Opp. B(1). Each of Defendants arguments is

incorrect.

1.

Plaintiffs Are Entitled to Declaratory Relief

Plaintiffs assert three claims for declaratory relief under the Exchange Act:

(i) Section 14(a) and the rules promulgated thereunder; (ii) Section 14(e) and the

rules promulgated thereunder; and (iii) Section 13(d) and Schedule 13Dpromulgated thereunder. Compl. 19, 159-189.

6 Each of these claims is

appropriate for declaratory relief. As Defendants acknowledge, declaratory

judgment is proper where it serves in clarifying and settling the legal relations in

6On August 6, 2014only afterPlaintiffs filed this lawsuit alleging thatDefendants had violated Section 13(d) by failing to disclose information anddocuments required by the statute, including derivatives contracts and the parties

confidentiality agreements, and more than three months after Defendants initialSchedule 13D filingsDefendants finally disclosed those documents. Supp.Smith Decl. Ex. H. While insufficient to cure Defendants numerous othermaterial omissions chronicled in Plaintiffs complaint, these long-concealeddocuments corroborate that Valeant and Pershing Square are not the same personunder Rule 14e-3, but rather distinct persons with separate economic interests. Forexample, Defendants amended and restated confidentiality agreement makes clearthat they contemplated two distinct transactions: Valeants transaction involvingAllergan, and a potential equity investment by Pershing Square. See id.



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issue. Opp. at 3 (citing United States v. Washington, 759 F.2d 1353, 135657

(9th Cir. 1985) (en banc));see also28 U.S.C. 2201(a) (the Court may declare

the rights and other legal relationsof any interested party seeking such

declaration, whether or not further relief is or could be sought) (emphasis added).

That is the essence of Plaintiffs request: a declaration concerning Defendants

conduct and whether it violated provisions of the Exchange Actwhich will

permit Allergans board to make an informed decision regarding the validity of any

special meeting request that is submitted and the proposed hostile exchange offer,

and will permit Allergans stockholders to make an informed decision in

evaluating the legality and sufficiency of Valeants offer.

Defendants suggest three reasons why declaratory relief is not available:

(1) declaratory relief must terminate the controversy, (2) declaratory relief must

address future wrongdoing or impending litigation, and (3) declaratory relief

cannot be combined with other remedies. Opp. at 10-14. Defendants are wrong on

all counts.

First, contrary to Defendants assertion that declaratory relief must terminate

the controversy (id.at 10-11), declaratory relief is proper when it would resolve or

significantly narrow the key issues. See, e.g.,Klungvedt v. Unum Grp., No. 2:12-

CV-00651 JWS, 2012 WL 2368623, at *3 (D. Ariz. June 21, 2012) (ruling on

ERISA claim would be dispositive as to state law claims); Chevron Corp. v.

Donziger, 800 F. Supp. 2d 484, 491 (S.D.N.Y. 2011) (explaining that decision on

enforceability of judgment probably would be dispositive of the unjust

enrichment count, dramatically narrow or eviscerate the RICO and fraud claims . .

.). Here, resolution of Plaintiffs declaratory judgment claims will be dispositive

of the primary issues of liabilityissues of federal law that can only be decided by

this Court. 15 U.S.C. 78aa;seeApache Corp. v. New York City Employees Ret.

Sys., No. CIV. A. H-08-1064, 2008 WL 1775221, at *1 (S.D. Tex. Apr. 15, 2008).

A declaratory judgment unquestionably will remove any uncertainty surrounding



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the legality of Defendants trading activities and disclosures to Allergans

stockholders. See, e.g., StreamCast Networks, Inc. v. IBIS LLC, No. CV 05-04239

MMM (Ex), 2006 WL 5720345, at *45 (C.D. Cal. May 2, 2006) (finding

declaratory relief appropriate where such relief would clarify plaintiffs

prospective right to terminate the agreement without liability);Sierra Foothills

Pub. Util. Dist. v. Clarendon Am. Ins. Co., No. CV-F-05-736 REC/JLO, 2005 WL

2089832, at *7 (E.D. Cal. Aug. 29, 2005) (holding that declaratory relief is

appropriate to resolve insurers potentially continuing duty to defend on the

appeal or thereafter if a re-trial is ordered).

