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No. ______________________ _
In The Court Of Appeals For The Fifth Court Of Appeals District
Dallas, Texas
In Re MetroPCS Communications, Inc., Deutsche Telekom, T -Mobile USA, Inc., Roger D. Linquist, W. Michael Barnes, Jack F. Callahan, Jr., C. Kevin Landry,
Arthur C. Patterson, and James N. Perry, Jr.
Original Mandamus Proceeding From the County Court at Law No. 1, Dallas County, Texas
Cause No. CC-12-06144-A Honorable D'Metria Benson Presiding
PETITION FOR WRIT OF MANDAMUS
ACCEPTED225EFJ017189622 FIFTH COURT OF APPEALSDALLAS, TEXAS12 November 19 P12:11Lisa MatzCLERK
05-12-01577-CV
FILED IN 5th COURT OF APPEALS DALLAS, TEXAS
11/19/2012 12:11:05 PM
LISA MATZ Clerk
FILED IN 5th COURT OF APPEALS DALLAS, TEXAS
11/19/2012 12:11:05 PM
LISA MATZ Clerk
CARTER STAFFORD ARNETT HAMADA & MOCKLER, PLLC
E. Leon Carter State Bar No. 03914300
Sean T. Hamada State Bar No. 24014448
Campbell Centre II 8150 North Central Expressway
Suite 1950 Dallas, Texas 75206
Telephone: (214) 550-8188
Of Counsel: WACHTELL, LIPTON, ROSEN &
KATZ William D. Savitt
Ian Boczko 51 West 52nd Street
New York, New York 10019 Telephone: (212) 403-1000 Telephone: 512-474-5201 Telecopier: 512-536-4598
Counsel for Relator T-Mobile USA, Inc.
FULBRIGHT & JAWORSKI L.L.P. Karl G. Dial
State Bar No. 05800400 Brett C. Govett
State Bar No. 08235900 Ben Taylor
State Bar No. 19684500 Peter Stokes
State Bar No. 24028017 Tate A. Seideman
State Bar No. 24060912 2200 Ross A venue, Suite 2800
Dallas, Texas 75201 Telephone: 214-855-8000 Telecopier: 214-855-8200
THE SANDLER LAW FIRM Eric L. Johnson
State Bar No. 24041196 6600 LBJ Freeway
Suite 183 Dallas, Texas 75240
(972) 498-1317 Telephone (972) 239-9968 Facsimile
Of Counsel: Mark A. Stachiw
General Counsel, Secretary and Vice Chairman State Bar No. 18987400
Chris Luna Staff Vice President and Assistant General Counsel
State Bar No. 1268920 Garreth Sarosi
Staff Vice President and Assistant General Counsel State Bar No. 24039373
MetroPCS Communications, Inc. 2250 Lakeside Boulevard Richardson, Texas 75082
Counsel for Relators MetroPCS Communications, Inc., Roger D. Linquist, W Michael Barnes, Jack F. Callahan, Jr., C. Kevin Landry, Arthur C. Patterson, and
James N Perry, Jr. ORAL ARGUMENT REQUESTED
11
IDENTITIES OF PARTIES AND COUNSEL
Relator/Defendant
MetroPCS Communications, Inc. ("MetroPC S ")
Mandamus Counsel and Trial Counsel
Karl G. Dial State Bar No. 05800400 Brett C. Govett State Bar No. 08235900 Ben Taylor State Bar No. 19684500 Peter Stokes State Bar No. 24028017 Tate A. Seideman State Bar No. 24060912 2200 Ross Avenue, Suite 2800 Dallas, Texas 75201 Telephone: (214) 855-8000 Facsimile: (214) 855-8200
Eric L. Johnson State Bar No. 24041196 6600 LBJ Freeway Suite 183 Dallas, Texas 75240 (972) 498-1317 Telephone (972) 239-9968 Facsimile
Of Counsel: Mark A. Stachiw General Counsel, Secretary and Vice Chairman State Bar No. 18987400 Chris Luna Staff Vice President and Assistant General Counsel State Bar No. 1268920 Garreth Sarosi Staff Vice President and Assistant General Counsel State Bar No. 24039373 MetroPCS Communications, Inc. 2250 Lakeside Boulevard Richardson, Texas 75082
111
Relator/Defendant
T -Mobile USA, Inc. ("T -Mobile")
Respondent
The Honorable D'Metria Benson Dallas County Court at Law No. 1 600 Commerce Street 5th Floor Dallas, Texas 75202
E. Leon Carter State Bar No. 03914300 Sean T. Hamada State Bar No. 24014448 Campbell Centre II 8150 North Central Expressway Suite 1950 Dallas, Texas 75206 Telephone: (214) 550-8188
Of Counsel: WACHTELL, LIPTON, ROSEN & KATZ William D. Savitt IanBoczko 51 West 52nd Street New York, New York 10019 Telephone: (212) 403-1000 Telecopier: 212-403-2000
IV
Real Party in Interest, Plaintiff
Adam Golovoy, individually on behalf of themselves and all others similarly situated and derivatively on behalf of MetroPCS ("Plaintiff' or "Real Party")
Trial Counsel
Kendall Law Group, LLP Joe Kendall Texas Bar No. 11260700 Jamie J. McKey Texas Bar No. 24045262 3232 McKinney Avenue, Suite 700 Dallas, Texas 75204 Telephone: 214-744-3000 Telecopier: 214-744-3015
Robbins Geller Rudman & Dowd LLP Randall J. Baron A. Rick Atwood, Jr. David T. Wissbroecker Edward M. Gergosian 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619-231-1058 Telecopier: 619-231-7 423
Ryan & Maniskas, LLP Richard A. Maniskas 995 Old Eagle School Road, Suite 311 Wayne, PA 19087 Telephone: 484-588-5516 Te1ecopier: 484-450-2582
Willie Briscoe The Briscoe Law Firm, PLLC 8117 Preston Road, Suite 300 Dallas, Texas 75225 Telephone: (214) 706-9314 Telecopier: (214) 7 06-9315
v
TABLE OF CONTENTS
Page
IDENTITIES OF PARTIES AND COUNSEL ................................................................ III
RECORD REFERENCES .............................................................................................. XII
STATEMENT OF THE CASE ...................................................................................... XIII
STATEMENT OF JURISDICTION ............................................................................. XVI
ISSUES PRESENTED .................................................................................................. XVI
1. Whether, in this stockholder derivative and class action suit, the trial court clearly abused its discretion in granting a temporary restraining order and ordering a temporary injunction hearing despite a pending motion to dismiss based on a mandatory exclusive forum selection clause in MetroPCS' bylaws requiring that this case be heard only in the Delaware Court of Chancery.
