On discovery relating to the actions on 5/22:
Counterclaim Plaintiffs’ argument—that communications between themselves and others related to the May 22, 2019 meeting are irrelevant—is unpersuasive. Counterclaim Plaintiffs have asked this Court to determine the validity of the vote and Oliver’s status as a trustee. See Doc. 37, Mot. Prelim. Inj., 4. The Court finds that the discovery requests regarding these communications would be relevant to decide these issues.
Last, the Court finds that Plaintiffs would be unfairly prejudiced without this discovery. The “unfairness” in this situation stems from Counterclaim Plaintiffs’ decision to seek an early and expedited preliminary injunction before their motion for judgment on the pleadings was resolved. Thus, Counterclaim Plaintiffs would be “unfairly shielded” from liability in resolving their preliminary injunction motion, while Plaintiffs would be placed at an “unfair advantage to make informed decisions” in defending against Counterclaim Plaintiffs’ motion.
On Oliver’s qualification for candidacy:
The Court believes that Oliver’s qualifications will be relevant in determining whether he made misrepresentations to shareholders in proxy materials before the May 22, 2019 meeting, which in turn could affect the validity of that meeting and the shareholder vote. It could also be a factor in the Court’s holding on whether to enjoin the TPL from acting without Oliver in place as a trustee and on whether, in the alternative, a new election is needed. Despite Counterclaim Plaintiffs’ objections to the contrary, the Court finds that Plaintiffs would be put at a serious disadvantage in this litigation if they were prevented from seeking this discovery before the preliminary injunction hearing. At its core, the issue the Court is being asked to decide is whether the meeting and the vote electing Oliver as trustee was valid.
Court believes the standards cited above are applicable: the stay should not be used to place Plaintiffs at an informational disadvantage at an evidentiary hearing they never requested. Relatedly, any burden of which Counterclaim Plaintiffs complain is brought about by their own requests for relief. If Counterclaim Plaintiffs truly wished to avoid the costs of discovery here, they would not have requested an immediate evidentiary hearing on the issues raised in Plaintiffs’ complaint.
For the reasons given above, the Court GRANTS Plaintiffs’ Expedited Motion for Limited Discovery Related to Counter-Plaintiffs’ Declaratory Judgment and Preliminary Injunction Motion (Doc. 54). The stay of discovery under the PSLRA is partially lifted for the limited purpose of allowing Plaintiffs to pursue the discovery discussed in their motion and granted herein. For all other purposes, the discovery stay remains in place until the Court rules on the Counterclaim Plaintiffs’ motion for judgment on the pleadings. See Doc. 42, Order Staying Discovery.
Accordingly, Counterclaim Plaintiffs are ORDERED to respond to Plaintiffs’ discovery requests listed in Exhibit 1 to their motion by August 1, 2019. Any privilege log shall be produced by August 4, 2019. Discovery shall be otherwise conducted and produced in accordance with the Court’s July 15, 2019 Order (Doc. 53).
Looks like a slight setback for White Card but the ruling makes sense in my opinion. The DJ/PI contains some heavy stuff which merits investigation. Probably best to get it right the first time.