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GLENMEDE TRUST CO. v. DOW CHEM. CO.

October 25, 1974

The GLENMEDE TRUST COMPANY, Trustee of the Pew Memorial Trust, and International Paper Company, Plaintiffs, and Israel Packel, Attorney General of the Commonwealth of Pennsylvania, as Parens Patriae, Nominal Plaintiff,
v.
The DOW CHEMICAL COMPANY and General Crude Oil Company, Defendants



The opinion of the court was delivered by: BRODERICK

 BRODERICK, District Judge.

 Currently before the Court is plaintiffs' Motion to Remand this suit to the Orphans' Court Division of the Court of Common Pleas for the County of Philadelphia. Oral argument was held on the 3rd day of October, 1974.

 This action was originally filed in the Orphans' Court on September 4, 1974 by Glenmede Trust Company under the caption "In The Matter Of THE PEW MEMORIAL TRUST." In the state court action Glenmede Trust Company sought a declaratory judgment and petitioned the Court for a "Citation to Show Cause Why an Agreement for Sale of Stock Should Not Be Approved." Cited as respondents in the state court petition were the following: The Honorable Israel Packel, Attorney General of the Commonwealth of Pennsylvania, as parens patriae ; The Dow Chemical Company; International Paper Company; and General Crude Oil Company. On September 10th, General Crude Oil Company, and on September 11th, Dow Chemical Company filed petitions to remove the case to this Court on the basis of diversity jurisdiction, rearranging the caption so that it reads as above. The citizenship of the parties is as follows: Glenmede Trust Company (Glenmede) is a trust company without banking powers incorporated under the laws of Pennsylvania with its principal place of business in Pennsylvania; International Paper Company (IPCo.) is a corporation organized under the laws of the State of New York with its principal place of business in that State; Israel Packel, Attorney General of the Commonwealth of Pennsylvania, is either a Pennsylvania citizen and/or the Commonwealth of Pennsylvania; The Dow Chemical Company (Dow) is a corporation organized under the laws of the State of Delaware with its principal place of business in Midland, Michigan; General Crude Oil Company (General Crude) is a corporation organized under the laws of the State of Delaware with its principal place of business in the State of Texas.

 Glenmede is the trustee of the Pew Memorial Trust, a charitable trust, set up under the Laws of the Commonwealth of Pennsylvania. Glenmede decided in January of 1974 to sell its holdings in General Crude which consisted of 5,564,357 shares of common stock, representing 63% of the common stock of General Crude. The General Crude stock is a substantial portion of the assets of the Pew Memorial Trust. In February of 1974, Glenmede was contacted by IPCo. concerning IPCo.'s desire to purchase all of the shares of General Crude held by Glenmede. On July 8, 1974, the Board of Glenmede met to consider an offer by IPCo. and on July 9, 1974, conditionally approved the offer subject to Glenmede's receiving a more advantageous offer. IPCo., however, withdrew its offer on July 10, 1974. On August 12, 1974, Dow presented to the Board of General Crude a merger proposal conditioned on Glenmede's committing itself to vote its General Crude shares in favor of the merger proposal at a stockholders' meeting. The Dow proposal was to purchase the General Crude stock in exchange for Dow stock at the rate of $45 per each share of General Crude. On the morning of August 16th, immediately prior to the Glenmede Board meeting at which the Dow proposal was to be considered, representatives of IPCo. made an offer to purchase the Pew Memorial Trust's General Crude shares at a price of $45 per share, payable in cash and IPCo. notes. In the course of the August 16th meeting, the IPCo. offer was raised to $47.50 per share. Glenmede's Board voted, however, to accept the Dow proposal and to commit the Trust to vote its shares of General Crude in favor of the Dow merger proposal. After adjournment of the Board meeting, IPCo. informed Glenmede that it would raise its offer to $50 per share. After being so advised by IPCo., Glenmede delivered a letter to Dow indicating that the Board had committed Glenmede to vote its shares of General Crude in favor of the Dow merger proposal " subject to such obligations as may be imposed upon the trustees pursuant to the laws of the Commonwealth of Pennsylvania respecting fiduciaries." At the same time, Dow was informed by Glenmede of a higher offer made by IPCo. On August 18, 1974, IPCo. delivered an agreement dated August 16, 1974 to purchase the General Crude common stock held by the Trust, at a cash price of $50 per share. On September 4, 1974, Glenmede's Board adopted resolutions withdrawing from its August 16, 1974 commitment to Dow and accepting the IPCo. agreement dated August 16, 1974, subject to the following condition.