2. Whether the trial court clearly abused its discretion in refusing to rule on Relators' Motion to Stay the case until after a ruling on the Motion to Dismiss raising the issue of the mandatory exclusive forum selection proVISIOn.
3. Whether the trial court clearly abused its discretion in granting a temporary restraining order without any verified facts, affidavits or other evidence supporting the findings in the TRO Order or establishing a valid claim, probable right of recovery, or any imminent irreparable harm, in violation of TEX. R. CIV. P. 682.
4. Whether the trial court committed a clear and prejudicial error of law in enjoining contractual provisions that are expressly permitted by controlling Delaware law.
STATEMENT OF UNDISPUTED FACTS ENTITLING RELATORS TO RELIEF ............................................................................. l
A. MetroPCS Bylaws Require Mandatory Exclusive Venue in Delaware ............................................................................................ 4
-VI-
TABLE OF CONTENTS (continued)
Page
B. The Texas And Delaware Lawsuits .................................................. 5
C. The Trial Court's TRO Order ........................................................... 7
SUMMARY OF THE ARGUMENT .............................................................................. 10
STANDARD OF REVIEW ............................................................................................. 16
ARGUMENT ................................................................................................................... 17
I. The Trial Court Abused Its Discretion in Issuing the TRO Order and Setting a Temporary Injunction Hearing Despite Relators' Motion to Dismiss Based on a Mandatory Exclusive Forum Selection Clause in MetroPCS' Corporate Bylaws ................................................................... 17
A. MetroPCS and Its Stockholders Lawfully Agreed Upon A Mandatory Exclusive Forum Selection Bylaw Provision ............... 18
B. The Mandatory Exclusive Forum Selection Provision Is Binding And Enforceable ............................................................... 21
C. The TRO Order Also Violates This State's Strong Policy Against Duplicative And Piecemeal Litigation .............................. 23
II. The Trial Court Abused Its Discretion in Refusing to Rule on Relators' Motion to Stay the TRO Motion Until After Ruling on the Motion to Dismiss ....................................................................................... 25
III. The Trial Court Abused Its Discretion By Granting the TRO Order Without Any Verified Facts, Affidavit Evidence Or Any Other Evidence Supporting The Elements Of A Temporary Restraining Order .......................................................................................................... 27
IV. The Trial Court Committed a Clear and Prejudicial Error of Law By Enjoining Contractual Provisions That Are Expressly Permitted Under Controlling Delaware Law .............................................................. 32
V. Relators Have No Adequate Remedy on Appeal.. ..................................... 36
CONCLUSION AND PRAYER FOR RELIEF .............................................................. 37
-Vll-
INDEX OF AUTHORITIES
Page(s) CASES
Airgas, Inc. v. Air Prods. & Chems., Inc., 8 A.3d 1182 (Del. 2010) .............................................................................................. 18, 21
Bartleson v. Winnebago Indus., Inc., No. C02-3008, 2003 WL 22427817 (N.D. Iowa Oct. 24, 2003) ............................... 24
Benihana ofTokyo, Inc. v. Benihana, Inc., 891 A.2d 150 (Del. Ch. 2005) ........................................................................................... 18
Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) ...................................................................................... 28, 29
CA, Inc. v. AFSCME Emps. Pension Plan, 953 A.2d 227 (Del. 2008) ................................................................................................ 21
Camp Mystic, Inc. v. Eastland, No. 04-12-00102-CV, 2012 WL 4903019 (Tex. App.- San Antonio, Oct. 17, 2012, orig. proceeding) ............................................................................................ 31
Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671 (Tex. 2006) ............................................. :············································23
Energy Partners, Ltd. v. Stone Energy Corp., No. Civ. A. 2402-A, 2006 WL 2947483 (Del. Ch. Oct. 11, 2006) ........................... 35
Ex Parte Coffee, 328 S.W.2d 283 (Tex. 1959) .......................................................................................... 27
Galaviz v. Berg, 763 F. Supp. 2d 1170 (N.D. Cal. 2011) ............................................................................. 21
Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615 (Tex. 2005) .................................................................................... 23, 24
Huiev. DeShazo, 922 S.W.2d 920 (Tex. 1996) .......................................................................................... 16
In re Allion Healthcare Inc. S'holders Litig., No. 5022-CC, 2011 WL 1135016 (Del. Ch. Mar. 29, 2011) ..................................... 24
V111
In re AutoNation, Inc., 228 S.W.3d 663 (Tex. 2007) .............................................................................. 17, 23,27
In re Boehme, 256 S.W.3d 878 (Tex. App.-Houston [14th Dist.] 2008, orig. proceeding) ......... 17
In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379 (Tex. 2005) .......................................................................................... 16
In re Cogent, Inc. S'holder Litig., 7 A. 3d 487 (Del. Ch. 201 0) ............................................................................................... 33
In re C@lonial Pipeline Co., 968 S.W.2d 938 (Tex. 1998) .......................................................................................... 36
In re Hardwick, No. 01-12-00362-CV, _ S.W.3d_, 2012 WL 3132670 (Tex. App.-Houston [1st. Dist.] Aug. 2, 2012, orig. proceeding) ........................................... 16, 36
In re Int'l Profit Assocs., Inc., 274 S.W.3d 672 (Tex. 2008) .................................................................................... 18, 21
In re !XC Communs. S 'holders Litig., C.A. Nos. 17324, 17334, 1999 Del. Ch. LEXIS 210 (Del. Ch. Oct. 27, 1999) ................. 33
In re Jorden, 249 S.W.3d 416 (Tex. 2008) ......................................... : ................................................ 16
In re Laibe Corp., 307 S.W.3d 314 (Tex. 2010) (per curiam) ................................................................... 21
In re Lisa Laser U.S., Inc., 310 S.W.3d 880 (Tex. 2010) .......................................................................................... 22
In reMark Andy, Inc., 2012 Tex. App. LEXIS 1645 (Tex. App.-Corpus Christi Feb. 29, 2012, orig. proceeding) .............................................................................................................. 22
In re Micromet, Inc. S'holders Litig., C.A. No. 7197-VCP, 2012 WL 681785 (Del. Ch. Feb. 29, 2012) ...................... 32, 34
In re Office of Attorney Gen., 257 S.W.3d 695 (Tex. 2008) ........................................................................ 16, 27, 32,36
In re Orchid Cellmark Inc. S 'holder Litig., C.A. No. 6373-VCN, 2011 WL 1938253 (Del. Ch. May 12, 2011) ................... 33, 34
lX
Williams v. Bagley, 875 S.W.2d 808 (Tex. App.-Beaumont 1994, no writ) ........................................... 27
RULES AND STATUTES
TEX. CONST. ART. 5, § 6 ............................................................................................................. xvi
TEx. Bus. ORG. CoDE§§ 1.102 ..................................................................................................... 12
TEX. Gov'T CODE § 22.221 ...................................................................................................... xvi
TEX. R. APP. P. 52 ...................................................................................................................... xvi
TEX. R. APP. P. 52.7(a)(1) ......................................................................................................... xii
TEX. R. APP. P. 52.7(a)(2) ......................................................................................................... xii
TEX. R. Crv. P. 682 ....................................................................................................... xiv, xvi, 27
Del. Code Ann. tit. 8 § 109 (2012) ........................... ; ................................................................ 18
8 Del. C. § 146 ....................................................................................................................... 35, 36
OTHER AUTHORITIES
Joseph M. McLaughlin, McLaughlin on Class Actions§ 5.62 (5th ed. 2008) .................... 23
Xl
RECORD REFERENCES
Relators are filing a separate sworn record in connection with this Petition for Writ
of Mandamus. See TEX. R. APP. P. 52.7(a)(l), 52.7(a)(2). Relators have cited the sworn
record as follows: "Rec. p. [#]."