Second, Defendants argue that a party cannot bring a declaratory judgment

claim to declare past conduct unlawful. Opp. at 12. But Defendants discussion of

the cases they cite is completely out of context. Here, the proxy contest between

Allergan and Defendants is ongoing, and a declaratory judgment would

unquestionably impact the parties future conductfor example, a decision by

Allergans Secretary concerning the effectiveness of any special meeting request

that may be submitted. Defendants cases do not suggest that declaratory relief is

unavailable in these circumstances, as they all involve situations where the plaintiff

sought only psychic satisfaction from a judgment that would have no present

effect. See id., citingLeu v. Intl Boundary Commn, 605 F.3d 693, 694 (9th Cir.

2010) (claim for declaratory judgment against President Bush, a non-party, for

unlawful termination);see also CNW Corp. v. Japonica Partners, L.P., 776 F.

Supp. 864 (D. Del. 1990) (no live controversy where defendant had already lost

proxy contest and sold shares);Flores v. EMC Mortg. Co., -- F. Supp. 2d --, No.

CV F 14-0047 LJO GSA, 2014 WL 641097, at *13 (E.D. Cal. Feb. 18, 2014)

(seeking declaration as to completed foreclosure).

Third, there is no basis for Defendants assertion that plaintiffs

intermingling of requests for declaratory relief with coercive demands for damages

and injunctions, removes [a] suit from the realm of a declaratory judgment



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action. Opp. at 14 n.11 (quotingDiamond Offshore Co. v. A & B Builders, Inc.,

302 F.3d 531, 539 (5th Cir. 2002), overruled in part on other grounds by Grand

Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th Cir. 2009)). In fact,

the Declaratory Judgment Act and Rule 57 expressly permit declaratory relief even

if other remedies are available. 28 U.S.C. 2201(a) (permitting declaratory relief

whether or not further relief is or could be sought); Fed. R. Civ. P. 57 (The

existence of another adequate remedy does not preclude a declaratory judgment

that is otherwise appropriate.);see also Beacon Looms, Inc. v. S. Lichtenberg &

Co., 552 F. Supp. 1305, 1315 (S.D.N.Y. 1982)([T]he fact that plaintiff seeks, and

may be deserving of, preliminary injunctive relief does not preclude the entry of a

declaratory judgment if appropriate in the instant case.), abrogated in part on

other grounds by Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189 (2d Cir.

1985).

Both cases cited by Defendantsostensibly in support of this proposition

in fact say the opposite. Southwind Aviation, Inc. v. Bergen Aviation, Inc., 23 F.3d

948, 951 (5th Cir. 1994) (Opp. at 14 n.11), held that, in determining whether to

abstain in favor of an ongoing state court proceeding, the existence of a damages

claim requires the trial court to treat the case as more thansimplya case for

declaratory judgment (and, on that basis, to defer to the state court). Southwind

makes clear that [a]lthoughsome of the relief sought by Southwind is declaratory

in nature, Southwind also requests coercive remedies for the breach of contract in

the form of damagesand that both claims were permissible in the same action.

Id. (emphasis added); accord Diamond Offshore, 302 F.3d at 540 (noting that

district court erred in not hearing damages claim as well as declaratory claim).

Here, there is no question of abstention in favor of a pending state court case, and

the claims at issue in this action are exclusively federal. There simply is no barrier

to this Court exercising jurisdiction over Plaintiffs claims for both declaratory

relief and monetary damages.



