While the Parties have negotiated and agreed to a limited exchange of discovery, there are additional particularized categories of discovery that are necessary for Plaintiffs to defend themselves against Counter-Plaintiffs’ Declaratory Judgment/PI
Motion. Given the accelerated timetable of the Parties’ agreed briefing schedule, Plaintiffs respectfully request expedited consideration of these matters.
Accompanying the motion was this memorandum of law.
On June 25, 2019, the Court entered an order to stay discovery in this action pursuant to the PSLRA, after Defendant filed a motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure (the “Rules”). [Dkt. 42.] On that same day, Defendant and Counter-Plaintiffs filed the Declarator Judgment/PI Motion, seeking a preliminary injunction and declaratory relief. Given Counter-Plaintiffs’ request for a judgment on the merits of the instant dispute, the Parties agree that discovery is necessary to allow for the proper resolution of the Declaratory Judgment/PI Motion presently before the Court. To that end, Plaintiffs have agreed, subject to standard discovery objections and privilege, to respond to all discovery that CounterPlaintiffs have sought regarding the Declaratory Judgment/PI Motion, including the requests contained in the agreed discovery entered by this Court [Dkt. 53], and additional requests propounded as recently as July 15, 2019.
While Defendant has agreed to allow Plaintiffs access to limited discovery, Defendant continues to oppose certain requests for critical information. In particular, Defendant disputes Plaintiffs’ need for discovery related to communications between Defendant and TPL’s shareholders and for information related to Defendant’s background. These requests, however, bear directly on the issues implicated by the Declaratory Judgment/PI Motion which attacks
Plaintiffs’ fiduciary responsibility to review the qualifications of candidates for trustee and seeks a declaration that the invalid meeting held by Defendant and a small minority of shareholders on May 22, 2019 was proper because Plaintiffs lacked the authority to postpone the meeting to correct Defendant’s false and misleading communications with shareholders.
In case you forgot the reason for the declaratory judgement request, here is the background. It’s a big one.
On June 14, 2019, Incumbents issued a press release stating they were “obliged to remind shareholders that the proxy solicitation is suspended while the litigation is pending.” On June 21, 2019, Incumbents requested in a Rule 26(f) report that a trial on the merits not commence until at least August 31, 2020. Dkt. 25, ¶ 12. These recent statements – in addition to the daunting discovery requests served last week by Incumbents’ counsel on nonparties affiliated with the Investor Group—including Mr. Oliver’s son and Allan Tessler’s two daughters—make clear TPL’s true motivations behind its lawsuit: intimidate the Investor Group, impose on over 15,000 shareholders at least a year-long delay, and incur the costs of protracted litigation—all in an effort to dodge the shareholders’ election of Mr. Oliver as trustee. In the meantime, the Incumbents continue to illegally manage TPL without the necessary checks Mr. Oliver would bring as a duly elected trustee.
On June 17, 2019, Mr. Oliver moved for dismissal of the federal securities claims
asserted against him in Incumbents’ Amended Complaint.
To restore and confirm TPL shareholders’ rights, Counterclaim Plaintiffs now request a declaratory judgment that: (i) TPL was required to hold a special meeting to elect a successor trustee after one of its trustees resigned in February 2019; (ii) Incumbents had no authority to unilaterally and indefinitely postpone the special meeting they had noticed; (iii) Incumbents have no authority to “disqualify” Mr. Oliver from election; (iv) the vote at the May 22, 2019 special meeting was valid and Mr. Oliver has been duly elected a TPL trustee; and (v) the vote at the January 12, 2017 special meeting was invalid and Mr. Barry has never been duly elected a TPL
To prevent any further abrogation of TPL shareholders’ rights in connection with the May 2019 election, Counterclaim Plaintiffs request a preliminary injunction (i) prohibiting Incumbents from taking any action on TPL’s behalf without Mr. Oliver’s participation as a trustee; or (ii) prohibiting Incumbents from any further unauthorized postponement of the election. To prevent any further denial of TPL shareholders’ rights in connection with the January 2017 election, Counterclaim Plaintiffs request a preliminary injunction prohibiting Mr. Barry from taking any action on TPL’s behalf until a new election can be held.
Doesn’t seem like this request will delay the show. It does turn the heat on the Oliver team to produce more information. I’m still somewhat surprised that the Trust is playing ball in not opposing the declatory judgement. Perhaps they are confident in the merits of their side of the case.
Legal fun aside, I’d rather the Trust be buying shares back whilst being overseen by confidence inspiring indivuals with skin in the game. Oh what great times we had.