Where sworn record materials are appended to this brief, they are cited as "App.
[#]/Rec. p. [#]." The "App." number refers to the numbers of the attached Appendix, and
the "Rec." page numbers refer to the page number in the record.
Xll
Underlying proceeding:
STATEMENT OF THE CASE
This is a putative stockholder derivative and class action lawsuit seeking to enjoin a proposed business combination between MetroPCS, Deutsche Telekom ("DT") and T-Mobile. Plaintiff/Real Party alleges that he is a stockholder of MetroPCS, which is incorporated in the State of Delaware. Real Party filed one of two identical derivative and class actions filed in Texas: Real Party's suit was filed in Dallas County Court at Law No. 1, and another was filed on behalf of Nagendra Polu and Fred Lorquet in Dallas County Court at Law No. 5 (collectively, the "Texas Actions"). The Texas Actions have not been consolidated to date. There are also four putative class action suits filed in Delaware (the "Delaware Actions"), which allege substantially similar claims on behalf of the same putative class as the Texas Actions. The Texas Actions and the Delaware Actions all allege that the directors of MetroPCS breached their fiduciary duties under Delaware law by failing to obtain sufficient consideration for MetroPCS' stockholders in the proposed combination and by following an inadequate negotiation process that allegedly placed the interests of MetroPCS' directors and officers above the interests of MetroPCS' stockholders. All six putative class actions also allege aiding and abetting claims against T-Mobile and DT. The proposed transaction is subject to a vote of MetroPCS' stockholders, which must occur prior to the closing, and that vote cannot occur until, at the earliest, late January
. 2013.
Relators filed a Motion to Dismiss or Stay ("Motion to Dismiss") based on a mandatory exclusive forum selection provision contained in MetroPCS' lawfully and duly adopted Fourth Amended and Restated Bylaws (the "MetroPCS Bylaws"). In addition, as part of their Opposition to Plaintiffs' Motion for Temporary Restraining Order ("TRO Motion"), Relators filed a motion to stay any ruling until after the trial court first ruled on the Motion to Dismiss ("Motion to Stay"). Relators also objected to the trial court's failure and refusal to rule on the Motion to Stay and Motion to Dismiss.
Xlll
Nature of the case and ruling at issue:
This is a putative stockholder derivative and class action suit to enjoin a proposed business combination between MetroPCS, DT and T-Mobile.1
On October 19, 2012, Real Party entered into a Rule 11 agreement that Relators had until November 27, 2012, to "answer or otherwise respond."
On November 5, 2012, over a month after the public announcement of the transaction but before Relators had to answer or otherwise respond under the Rule 11 agreement, Plaintiff/Real Party filed a Motion for Temporary Restraining Order and an Order Compelling Expedited Discovery (the "TRO Motion"). On November 12, 2012, Relators filed, among other documents, a Motion to Dismiss or Stay ("Motion to Dismiss") and an Opposition to the TRO Motion which contained a Motion to Stay ("Motion to Stay") requesting the trial court to rule upon the Motion to Dismiss before considering Real Party's TRO Motion.
On Friday, November 16, 2012, at 4:32 p.m., the trial court issued a Temporary Restraining Order (the "TRO Order")-restraining and enjoining MetroPCS and the Individual Relators from complying with the Business Combination Agreement and an unrelated Rights Agreement, and setting a hearing on Real Party's temporary injunction request for November 29, 2012-which is the subject of this Petition for Writ of Mandamus. The TRO Order granted Plaintiff/Real Party's TRO Motion but denied his request for expedited discovery. Relators respectfully submit that the trial court clearly abused its discretion and committed a clear and prejudicial error of law by granting the TRO Motion and setting a temporary injunction hearing because:
(i) MetroPCS' Bylaws (the contract with its stockholders) contain a mandatory exclusive forum selection provision requiring that this case only be brought in Delaware, and Relators have a pending Motion to Dismiss;
(ii) the trial court refused to rule on Relators' Motion to Stay the case until after a ruling on the Motion to Dismiss raising the issue of the mandatory exclusive Delaware forum selection provision;
(iii) Real Party did not present any verified facts, affidavits or other evidence of a valid claim or any imminent irreparable harm for any of the relief granted, in violation of TEX. R. CIV. P. 682; and
(iv) the contractual provisions enjoined by the TRO are expressly permitted by controlling Delaware law.
1 Although DT was named as a defendant in the underlying action, they have not been served or entered an appearance.
XIV
Respondent: Honorable D'Metria Benson, Dallas County Court at Law No. 1
Relief sought:
Issuance of a writ of mandamus directing the trial court to:
(i) dismiss the underlying action pursuant to the valid mandatory exclusive forum selection clause in MetroPCS' bylaws in favor of actions brought in Delaware;
(ii) vacate its TRO Order entered November 16, 2012, including the setting for the temporary injunction hearing on November 29, 2012;
(iii) deny the Plaintiff/Real Party's TRO Motion; and
(iv) grant Relators' Motion to Stay the case until Relators' Petition for Writ of Mandamus in this Court and Motion to Dismiss in the trial court are decided.
XV
STATEMENT OF JURISDICTION
This Court has original mandamus jurisdiction under TEX. CONST. ART. V, § 6,
TEX. GOV'T CODE§ 22.221, and TEX. R. APP. P. 52.
ISSUES PRESENTED
1. Whether, in this stockholder derivative and class action suit, the trial court
clearly abused its discretion in granting a temporary restraining order and ordering a
temporary injunction hearing despite a pending motion to dismiss based on a mandatory
exclusive forum selection clause in MetroPCS' bylaws requiring that this case be heard
only in the Delaware Court of Chancery.
2. Whether the trial court clearly abused its discretion in refusing to rule on
Relators' Motion to Stay the case until after a ruling on the Motion to Dismiss raising the
issue of the mandatory exclusive forum selection provision.