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Once the Court has addressed the merits of Plaintiffs declaratory relief

claims, appropriate remedies for any violations found can be determined on a

schedule convenient to the Court. See Am. Trim, LLC v. Oracle Corp., 383 F.3d

462, 47475 (6th Cir. 2004) (finding no abuse of discretion where district court

divided trial into three phases);Bautista-Perez v. Holder, No. C 07-4192 TEH,

2009 WL 2031759, at *12 (N.D. Cal. July 9, 2009) (allowing bifurcation of

liability and injunctive/declaratory relief from monetary relief).

Defendants misplaced arguments aside, Plaintiffs declaratory judgment

claims are both proper and justiciable. There exists a substantial controversy in

need of immediate resolution regarding the legality of Defendants conduct in

connection with Valeants efforts to acquire Allergan. See MedImmune, Inc. v.

Genentech, Inc., 549 U.S. 118, 127 (2007); Seattle Audubon Socy v. Moseley, 80

F.3d 1401, 1405 (9th Cir. 1996).7 These are exactly the circumstances in which

declaratory relief is appropriate.

2.

Rule 57 Expedited Proceedings Are Warranted

Because declaratory relief is appropriate, this Court has clear discretion

under Rule 57 to order a discovery and briefing schedule that would facilitate an

expedited ruling on Plaintiffs declaratory judgment claims. See Klungvedt, 2012

WL 2368623, at *3 (ordering discovery and briefing schedule); Tri-State

Generation & Transmission Assn, Inc. v. BNSF Ry. Co., No.CV08-272-PHX-

MHM, 2008 WL 2465407, at *67 (D. Ariz. June 17, 2008) (granting Rule 57

motion and ordering parties to submit a proposed scheduling order);Beacon

7Seattle Audubon Society, cited by Defendants (Opp. at 12), in fact supportsPlaintiffs request for expedition. There, the court held that declaratory relief wasappropriate to prevent the likelihood of confusion caused by differing judgmentsor, at least, the uncertainty and expense associated with proceeding later in anotherforum. Seattle Audubon Socy, 80 F.3d at 1406. Similar considerations informthe present case, given this Courts exclusive jurisdiction over the asserted federallaw claims.



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Looms, 552 F. Supp. at 1315 (ordering parties to submit proposed discovery

schedule to allow the court to try the matter expeditiously).

Expediting proceedings under Rule 57 comports with the well settled rule

that the Declaratory Judgment Act should be liberally construed to accomplish its

purpose of providing a speedy and inexpensive method of adjudicating legal

disputes without invoking coercive remedies and that it is not to be interpreted in

any narrow or technical sense. Garanti Finansal Kiralama A.S. v. Aqua Marine

& Trading, Inc., 697 F.3d 59, 70 (2d Cir. 2012) (quotingSherwood Med. Indus.,

Inc. v. Deknatel, Inc., 512 F.2d 724, 729 (8th Cir. 1975)); Chevron, 800 F. Supp.

2d at 491. Indeed, [t]he very justification for the existence of the right to maintain

a declaratory action is to expedite the ascertainment of rights, stabilize relations

and dissipate uncertainty. Hanes Dye & Finishing Co. v. Caisson Corp., 309 F.

Supp. 237, 240 (M.D.N.C. 1970) (quoting ANDERSON,ACTIONS FOR

DECLARATORY JUDGMENTS, Vol. 1 228, at 512).

Defendants arguments against expedited proceedings under Rule 57 are

singularly unpersuasive. First, Defendants contend that because there is no clear

precedent applying Rule 57, the Court should rely on general equitable

principles, which justify denial of expedition. Opp. at 15. However, not one of

the cases Defendants cite has anything to do with expedited proceedings, much less

