In re METROPCS Communications, Inc.

391 S.W.3d 329, 2013 WL 80179, 2013 Tex. App. LEXIS 132
CourtCourt of Appeals of Texas
DecidedJanuary 8, 2013
DocketNo. 05-12-01577-CV
StatusPublished
Cited by10 cases

This text of 391 S.W.3d 329 (In re METROPCS Communications, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re METROPCS Communications, Inc., 391 S.W.3d 329, 2013 WL 80179, 2013 Tex. App. LEXIS 132 (Tex. Ct. App. 2013).

Opinion

OPINION

Opinion by

Justice LANG.

This mandamus proceeding arises from a “shareholder class and derivative action” brought by real party in interest Adam Golovoy1 against relators2 for alleged breaches of fiduciary duty respecting a proposed “business combination” involving MetroPCS, DT, and T-Mobile. Golovoy filed a motion for a temporary restraining order to enjoin several alleged “deal protection devices” pertaining to the proposed business combination, including, inter alia, (1) the issuance of any “Rights Certificates” to MetroPCS common stockholders pursuant to a MetroPCS “Rights Agreement” dated March 29, 2007, and (2) compliance with a voting provision contained in section 4.5(h) of the agreement governing the proposed business combination (the “Business Combination Agreement”). Re-lators filed (1) a motion to dismiss in which they asserted that a “mandatory exclusive forum selection provision” in MetroPCS’s bylaws requires that this case be brought only in Delaware and (2) a motion to stay in which they requested the trial court to rule on their motion to dismiss before considering Golovoy’s motion for a temporary restraining order. After holding a hearing on Golovoy’s motion, the trial court signed a temporary restraining order dated November 16, 2012 (the “TRO”). The TRO enjoined MetroPCS and its board of directors from “causing or allowing” the issuance of the “Rights Certificates” described above or complying with the voting provision in section 4.5(h) of the Business Combination Agreement. Additionally, in the TRO, the trial court set a November 29, 2012 hearing to determine whether the TRO “should be made a Temporary Injunction pending a full trial on the merits.”

In their, petition for writ of mandamus, relators request this Court to direct the trial court to (1) vacate the TRO, including the setting for the temporary injunction hearing, (2) deny Golovoy’s motion for a temporary restraining order, and (3) grant relators’ motion to stay the case until rela-tors’ motion to dismiss is decided.3 Because we conclude the trial court abused its discretion and relators have no adequate remedy by appeal, we conditionally grant the writ of mandamus.

I. FACTUAL AND PROCEDURAL BACKGROUND

Golovoy contended in his petition that DT, T-Mobile, and the members of Me-troPCS’s board of directors (the “Board”) [332]*332breached fiduciary duties or aided and abetted such breaches in connection with DT and T-Mobile’s “proposed acquisition of [MetroPCS] at an unfair price via a recapitalization” pursuant to the Business Combination Agreement. According to Golovoy, the “per share value of the Proposed Acquisition drastically undervalues [MetroPCS’s] worth and prospects.” Further, Golovoy asserted “the terms of the Proposed Acquisition were designed to ensure the sale of [MetroPCS] to one buyer, and one buyer only” on terms preferential to DT, T-Mobile, and the Board, “and to subvert the interests of plaintiff and the other public stockholders of [MetroPCS].” Specifically, Golovoy contended

The Board breached its fiduciary duties by agreeing to preclusive deal protection devices in connection with the [Business Combination Agreement] [MetroPCS] entered into with T-Mobile [and DT]. These provisions, which collectively preclude any competing offers for [Me-troPCS], include: (i) a no-solicitation provision that precludes [MetroPCS] from providing confidential [MetroPCS] information to, or even communicating with, potential competing bidders except under extremely limited circumstances; (ii) a matching rights provision that allows T-Mobile [and DT] to match any competing superior proposal; and (iii) a termination fee provision which obligates [MetroPCS] to pay T-Mobile [and DT] a $150 million termination fee in the event the Proposed Acquisition is terminated in favor of a superior proposal.

Golovoy contended in part that unless enjoined by the trial court, “defendants will consummate the Proposed Acquisition, and plaintiff and the other [Me-troPCS] shareholders will forever lose their equity interest in [MetroPCS] for an inadequate price, all to the irreparable harm of plaintiff and the other shareholders of [MetroPCS].” The relief requested in the petition included, inter alia, awarding damages to MetroPCS; declaring the Business Combination Agreement “unlawful and unenforceable”; rescinding, to the extent already implemented, the Business Combination Agreement, “including the onerous and preclusive deal protection devices”; and “[e]njoining defendants, their agents, counsel, employees and all persons acting in concert with them from consummating the Proposed Acquisition, unless and until defendants disclose all material information to [MetroPCS’s] shareholders in advance of the shareholder vote on the Proposed Acquisition necessary for [Me-troPCS’s] shareholders to be able to make a fully informed decision on the Proposed Acquisition.” On the day after the petition was filed, Golovoy’s counsel of record, Jamie McKey, filed a “Verification” in which she testified, “I have read the Shareholder Derivative and Class Action Petition for Breach of Fiduciary Duty. The facts stated in it are within my personal knowledge and are true and correct.”

On November 5, 2012, Golovoy filed a “Motion for a Temporary Restraining Order and an Order Compelling Expedited Discovery.” In that motion, Golovoy asserted in part

[T]he Board has agreed to a number of unfair contractual terms in the merger documents that are designed to take freedom of choice, and any hope for a better deal, away from shareholders. Each day that passes with those unfair contractual terms in place decreases the likelihood that a better offer will be made for the Company, and increases the likelihood that shareholders will be disenfranchised and otherwise irreparably harmed. Accordingly, time is of the essence, and the Proposed Acquisition and the unfair contractual terms agreed to by defendants should be restrained [333]*333and enjoined so that a fair and open process can take place.

Golovoy restated the contentions in his petition respecting the undervaluation of MetroPCS and the three alleged “preclu-sive deal protection devices” described therein. Further, in the motion, Golovoy stated in part

On October 3, 2012, [MetroPCS] entered into an amendment to the its [sic] Rights Agreement, dated as of March 29, 2007, by and between [MetroPCS] and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Poison Pill”). The amendment makes [Me-troPCS’s] Poison Pill inapplicable to the Proposed Acquisition, but keeps the Poison Pill in place as to all other potential acquirers of [MetroPCS] (the “Poison Pill Lock-Up”). That means that if a potential acquirer other than [DT and] T-Mobile attempts to launch a tender offer for more than 15% of [MetroPCS’s] outstanding stock, or even announces an intention to do so, a “flip-in” event, will occur that allows existing [MetroPCS] shareholders to buy more [MetroPCS] shares at a discount, making [Me-troPCS] prohibitively expensive for any buyer.... As such, the Poison Pill Lock-Up is an onerous and inappropriate deal protection device that has the immediate and absolute effect of discouraging potential acquirers from making a competitive and superior bid for [MetroPCS] in the form of a tender offer directly to [MetroPCS’s] shareholders.
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Bluebook (online)
391 S.W.3d 329, 2013 WL 80179, 2013 Tex. App. LEXIS 132, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-metropcs-communications-inc-texapp-2013.