3. Whether the trial court clearly abused its discretion in granting a temporary
restraining order without any verified facts, affidavits or other evidence supporting the
findings in the TRO Order or establishing a valid claim, probable right of recovery, or
any imminent irreparable harm, in violation of TEX. R. CN. P. 682.
4. Whether the trial court committed a clear and prejudicial error of law in
enjoining contractual provisions that are expressly permitted by controlling Delaware
law.
XVI
STATEMENT OF UNDISPUTED FACTS ENTITLING RELATORS TO RELIEF
On October 3, 2012, more than six weeks before the TRO Order was issued,
MetroPCS announced a definitive Business Combination Agreement between MetroPCS,
DT and T-Mobile (the "Business Combination Agreement"). See Rec. pp. 760-1055.
Pursuant to the terms and subject to the conditions set forth in the Business Combination
Agreement, following receipt of the required MetroPCS stockholder approval of certain
actions, including the amendment of the MetroPCS certificate of incorporation and the
issuance of stock, and certain required governmental approvals, MetroPCS will:
• Effect a recapitalization that includes a reverse stock split of the MetroPCS
common stock pursuant to which each share of MetroPCS common stock
outstanding as of the effective time of the reverse stock split, will thereafter
represent one-half of a share of MetroPCS common stock;
• As part of the recapitalization, make a payment in cash in an amount equal
to $1.5 billion in the aggregate to the record holders of MetroPCS common
stock; and
• Immediately following the cash payment, issue and deliver to a subsidiary
of DT or its designee shares of MetroPCS common stock equal to an
approximate pro forma 74% of the fully-diluted shares of MetroPCS
common stock outstanding following the cash payment, and DT will
deliver to MetroPCS all of the shares of capital stock ofT-Mobile.
1
!d. MetroPCS' stockholders will have an opportunity to vote on the necessary actions to
approve the proposed transaction and decide for themselves whether this is a good deal.
See id. The proposed MetroPCS/T -Mobile combination is not expected to close until, at
the earliest, late January 2013, because at least the following must first occur before the
transaction closes:
• MetroPCS must submit its preliminary Proxy materials to the United States
Securities Exchange Commission (SEC) within 45 days of the Business
Combination Agreement being entered (the 45th day was November 17,
2012);2
• The SEC must review and approve (or decide not to review) the Proxy
materials before they may be sent to MetroPCS stockholders (which usually
takes at least thirty (30) days); and
• Once the SEC approves the Proxy materials (or decides not to review
them), the Proxy materials must be mailed at least twenty (20) business
days before the special meeting to which the Proxy materials relate, and the
special meeting must be held within 45 business days after such SEC
2 MetroPCS filed its preliminary Proxy with the SEC on November 16, 2012. See http://www.sec.gov/Archives/edgar/data/1283699/000119312512474169/d433418dprem14a.htm (last viewed November 17, 2012). This was filed the same day the trial court issued the TRO Order, so it was not before the trial court. Nevertheless, this Court has the power to take judicial notice of a public record for the first time on appeal. See Office of Pub. Uti!. Counsel v. Public Uti!. Comm 'n, 878 S.W.2d 598, 600 (Tex. 1994). This link is provided for this Court's information and is not necessary to show that the trial court clearly abused its discretion.
2
approval. At that special meeting, the proposed business combination must
be voted on by the stockholders ofMetroPCS.3
Rec. pp. 847, 865-868. Because of these time periods, the earliest the special meeting
could occur is late January 2013. If Real Party is in fact a stockholder ofMetroPCS-an
issue on which there is no verification or evidence in this record-he and the other
MetroPCS stockholders will have an opportunity to vote on the necessary proposals to
effectuate the proposed transaction with T-Mobile at the special meeting. If the
stockholders vote against the necessary proposals to effectuate the proposed transaction
at the special meeting, the proposed transaction will not occur. !d. If the stockholders
vote against the proposed transaction, the MetroPCS Board or DT can terminate the
Business Combination Agreement. !d.
While the MetroPCS Board has recommended to the MetroPCS stockholders that
they vote in favor of the proposed transaction in its Proxy statement (filed with, but not
yet approved by the SEC), under the Business Combination Agreement MetroPCS is able
to receive higher bids, negotiate the terms of those higher bids, and change the Board's
recommendation to the stockholders as to how it recommends the stockholders vote on
the proposed transaction with DT. See Rec. pp. 847-851. Further, MetroPCS may not
terminate the Business Combination Agreement in connection with another bid prior to
the stockholder vote, but DT can terminate the Business Combination Agreement if
3 The conditions to the closing of the proposed transaction are set forth in the Business Combination Agreement. See Rec. pp. 865-868. The conditions include approval by the Federal Communications Commission and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
3
MetroPCS receives a superior proposal and DT decides not to increase its bid. See Rec.
pp. 847-851, 869-872. Finally, while MetroPCS is prohibited from amending or waiving
its Rights Agreement while the Business Combination Agreement is in effect, MetroPCS
would not need to do so to receive a higher bid, negotiate with a new bidder, or change
the Board's recommendation. I d.
A. MetroPCS Bylaws Require Mandatory Exclusive Venue in Delaware
In 2007-effective as of MetroPCS' initial public offering of stock in April 2007
(i.e., before Real Party possibly could have owned any stock)-the MetroPCS
stockholders duly approved a Third Amended Certificate of Incorporation ("Certificate of
Incorporation") which, among other things, conferred on the MetroPCS Board the
authority to adopt or amend the MetroPCS bylaws· (subject to repeal or further
amendment by the stockholders). App. 0010/Rec. pp. 1077, 1100, 1104-1105. The
Certificate of Incorporation was required to be, and was, approved by a majority of the
MetroPCS stockholders. Rec. p. 1077, 1100.
Effective at the same time, the Board duly and lawfully adopted MetroPCS' Third
Amended and Restated Bylaws which also conferred that same power to amend the
MetroPCS Bylaws upon the MetroPCS Board (also subject to stockholder repeal or
subsequent amendment). App. 0010/Rec. p. 1077, 1111, 1123. Since these corporate
documents were adopted before MetroPCS' stock became publicly traded, Real Party and
other public stockholders acquired their stock subject to their terms and were on notice
that the MetroPCS Board of Directors could amend the bylaws, subject to the
stockholders' right to repeal such amendments if they chose to do so. Id.
4
On March 14, 2011, long before the first discussions took place regarding the
proposed transaction challenged in the underlying action, the MetroPCS Board duly and
lawfully adopted the Fourth Amended and Restated Bylaws (the "Bylaws"), pursuant to
the express authority set forth in the Certificate of Incorporation and the then-existing
bylaws- all long before the transaction at issue in this case. App. 0007-10/Rec. pp.