Rule 57. See id.at 15 n.12.8 Defendants cannot simply manufacture a standard

and then argue that Plaintiffs have failed to meet it. Indeed, the same leading

8Rather, each case evaluates a procedural issue irrelevant to this case. SeePincay

v. Andrews, 389 F.3d 853, 855 (9th Cir. 2004) (applying four-factor balancing test

established by the Supreme Court to determine whether excusable attorney neglectexisted to warrant extension of deadline for filing notice of appeal);Bauman v.U.S. Dist. Ct., 557 F.2d 650, 655 (9th Cir. 1977) (establishing five guidelinesthat may not result in bright-line distinctions to help determine whether drasticcircumstances exist to issue writ of mandamus);Mission Power Engg Co. v.Contl Cas. Co., 883 F. Supp. 488, 49093 (C.D. Cal. 1995) (providing standardfor granting ex parteapplications); Notaro v. Koch, 95 F.R.D. 403, 405 (S.D.N.Y.1982) (requiring four elements that parallel preliminary injunction requirements forexpedited discovery).



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treatise quoted by Defendants (id.at 15) explains that there is a dearth of decided

cases precisely becausethe Rule 57 provision permitting expedition is so

sensible and appropriate. 10BCHARLES ALAN WRIGHT &ARTHUR R.MILLER,

FEDERAL PRACTICE AND PROCEDURE 2768 (3d ed. 2014). The Court should

reject Defendants transparent attempt to circumvent Rule 57 and its strong policy

favoring early resolution of declaratory judgment actions. Chevron, 800 F. Supp.

2d at 491.

Second, Defendants suggest that Rule 57 should be applied only to avoid

piecemeal litigation. Opp. at 16. That consideration has nothing to do with the

availability of a speedy hearing under Rule 57. See supraSection D; Chamberlain

v. Allstate Ins. Co., 931 F.2d 1361, 136568 (9th Cir. 1991) (Opp. at 16) (noting

that the district court avoided piecemeal litigation by deciding declaratory claims

in one forum). As described above, a grant of declaratory relief would both

effectively resolve this matter (leaving only the question of remedies for the Court

to consider) and streamline any future litigation in Delaware.

Third, Defendants assert that concerns of [the Courts] own docket or the

impact on other litigants justifies denial of expedition. Opp. at 16 (citingTurner

Indus. Grp., LLC v. Intl Union of Operating Engrs, Local 450, No. Civ. A. H-13-

0456, 2013 WL 2147515, at *4 (S.D. Tex. May 10, 2013)). In Turner, the court

found some urgency justifying expedited discovery, but declined the plaintiffs

request for a full trial on the merits in less than six weeks because of the courts

heavy docket. 2013 WL 2147515, at *4. Here, Plaintiffs have proposed a

schedule that seeks to resolve their claims on a prompt and reasonable basis over a

four month period (or longer, depending on when the special meeting request

forms are actually submitted), and of course will abide by whatever specific

scheduling requirements are needed to serve the Courts calendar.

Fourth, Defendants object that expedition would be inconsistent with their

due process rights by permitting an exception to the ordinary scheduling



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deadlines provided by the Local Rules. Opp. at 16. But courts commonly permit

expedited declaratory judgment proceedings notwithstanding claims of due process

problems. See Chevron, 800 F. Supp. 2d at 492 (permitting expedition where

none of the defendants . . . has offered any persuasive basis for concluding that a

separate and early trial of Count 9 would be prejudicial in any material way);

Stein, 452 F. Supp. 2d at 27071 (permitting expedition over due process objection

where defendants failed to advance a single persuasive reason for failing to

proceed expeditiously with this matter). Defendants reliance on GEM

Acquisitioncoprovides no support. GEM Acquisitionco, LLC v. Sorenson Grp.

Holdings, LLC, No. C 09-01484 SI, 2009 WL 3246747, at *6 (N.D. Cal. Oct. 8,

2009) (Opp. at 15-16). There, the court denied the request for a speedy trial under

Rule 57 because a trial date had already been set with the parties consent. Id.

Here, of course, the parties have reached no such agreement. Furthermore, and

contrary to Defendants assertion (Opp. at 17), there is no question that the Court

may adjust any of the dates and deadlines provided for in the Local Rules to

accommodate expedited proceedings. Fed. R. Civ. P. 57;see alsoL.R. Civ. 16-11

(specifying procedures for waiver of Local Rule 16-2 to 16-10 pre-trial

requirements).

