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A New York state court judge said she was leaning toward dismissing a lawsuit seeking to block the $72 billion merger between Comcast Corp. and AT&T Corp.’s broadband division. New York State Supreme Court Justice Helen Freedman declined to rule from the bench but said, “I think I’m headed in favor of the defendants.” At an April 8 hearing, Freedman said that she thinks that Pennsylvania’s state corporate law permits modification of a law that requires annual elections of the board of directors. Two AT&T shareholders sued in New York to enjoin the giant merger. The plaintiffs claim that the governance structure proposed for the merged AT&T Comcast Corp. is illegal under Pennsylvania law. The new AT&T Comcast will be incorporated in Pennsylvania and will have one class of 12 directors, none of whom will stand for election until 2005. At that point all of them will be up for election. The plaintiffs, Norman Salitz and Michael Grening, are arguing that Pennsylvania corporate law requires annual election of directors. James Flynn, a partner at Wechsler Harwood Halebian & Feffer in New York, represents the plaintiffs. In his brief, Flynn said the companies’ position would “deny the owners of a corporation the right to determine who will run the company for three years.” Two Philadelphia lawyers familiar with Pennsylvania law rejected the plaintiffs’ argument. “Some things you can’t vary,” said Frederick D. Lipman, a partner at Blank, Rome, Comiskey & Macauley in Philadelphia, about the election of board members. But directors’ terms, he said, are “one of the things you can.” Added David S. Denious, a partner at Dechert in Philadelphia, “Comcast has the better of the argument.” Both Lipman and Denious — neither of whom is involved in the case — pointed to � 1306 of the Pennsylvania Business Corporation Law. They said that under that statute, Comcast’s plan is clearly legal. The law says that the articles of incorporation may permit terms of the directors to be more than one year despite another legal provision mandating the one-year terms. “I will read it again,” the judge said of the two conflicting pieces of legislation. Justice Freedman said she hoped to rule in time to allow the plaintiffs to appeal before the companies complete their proxy statement for federal regulators at the end of April. Dennis E. Glazer and Gregory G. Ballard, partners at Davis Polk & Wardwell in New York, represent Comcast. Alan M. Unger, a partner at Sidley Austin Brown & Wood in New York, was on the brief for AT&T along with Charles W. Douglas and Stephen C. Carlson, partners at Sidley in Chicago. Mark C. Rosenblum and Edward A. Harris of AT&T’s law division of counsel were also on the brief. Copyright (c)2002 TDD, LLC. All rights reserved.

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