1077, 1080-1098. These valid Bylaws, still in effect today, expressly provide that the
Delaware Court of Chancery "shall be the sole and exclusive forum" for both "any
derivative action or proceeding brought on behalf of [MetroPCS]" and "any action
asserting a claim of breach of a fiduciary duty owed by any director" to MetroPCS'
stockholders. App. 0008/Rec. p. 1097.
The adoption of such Bylaws, and the changes made therein, were publicly
disclosed in a Current Report on Form 8-K filed with the SEC on March 18, 2011 (the
"8-K"). App. 0010/Rec. pp. 1077, 1125-1147.4
Since adopting the forum selection clause, MetroPCS has conducted two annual
stockholder meetings at which Real Party and any other MetroPCS stockholders could
have proposed and adopted changes to the forum selection clause and other bylaw
provisions, but they did not do so. App. 0010-11/Rec. pp. 1077-1078.
4 See http://www.sec.gov/Archives/edgar/data/1283699/000119312511071292/d8k.htm (last viewed November 7, 2012). MetroPCS also included the new MetroPCS Bylaws on its public website with its publicly available corporate governance materials. See http://phx.corporateir.net/Extemal.File?item=UGFyZW50SUQ90DczNTd802hpbGRJRDOtMXxUeXBlPTM=&t=1 (last viewed November 7, 2012). Rec. p. 1066.
5
B. The Texas And Delaware Lawsuits
On October 10, 2012, in violation of the mandatory exclusive forum selection
provision in the MetroPCS Bylaws, Plaintiff/Real Party Adam Golovoy filed the
underlying derivative action and putative class action in County Court-at-Law No. 1 in
Dallas County, Texas, alleging in general terms that the MetroPCS directors (the
"Individual Relators") breached their fiduciary duties by failing to obtain sufficient
consideration for MetroPCS stockholders, following an unfair process, placing their own
interests ahead of the MetroPCS' interests, receiving unspecified compensation and had
other unspecified conflicts. See Rec. pp. 29-36. Later that day, two other stockholders
(Nagendra Polu and Fred Lorquet), who are represented by the same California law firm
as Real Party, filed a second identical suit in County Court-at-Law No.5. See Rec. p. 77.
As actions alleging breach of fiduciary duty claims against all the MetroPCS directors,
both Texas Actions fall squarely under the mandatory exclusive forum selection
provision in the MetroPCS Bylaws.
One day after the Texas Actions were filed, two more alleged stockholders
(Joseph Marino and Paul Berm) filed substantially similar putative class action suits in
the Delaware Court of Chancery against the same defendants as the Texas Actions
alleging similar breaches of fiduciary duties. See Rec. pp. 1149-1184. On October 22,
2012, another alleged stockholder (Robert Picheny) filed another similar class action suit
in the Delaware Court of Chancery against the same defendants alleging similar breaches
of fiduciary duties. See Rec. pp. 1186-1198. Another alleged stockholder (James S.
McLearie) filed a similar putative class action in Delaware against the same defendants
6
on November 5, 2012, alleging similar breaches of fiduciary duties. See Rec. pp. 1200-
1220. These types of suits are filed after more than 96 percent of all business
combination transactions valued at over $500 million. See Rec. p. 1243.
On October 19, 2012, Real Party entered into a Rule 11 agreement that Relators
had until November 27, 2012, to "answer or otherwise respond." Rec. pp. 1127-1128.
C. The Trial Court's TRO Order
On November 5, 2012, six weeks after the public announcement of the Business
Combination Agreement and two weeks after the Rule 11 agreement allowing Relators
until the end of November to answer or otherwise respond to his Petition, Plaintiff/Real
Party filed his TRO Motion. Rec. pp. 730-750.
Because Real Party sought a TRO prior to the agreed-upon date for Relators to
respond to the Petition in this case, on November 12, 2012, Relators filed: (i) the Motion
to Dismiss, based on the mandatory exclusive forum selection provision in the MetroPCS
Bylaws; and (ii) an Opposition to the TRO Motion, which included a Motion to Stay any
ruling on the TRO Motion until after the trial court rules on Relators' Motion to Dismiss.
App. 0013-32/Rec. pp. 1059-1075, 1238-1257. On November 14, 2012, the trial court
conducted a hearing on Real Party's TRO Motion. Rec. pp. 1339-1447. Prior to the
hearing on November 14, 2012, Relators filed a supplemental opposition brief and
attached the Rule 11 agreement, and at the hearing, Relators' counsel informed the trial
court of the Rule 11 agreement. Rec. pp. 1273-1278. Relators also filed a post-argument
submission brief on November 15, 2012. Rec. pp. 1298-1308. Relators also filed
objections on November 15, 2012, to Real Party's proposed order, objecting that (among
7
other things) the proposed order does not contain a ruling on the Motion to Dismiss or the
Motion to Stay, the TRO Motion did not have verified facts, affidavits or other evidence
in support of its assertions, and the trial court has refused to rule on the Motion to
Dismiss and the Motion to Stay. App. 33-35/Rec. pp. 1310-1317.
Relators argued in their opposition briefing, and at the November 14, 2012
hearing, that injunctive relief was improper because: (a) the mandatory exclusive forum
selection provision in the Bylaws, the pending Motion to Dismiss based on that issue, and
the Motion to Stay any ruling until after the Motion to Dismiss had not been decided; (b)
the Real Party failed to verify his petition or provide any affidavit proof or other evidence
supporting his allegations, the proposed findings, a probable right of recovery, imminent
or irreparable harm, or the relief sought (the only evidence Real Party presented was the
Business Combination Agreement); and (c) the complained-of provisions in the Business
Combination Agreement are allowed under Delaware law. Rec. pp. 1244-1255.
Late on Friday, November 16, 2012, the trial court signed the TRO Order granting
a temporary restraining order and ordering a temporary injunction hearing will take place
on November 29, 2012. App. 0002-05/Rec. pp. 1326-1329. The TRO Order contained
findings made by the trial court that were not supported by any verified facts or evidence
in support. Specifically, no evidence exists in the record (other than the Business
Combination Agreement itself), and no verified facts were presented to the trial court as
to any of the following factual assertions in the TRO Order:
• "that harm is imminent to Plaintiffs;"
8
• that " ... if the Court does not issue the Temporary Restraining Order,
Plaintiffs will be irreparably injured;"
• any of the terms or conditions of the "MetroPCS ... shareholder rights plan
(the 'Poison Pill');"
• the existence of any potential or actual bid from a "potential acquirer"
which would require waiver or amendment of the MetroPCS "shareholder
rights plan;"
• that MetroPCS' Board would not fulfill their fiduciary duty if a superior bid
was received, including waiving again the "shareholder rights plan" to enter
into an agreement with the superior bidder just like MetroPCS did when it
entered into the Business Combination Agreement with DT; and
• that there is anything wrong with requiring the MetroPCS stockholders to
vote on the proposed transaction, regardless of the recommendation from
the Board of Directors (referred to as a "force the vote" provision in the
TRO Order).