The only case cited by Defendants on this issue,Professional Programs

Group v. Department of Commerce, 29 F.3d 1349 (9th Cir. 1994), Opp. at 16,

actually supports Plaintiffs request. There, the Ninth Circuit held that the district

court did not deprive the moving party of substantial rights by shortening the

local rule requiring a 24-day notice period, because the rules granted the district

court discretion to order a shorter time. Profl Programs, 29 F.3d at 1353. Rule

57 expressly authorizes district courts to expedite the adjudication of a declaratory

judgment action, which necessarily contemplates shortened scheduling deadlines.

Defendants do not respond to Plaintiffs argument that the Court has

inherent authority and broad discretion under Rule 26 to manage the scheduling of



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its docket. Mot. at 11-12;see Fed. R. Civ. P. 26. Indeed, pursuant to this inherent

power and Rule 26, and notwithstanding typical discovery and briefing timetables,

courts routinely order expedited discovery and briefing schedules to facilitate a

prompt ruling on declaratory judgment claims. See, e.g., Smith Decl. Ex. G

(Order,Express Scripts Holding Co. v.Chevedden, No. 4:13-cv-02S20-JAR (E.D.

Mo. Jan. 3, 2014), ECF No. 13) (granting plaintiffs motion for expedited briefing

schedule and speedy hearing); Smith Decl. Ex. H (Order,Apache Corp. v

Chevedden, No. 4:12-cv-00137-LHR (S.D. Tex. Feb. 3, 2012), ECF No. 7)

(granting motion for speedy hearing and setting conference to establish expedited

schedule two weeks after complaint was filed);Neuberger Berman Real Estate

Income Fund, Inc. v. Lola Brown Trust No. 1B, 342 F. Supp. 2d 371, 372 (D. Md.

2004) (ruling on declaratory judgment one month after target company filed

complaint).

3.

Plaintiffs Did Not Delay in Bringing This Action

Defendants also contend that Plaintiffs delayed in bringing suit. Again, that

assertion has no merit. Valeant launched its tender offerthe basis for Plaintiffs

Section 14(e) claimson June 18, 2014. Compl. 130. The day before, in

disclosing for the first time that Valeant would make a tender offer to Allergans

stockholders, Valeants CEO Michael Pearson admitted, in an unscripted moment:

On April 22nd, we announced our offer for Allergan. We suspected at the time it

would ultimately have to go directly to Allergan shareholders. We were correct.9

Id. 108. Prior to that date, Valeant had publicly maintained the fiction that it was

seeking a friendly merger. Not until July 11, 2014a date noticeably absent from

9In a recent interview, Mr. Ackman admitted he took a toehold position inAllergan before Valeant announced its plana common tactic in advance of tenderoffersthereby indicating he knew in advance that a tender offer would resultfrom Valeants interest in Allergan. Supp. Smith Decl. Ex. I (Stuart Pfeifer, SEC

Is Investigating Bid by Valeant and Bill Ackman for Allergan, L.A.TIMES(Aug.14, 2014)).



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Defendants timeline of events,seeOpp. at 7did Defendants file a definitive

statement soliciting proxies to call a special meeting. Even then, Defendants failed

to disclose material information necessary to inform stockholders of their

relationships, history, and plans. Compl. 16-18, 131, 135-43. Plaintiffs filed

suit promptly thereafter.

4.

