Toshiba's Opposition to SanDisk's Motion for Preliminary Injunction

As has been widely reported in the press, due to unanticipated financial pressures, Toshiba Corp. has spun off its Japanese memory business-but not the ‘interests’ at issue in this case-and is attempting to sell that business.

Originally a bidder, Western Digital Corp. is itself so highly leveraged that it cannot afford to pay fair value for the business. Quickly outbid, it commenced an extensive effort to discourage bidders and force Toshiba to sell its entire memory business to Western Digital at a bargain price. Western Digital has threatened bidders and buyers directly, it has threatened banks that may be interested in providing financing, it has filed a merit less arbitration hoping to delay the sale and increase Toshiba’s financial distress, and now it has filed this litigation in the United States in a further effort to block the planned sale.

There are many reasons
why the court should reject Western Digital’s effort:
• This court has no personal jurisdiction over Toshiba and cannot enjoin a business transaction concerning Japanese business interests occurring exclusively in Japan.
• SanDisk’s allegation that “the parties purposefully availed themselves of the forum benefits by agreeing to resolve disputes in California” is untrue. The parties agreed to arbitrate disputes pursuant to the rules of the International Chamber of Commerce, with a hearing in San Francisco, CA. They never submitted to the jurisdiction of California courts.
• SanDisk’s claims of urgency are entirely manufactured. The closing of any transaction will not occur until early 2018 – and certainly not before the arbitral tribunal will have been empaneled and interim relief ruled upon.
• Intervention by this court is highly likely to be misconstrued by the markets, the banks, and the bidders, inflicting irreparable injury upon Toshiba.
• There is no substance to SanDisk LLC‘s claims. SanDisk’s so-called “consent rights” relate to certain kinds of transfers of equity in three Japanese companies (the Flash Ventures or “.IV “s”) that were formed with the sole purpose to buy machinery for use at Toshiba’s fabs) in Japan, purchase finished memory wafers from Toshiba, and sell those memory wafers to Toshiba and SanDisk. SanDisk cannot stretch its limited consent rights in the JV companies to encompass complete control over Toshiba’s business.