See id. Further, no evidence exists in the record as to why a TRO Order needed to be
granted over a month after the transaction had been announced and more than two
months before any stockholder vote. Nevertheless, the TRO Order enjoins Relators
MetroPCS and the Individual Relators (but not DT or T-Mobile) from: (a) declaring a
Distribution Date under MetroPCS' Rights Agreement, dated March 29, 2007-even
though the Rights Agreement was not in evidence before the trial court, nor was the
9
effect of such provision, any potential suitors that purportedly being deterred, or potential
harm or irreparable injury that would be caused in such event; (b) causing MetroPCS'
Rights Agent to issue any Rights Certificates to MetroPCS' common stockholders
pursuant to the Rights Agreement-even though the actual provisions of the Rights
Agent, Rights Certificates and Rights Agreement were not in evidence before the trial
court, nor was the effect of such provision, any potential suitors that purportedly being
deterred, or potential harm or irreparable injury that would be caused in such event; and
(c) "complying with the 'force the vote' provisions contained in §4.5(h) of the Business
Combination Agreement-even though no verified facts or other evidence was before the
trial court as to the probable effect of this provision, any actual or potential imminent
harm of such provision, any irreparable injury that would befall Real Party absent the
TRO Order, or whether money damages were insufficient for any alleged injury. Rec.
pp. 730-1055, 1339-1447. The trial court refused to rule on Relators' Motion to Stay its
ruling on Real Party's request for injunctive relief until after the Motion to Dismiss
raising the issue of the mandatory exclusive forum selection provision was decided, and
Relators objected to that refusal. App. 0032-35/Rec. pp. 1255, 1310-1317. Additionally,
the trial court set a temporary injunction hearing for November 29, 2012, without setting
an earlier hearing to even address Relators' motions to dismiss and stay and the issues
raised by those motions. Rec. p. 1328.
SUMMARY OF THE ARGUMENT
The trial court's TRO Order, without any evidence to support its findings and
directly contrary to clear standards of Texas law governing the issuance of temporary
10
restraining orders, seeks to rewrite the deal terms of a multi-billion dollar transaction
The trial court clearly abused its discretion in ordering injunctive relief and refusing to
rule on the Motion to Dismiss and Motion to Stay because:
(a) The mandatory exclusive forum selection provision in MetroPCS' Bylaws
requires that this case only be brought in Delaware, and the trial court improperly refused
to grant Relators' Motion to Dismiss;
(b) The trial court improperly refused to rule on Relators' Motion to Stay the case
until after ruling on the Motion to Dismiss, and the TRO Order contradicts the mandatory
exclusive forum selection provision in MetroPCS' Bylaws requiring that this case only be
brought in Delaware;
-
(c) The TRO Order was improvidently issued as it is not supported by any
verified facts, affidavit evidence or other evidence of a valid claim, a probable right of
recovery, or any imminent or irreparable harm, or supporting the trial court's findings or
the relief granted; and
(d) The trial court committed a clear and prejudicial error of law by enjoining
contractual provisions that are plainly permissible under Delaware law.
The trial court's ruling is directly contrary to well-established Texas law. First,
Texas courts readily enforce mandatory exclusive forum selection provisions in the
parties' contract (including by mandamus, even if injunctive relief has been granted), and
11
both Delaware and Texas law5 recognize that stockholders are contractually bound by
duly and lawfully adopted bylaws provisions, such as the MetroPCS Bylaws. As shown
by uncontroverted evidence submitted by Relators, the MetroPCS Bylaws containing the
mandatory exclusive forum selection provision were validly authorized and duly adopted
under Delaware corporate law, the Certificate of Incorporation, and the then-existing
bylaws. The amended Bylaws were publicly filed with the SEC and placed on
MetroPCS' public website, and no stockholder has sought to repeal or change them at
any time thereafter, despite two annual stockholder meetings since the Bylaws were
announced. App. 0010-11/Rec. pp. 1077-1078.
The mandatory exclusive forum selection provision in the Bylaws applies to
Plaintiff/Real Party's claims. Specifically, the Bylaws require that the Delaware Court of
Chancery "shall be the sole and exclusive forum" for any "derivative action" or "any
action asserting a claim of breach of a fiduciary duty owed by any director" to any
MetroPCS stockholder. App. 0008/Rec. p. 1097. Real Party's Petition alleges that he is
a MetroPCS shareholder and asserts that this "action is brought (i) derivatively on behalf
of [Metro ]PCS; and (ii) individually on behalf of the holders of [Metro ]PCS common
stock against the members of [Metro ]PCS Board of Directors . . . arising out of their
breaches of fiduciary duty ... " allegedly owed to Real Party and the other stockholders.
5 See TEX. Bus. ORG. CODE §§ 1.102 ("If the formation of an entity occurs when a certificate of formation or similar instrument filed with a foreign governmental authority takes effect, the law of the state or other jurisdiction in which that foreign governmental authority is located governs the formation and internal affairs of the entity"). Further, the MetroPCS Bylaws make clear that the internal affairs of MetroPCS will be decided under Delaware law. Plaintiff does not dispute this. Indeed, Paragraph 39 of Plaintiff's Petition admits that Delaware law, not Texas law, will govern.
12
Rec. p. 9. Because the mandatory exclusive forum selection provision in the Bylaws
applies to Real Party's action, the trial court should not have issued any order in this case
other than one dismissing the Real Party's case.
Second, the trial court's issuance of the TRO Order, the setting of a temporary
injunction hearing date, and its refusal to rule on Relators' Motion to Stay the TRO
Motion until after ruling on Relators' Motion to Dismiss was a clear abuse of discretion.
The trial court has sidestepped, ignored and refused to abide by a lawful, duly adopted,
binding and mandatory exclusive forum selection provision, and refused to stay the
action until, and refused to first consider, the pending Motion to Dismiss based thereon.
Third, the trial court issued the TRO Order, which included findings of fact,
without any verification, affidavit or other evidence establishing any facts other than the
mere existence of the Business Combination Agreement. The Texas Rules of Civil
Procedure and Texas case law emphatically require, before a TRO or other injunctive
relief may be granted, a verified petition, affidavit proof or sufficient sworn evidence of
the claims made and the relief sought be provided to support such extraordinary relief.