Allergan Has Standing to Bring an Insider Trading Claim

Despite later acknowledging that Allergans insider trading claim entail[s]

potentially serious consequences, Defendants weakly assert that the claim fails

on its face because Allergan does not have standing to bring it. Defendants are

wrong. Courts consistently have held that a target company has standing under

Rule 14e-3. See, e.g.,Burlington Indus., Inc. v. Edelman, 666 F. Supp. 799

(M.D.N.C. 1987) (holding that target company has standing to obtain preliminary

injunction against Rule 14e-3 violations), affd, 1987 WL 91498 (4th Cir. 1987);

Essex Chem. Corp. v. Gurit-Heberlein AG, No. 88-2478, 1988 U.S. Dist. LEXIS

19515, at *1415 (D.N.J. June 24, 1988) (A target company has standing to assert

an insider trader violation under the rule.) (citingBurlington Indus., 666 F. Supp.

at 813). Defendants cite no case holding to the contrary.

Furthermore, that issuers have standing under Section 14(e) of the Exchange

Act also supports their standing under Rule 14e-3. InRobertson v. Dean Witter

Reynolds, Inc., 749 F.2d 530, 536 (9th Cir. 1984), the Ninth Circuit held that where

a rule is promulgated pursuant to an enabling statute that contains an implied

private remedy, there is a strong presumption that a rule drafted pursuant to such a

statute reflects the governing judicial construction. Courts uniformly have held

that Section 14(e) of the Exchange Act contains an implied private right of action

for shareholders and target corporations. See, e.g.,Polaroid Corp. v. Disney, 862

F.2d 987, 1003 (3d Cir. 1988) (target company has private right of action under

Section 14(e) to enjoin a tender offerors misrepresentations);Florida Commercial

Banks v. Culverhouse, 772 F.2d 1513, 1519, n.2 (11th Cir. 1985) (We conclude



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that it is necessary to grant this private right of action to issuers in order for the

Williams Act to be effective) (collecting cases);Pac. Realty Trust v. APC Invs.,

Inc., 685 F.2d 1083 (9th Cir. 1982) (allowing target company to bring suit under

Section 14(e) for injunctive relief against offeror corporation). Allergans standing

is thus further supported by the strong presumption underRobertsonthat issuer

standing exists under Rule 14e-3.

Defendants misconstrue the Ninth Circuits decision inBrody v. Transitional

Hospitals Corp., 280 F.3d 997 (9th Cir. 2002),by suggesting that it imposes a

contemporaneous trading requirement on anylitigant bringing an insider trading

claim under Rule 14e-3. Opp. at 9. There is no basis for that broad reading.

Brodyaddressed the standing of an individual shareholder plaintiff and did not

address whether issuers have standing to bring claims under Rule 14e-3 or in what

circumstances. Defendants cite no case afterBrody that has applied the

contemporaneous trading requirement to preclude issuer standing, and Plaintiffs

are aware of none.10

D.

Expedited Proceedings Are Available Whether or Not PlaintiffsPursue Preliminary Injunctive Relief

In an attempt to avoid the expedited proceedings available under Rule 57

when declaratory relief is sought, Defendants offer the specious argument that

expedited proceedings are not available here because Plaintiffs could have but

failed to move for a preliminary injunction. Opp. at 6-9. That argument is

misguided at every level. Plaintiffs are not required to pursue preliminary

10Ms. Parschauer, as an individual shareholder, plainly meets thecontemporaneous trading requirement underBrody. As alleged in the Complaint,on February 25 and 26, 2014, PS Fund 1 acquired outright approximately 600,000shares of the outstanding common stock of Allergan. Compl. 84. Ms.Parschauer exercised stock options and sold Allergan stock on February 26, 2014,for a price of $127.60, and on March 11, 2014, for a price of $129.08. Id. 21.



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injunctive relief, and the availability of declaratory relief or expedited proceedings

under Rule 57 is unaffected by whether Plaintiffs have done so.

Indeed, Defendants assertion flies in the face of established authority

regarding the different purposes of declaratory and injunctive relief. In the

Declaratory Judgment Act, Congress plainly intended declaratory relief to act as

a[] [milder] alternative to the strong medicine of the injunction . . . . Pratt v.