 
The Sale of the Shares to the Subsidiary under this Agreement shall have been approved by a final order or judgment of the Orphans' Court Division of a Court of Common Pleas in Pennsylvania (the "Orphans' Court") or any appellate court to which an appeal may be taken from such an order or judgment, or there shall be a termination of any such proceeding without disapproval of the sale of the Shares to the Subsidiary; provided, however, that a final order or judgment of any other court of competent jurisdiction, after exhaustion of appeals, having the effect of approving the sale of the Shares to the Subsidiary shall satisfy this condition; and provided further that a final order or judgment of the Orphans' Court or other court of competent jurisdiction, after exhaustion of appeals, having the effect of holding Seller's letter of August 16, 1974 to The Dow Chemical Company to be a binding and enforceable contract shall be considered a disapproval of the sale of the Shares to the Subsidiary.

 On September 4, 1974, Glenmede filed its Petition for Citation in the Court of Common Pleas, Philadelphia County, Orphans' Court Division, seeking a decree to the effect:

 
That The Dow Chemical Company has no right or claim whatsoever to the General Crude Oil Company stock held by Petitioner as Trustee of The Pew Memorial Trust and no rights or claims accrue under or by virtue of Petitioner's August 16, 1974 letter to The Dow Chemical Company, and that the sale of Petitioner's General Crude stock to International Paper Company is approved in accordance with the September 4, 1974 resolution of Petitioner's Board of Directors. (Orphans' Court Petition, p. 14.)

 On September 10, 1974 General Crude, and on September 11, 1974 Dow filed petitions to remove the Orphans' Court action to this Court on the basis of diversity of citizenship. Glenmede and IPCo. subsequently filed Motions to Remand contending this Court lacked the diversity required to retain jurisdiction and also lacked subject matter jurisdiction.

 
Dow Chemical announced that it gave notice to General Crude of termination of the merger agreement entered into August 12, under which General Crude would have been merged with the Dow Chemical unit. Dow said the reason for the termination was the delay in closing due to litigation resulting from the September 4 action of Glenmede Trust, trustee for the Pew Memorial Trust, owner of 63% of General Crude in withdrawing from its agreement with Dow Chemical approving the merger and agreeing to sell its General Crude stock to IPCO.
 
Dow said it would continue its litigation in U.S. District Court in Philadelphia seeking damages against Glenmede for breach of contract and against IPCo. for inducing breach.

 On October 16, 1974, defendant General Crude informed the Court that it was no longer opposing the remand of this case to the Orphans' Court. *fn1"

 It is noted that in the removal petition, Dow and General Crude have aligned the parties so that Dow and General Crude appear as defendants and Glenmede, IPCo., and the Attorney General appear as plaintiffs. This alignment of the parties is in accordance with their contention that such alignment represents the real interest of the parties in the litigation, and therefore there is diversity jurisdiction. Dow and General Crude further contend that the Attorney General of Pennsylvania is a mere nominal party and not a necessary or indispensable party to the action and should not be considered in determining whether diversity jurisdiction exists. On the other hand, Glenmede, IPCo. and the Attorney General contend that the alignment of the parties should remain as it was in the Orphans' Court proceeding; i.e., Glenmede as plaintiff and all the other parties as defendants. They further argue that the Attorney General is the alter ego of the state and as such is a necessary and indispensable party to this action whose presence in the case must be considered in determining whether removal was improvident.

 28 U.S.C. ยง 1441, the Removal Statute with which we are concerned, reads as follows:

 
(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. (Emphasis added.)
 
(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought. (Emphasis added.)

 A District Court must determine the propriety of the removal of a case only after it has realigned the parties according to their actual interests in the suit. City of Indianapolis v. Chase National Bank, 314 U.S. 63, 62 S. Ct. 15, 86 L. Ed. 47 (1941); Removal Cases, 100 U.S. 457, 25 L. Ed. 593 (1879); Sands v. Geller, 321 F. Supp. 558 (S.D.N.Y.1971); First National Bank of Chicago v. Motolla, 302 F. Supp. 785 (N.D.Ill.1969). The Court is not bound by the technical form of the state court proceeding, City of New York v. Evigo Corp., 121 F. Supp. 748, 750 (S.D.N.Y.1954), but is obligated to ascertain the underlying substantive interests of the parties in dispute and arrange the ...


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