That did not happen. Instead, the trial court's findings in the TRO Order are without any
evidentiary support in the record-including the findings that "harm is imminent,"
"Plaintiffs will be irreparably injured," and the "Poison Pill" and "force the vote"
provisions, in conjunction with other unnamed defensive measures, "eliminate potential
acquirers from making a competitive and superior bid for [Metro ]PCS, or any other offer
.... " Rec. p. 1327. Nowhere in this record is there one shred of proof or verified facts
to support any of these factual findings. It simply does not exist in the record. As such,
13
the adoption of findings in the TRO Order without any evidence in support is a clear
abuse of discretion.
The Business Combination Agreement-which was the only evidence before the
trial court-cannot support these findings and, in fact, establishes the contrary. If another
speculative suitor happens to appear, the Business Combination Agreement contemplates
such a scenario and addresses how this is to be handled. Section 4.5(c) expressly
provides that, notwithstanding anything else in the Business Combination Agreement
(including Section 4.5(b), the clause argued by Real Party to the trial court), ifMetroPCS
receives what it believes is a superior proposal, its Board is required by its fiduciary
obligations to pursue such superior proposal, and it may negotiate with that bidder. Rec.
p. 848-850. And all the "force the vote" provision does is guarantee that the MetroPCS
stockholders have the right to vote yes or no on the proposed transaction irrespective of
whether the MetroPCS Board changes its recommendation. ld. at 851. The trial court
simply parroted Plaintiffs unverified assertion of fact, and made a clear and prejudicial
error of law.
Further, the TRO Order enjoined the MetroPCS Board from declaring a
distribution date under the Rights Agreement. However, unlike the Business
Combination Agreement, the Rights Agreement was never presented as evidence to the
trial court, there was no sworn evidence of how it worked, what harm it caused, whether
a suitor was imminent that would trigger its provisions, nor did Real Party submit any
sworn evidence that harm was imminent under the Rights Agreement. To do so would
have required evidence that a third party was making a bid or that the MetroPCS Board
14
would breach its fiduciary duty. Plaintiff presented no evidence of this either. The trial
court abused its discretion by relying upon Real Party's unverified assertion of facts.
Without any verification of or evidentiary support for the required elements for
injunctive relief, the trial court clearly abused its discretion by issuing the TRO Order.
Fourth, the trial court committed a clear and prejudicial error of law, constituting
an abuse of discretion, by enjoining contractual provisions that are plainly permissible
under Delaware law. It is well-settled law in Delaware that a company entering a
business combination transaction may agree to provisions that: (i) enforce rights under a
prior stockholder rights agreement in the event of another bid; (ii) adopt a provision that
requires a company to hold a vote on a prior proposal even if a superior proposal had
been made and the board has changed its recommendation; and (iii) include the other
terms contained in the Business Combination Agreement. Since the only evidence Real
Party submitted was the Business Combination Agreement itself, _that agreement's
provisions cannot be evidence of harm since these provisions are expressly permitted.
More is required, but none was shown. The trial court made a clear and prejudicial error
of law that such contractual provisions violate the Individual Relators' fiduciary duties to
stockholders. They do not, and the trial court's error of law should be overturned.
The trial court's refusal to grant Relators' Motion to Dismiss, issuance of the TRO
Order, ordering a temporary injunction hearing on November 29t\ and refusal to rule on
Relators' Motion to Stay the TRO Motion until after ruling on Relators' Motion to
Dismiss were clear abuses of discretion.
15
STANDARD OF REVIEW
A wrongfully issued temporary restraining order is subject to mandamus review.
See In re Office of Attorney Gen., 257 S.W.3d 695, 697-98 (Tex. 2008). To obtain a writ
of mandamus, Relators must demonstrate a clear abuse of discretion or the violation of a
duty imposed by law; and the absence of any adequate remedy at law. In re Prudential
Ins. Co., 148 S.W.3d 124, 136-37 (Tex. 2004); Walker v. Packer, 827 S.W.2d 833, 839
(Tex. 1992). If no evidence exists on an essential element for injunctive relief, a trial
court has "no discretion to grant injunctive .relief. . . . " Operation Rescue-Nat '1. v.
Planned Parenthood of Houston & Se. Tex., 975 S.W.2d 546, 560 (Tex. 1998)
A trial court abuses its discretion if it reaches a decision so arbitrary and
unreasonable as to constitute a clear and prejudicial error of law. In re Cerberus Capital
Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005); Huie v. DeShazo, 922 S.W.2d 920, 927-
28 (Tex. 1996) (an erroneous legal conclusion constitutes an abuse of discretion).
Notably, "[a] trial or appellate court has no discretion in determining what the law is or in
applying the law to the facts, even if the law is somewhat unsettled." In re Jorden, 249
S.W.3d 416,424 (Tex. 2008).
Mandamus is particularly appropriate when a trial court wrongfully denies the
protections of a venue selection clause. See, e.g., In re Hardwick, No. 01-12-00362-CV,
_ S.W.3d _, 2012 WL 3132670, at *3 (Tex. App.-Houston [1st. Dist.] Aug. 2, 2012,
orig. proceeding) (wrongful failure to enforce mandatory venue provision).
16
ARGUMENT
I. The Trial Court Abused Its Discretion in Issuing the TRO Order and Setting a Temporary Injunction Hearing Despite Relators' Motion to Dismiss Based on a Mandatory Exclusive Forum Selection Clause in MetroPCS' Corporate Bylaws.
The trial court clearly abused its discretion by issuing the TRO Order and setting a
temporary injunction hearing despite Relators' Motion to Dismiss based on a mandatory
exclusive forum selection provision in the lawfully and duly adopted MetroPCS Bylaws.
The Texas Supreme Court held that "[m]andamus relief is available to enforce
forum-selection clauses" to require dismissal and overturn an injunction order in
markedly similar circumstances. In re AutoNation, Inc., 228 S.W.3d 663, 667 & 670
(Tex. 2007). In AutoNation, like in this case, the defendant moved to dismiss or stay the
Texas action based on a mandatory forum selection term in its contract with the plaintiff,
and then the trial court issued an injunction against the defendant and denied the motion
to dismiss or stay. !d. at 666. The Texas Supreme Court, citing its well-established
forum selection clause body of law, granted mandamus and ordered dismissal of the
Texas action. !d. at 669-70.
Other Texas cases since then have followed the same rationale. See In re Boehme,
256 S.W.3d 878, 880 (Tex. App.-Houston [14th Dist.] 2008, orig. proceeding) (granting
mandamus to dismiss a case on the basis of a forum selection clause after the plaintiff
obtained a TRO and temporary injunction, the parties engaged in expedited discovery,
and then two days later defendants moved to dismiss on the basis of the forum selection
clause). Based on this well-established law in Texas, a trial court abuses its discretion by
17
not dismissing a case pursuant to a forum selection clause in a valid contract between the
parties, and by issuing injunctive relief when such a mandatory, exclusive forum
selection provision exists.