Wilson, 770 F. Supp. 539, 545 (E.D. Cal. 1991) (granting declaratory judgment and

denying preliminary injunction) (quoting Steffel v. Thompson, 415 U.S. 452, 466

67 (1974)). Accordingly, courts long have held that each remedy involves

different considerations and requires a separate analysis. See Super Tire Engg Co.

v. McCorkle, 416 U.S. 115, 121 (1974);Planned Parenthood of the Heartland v.

Heineman, 724 F. Supp. 2d 1025, 1040 (D. Neb. 2010).

Cases applying Rule 57 to allow expedited proceedings consistently have

recognized this fact, and as a consequence have allowed expedition under Rule 57

regardless of whether a preliminary injunction is sought. See, e.g.,Klungvedt,

2012 WL 2368623, at *1 (permitting expedited proceedings where plaintiffs did

not seek injunctive relief); Tri-State Generation, 2008 WL 2465407, at *67

(same);Avon Prods., Inc. v. Chartwell Assocs. L.P., 738 F. Supp. 686, 68788

(S.D.N.Y. 1990) (same), affd, 907 F.2d 322 (2d Cir. 1990).

Defendants two cases (seeOpp. at 8) do not support their position. Neither

case requires plaintiffs to seek a preliminary injunction; rather, those cases

concerned plaintiffs attempts to secure relief after the controversy central to their

claims had become moot. See U.S. Philips Corp. v. KBC Bank N.V., 590 F.3d

1091, 1094 (9th Cir. 2010) (discussing the modification of a preliminary injunction

after a final order);Newdow v. Roberts, 603 F.3d 1002 (D.C. Cir. 2010) (denying

plaintiffs claims for declaratory and injunctive relief on mootness and standing

grounds). InNewdow,plaintiffs sought injunctive and declaratory relief against

religious elements in the Presidential Inauguration Ceremony. 603 F.3d at 1006.



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The district court denied plaintiffs motion for preliminary injunction and plaintiffs

chose not to appealat which point the court concluded that plaintiffs claims had

become moot. See id. at 1009. Plaintiffs claims here are not moot: the ongoing

dispute regarding Valeants efforts to acquire Allergan is very much a live issue.

Defendants also cite numerous cases supporting the unremarkable

proposition that preliminary injunctions may lead to curative disclosures. Opp. at

8(citing cases). For example, they quotePacific Realty Trust for the proposition

that [i]njunctions normally play a supporting role: a court enjoins the tender offer

until it can decide whether the Act requires further disclosures, and until all

required disclosures are made. Id.(quotingPac. Realty Trust, 685 F.2d at 1086).

However, the next lineomitted by Defendantsreads: But no court has ever

declared disclosure to be the exclusive remedy under the Williams Act. Pac.

Realty Trust, 685 F.2d at 1086. The relief sought by Plaintiffs here is not limited

to corrective disclosures. If Plaintiffs prevail on their insider trading claims, they

intend to seek, among other possible remedies, rescission of the Pershing Square

Defendants shares, and an order preventing the Pershing Square Defendants from

voting, tendering, or otherwise utilizing the beneficial ownership rights associated

with their shares.

Plaintiffs simply are not required to choose between declaratory and

preliminary injunctive relief. These separate forms of relief are not mutually

exclusive, and Defendants may not dictate the form of relief that Plaintiffs seek.



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III.

CONCLUSION

For the foregoing reasons and as stated in Plaintiffs Motion, Plaintiffs

respectfully request that the Court grant Plaintiffs Motion and direct expedited

proceedings pursuant to Rule 57.

Dated: August 18, 2014 LATHAM & WATKINS LLP

By: /s/ Peter A. WaldPeter A. WaldMichele D. Johnson

WACHTELL LIPTON ROSEN &KATZ LLPWilliam D. Savitt (pro hac vice)Bradley R. Wilson (pro hac vice)51 W. 52

ndStreet

New York, NY 10019

Attorneys for PlaintiffsALLERGAN, INC. andKARAH H. PARSCHAUER


Documents

Allergan Reply to Request for Expedited Proceedings