Under both Texas and Delaware law, lawfully and duly adopted bylaws constitute
an enforceable contract between the stockholders and the corporation. See Airgas, Inc.
v. Air Prods. & Chems., Inc., 8 A.3d 1182, 1188 (Del. 2010) ("Corporate charters and
bylaws are contracts among a corporation's shareholders."); See In re Int'l Profit Assocs.,
Inc., 274 S.W.3d 672, 675 (Tex. 2008) (same).6 The MetroPCS Bylaws should be
enforced like any other contractual mandatory exclusive forum selection provision.
A. MetroPCS and Its Stockholders Lawfully Agreed Upon A Mandatory Exclusive Forum Selection Bylaw Provision.
Delaware law permits companies in their certificate of incorporation to confer
upon their board of directors the authority to adopt changes to the company's bylaws.
Section 109 of the Delaware Code provides that
[A ]ny corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors ....
Del. Code Ann. tit. 8 § 109 (2012). Pursuant to this express authority, in connection with
MetroPCS' initial public offering in 2007, the MetroPCS stockholders duly approved an
amended Certificate of Incorporation which, in Article V(A), expressly authorized the
Board of Directors to "make, adopt, alter, amend, and repeal from time to time the
6 See also Benihana ofTokyo, Inc. v. Benihana, Inc., 891 A.2d 150, 171 (Del. Ch. 2005) (same); see also Openwave Sys. v. Harbinger Capital Partners Master Fund I, Ltd., 924 A.2d 228, 239 (Del. Ch. 2007) ("rules used to interpret statutes, contracts, and other written instruments are applicable when construing corporate bylaws"); Manasco v. Gilmer Boating & Fishing Club, 339 S.W.3d 828, 832 (Tex. App.Texarkana 2011, no pet.) (association's bylaws contractually bound a member of the association).
18
Bylaws of the Corporation" subject to the right of the stockholders to further amend or
repeal such bylaws made by the Board of Directors. App. 0010/Rec. pp. 1077, 1104-
1105. Likewise, also in 2007, the MetroPCS Board (pursuant to authority expressly
provided in the Certificate of Incorporation), duly and lawfully adopted the Third
Amended Bylaws which, in Article VIII, provided that "these Bylaws may be altered,
amended or repealed by the stockholders or by the Board" (again subject to the power
of the stockholders to amend or repeal such Bylaws in accordance with the Certificate of
Incorporation). See App. 0010/Rec. p. 1077, 1123. Because the Board's power to amend
the bylaws was established at the time of the initial public offering of MetroPCS stock in
2007, and was included in the public record, Real Party and every other public
stockholder acquired their stock following the initial public offering and thus had full
notice of the Board's authority to adopt or change the bylaws without prior stockholder
approval.
On March 14, 2011, long before even the first discussions took place regarding the
proposed transaction challenged in the underlying action-and over eighteen ( 18) months
before the Relators approved entering into the Business Combination Agreement-the
MetroPCS Board of Directors duly and lawfully adopted, pursuant to the Certificate of
Incorporation, the Third Amended Bylaws and in accordance with Delaware law, the
following provision as part of MetroPCS' Fourth Amended and Restated Bylaws (the
"Bylaws"):
These Bylaws and the internal affairs of the Corporation shall be governed by and interpreted under the laws of the State of Delaware, excluding its conflict of laws principals. Unless the Corporation consents in
19
B. The Mandatory Exclusive Forum Selection Provision Is Binding And Enforceable.
Delaware law presumes that a lawfully and duly adopted bylaw, such as the
MetroPCS Bylaws, is valid. See CA, Inc. v. AFSCME Emps. Pension Plan, 953 A.2d
227, 238 (Del. 2008); Orloffv. Shulman, No. Civ. A. 852-N, 2005 WL 3272355, at *13
(Del. Ch. Nov. 23, 2005). As a valid bylaw, the forum selection provision in the
MetroPCS Bylaws contractually binds the Board of Directors, MetroPCS, and the
stockholders (including Plaintiff/Real Party). See Manasco, 339 S.W.3d at 832; Airgas, 8
A.2d at 1188. Texas courts must presume that contractual forum selection clauses are
valid and enforceable. In re Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (per curiam).
By its terms, the forum selection provision is mandatory, exclusive and applies to
"any derivative action or proceeding brought on behalf of the Corporation" and to "any
action asserting a claim of breach of a fiduciary duty owed by any director, officer or
other employee of the Corporation to the Corporation or the Corporation's stockholders."
App. 0008/Rec. p. 1097. The provision is presumptively valid and enforceable, and
Plaintiff has not met, and cannot meet, the heavy burden to overcome this presumption.
See In re Laibe Corp., 307 S.W.3d at 316; In re Int'l. Profit, 274 S.W.3d at 675.7
7 See also MIS Bremen v. Zapata Offshore Co., 407 U.S. 1, 10 (1972). Under a different set of facts from this action, a court in California declined to enforce a forum selection clause in a corporation's bylaws. Galaviz v. Berg, 763 F. Supp. 2d 1170 (N.D. Cal. 2011). In Galaviz, the Court reasoned that because the bylaws were amended after the conduct at issue occurred and the shareholder-plaintiffs had no opportunity to agree to or reject the provision, there was no mutual consent or contractual aspect to the provision, and thus traditional contract analysis did not apply. Id. at 1174. The facts of this action are clearly distinguishable. First, the MetroPCS Bylaws were amended long before the Business Combination Agreement about which Plaintiff/Real Party complains. Rec. pp. 1077-1078. Second, Real Party here had the opportunity-not once, but twice-to reject or try to amend the provision long before the Business Combination Agreement was entered and this action was filed. !d.
21
Real Party's claims fall squarely within the ambit of the mandatory exclusive
forum selection provision. Paragraph 2 of the Petition alleges as follows:
This is a shareholder class and derivative action brought by a shareholder of nominal party MetroPCS Communications, Inc. ("PCS" or the "Company"). The action is brought (i) derivatively on behalf of PCS; ... arising out of their breaches of fiduciary duty, or aiding and abetting said breaches, in connection with T-Mobile's proposed acquisition of PCS at an unfair price via a recapitalization as described below (the "Proposed Acquisition"). [Emphasis added].
Rec. p. 9. Accordingly, Delaware is the sole and exclusive forum for Real Party's
claims. Relators submitted sworn affidavit testimony that the Bylaws were duly and
lawfully adopted, and no evidence to the contrary exists to controvert the enforceability
or valid formation of the provision. Accordingly, the trial court was obligated to abide by
that provision.
The trial court clearly abused its discretion by granting the TRO Order in
contravention of the mandatory exclusive forum selection provision in the lawfully and
duly adopted MetroPCS Bylaws and by setting the hearing for Real Party's request for
temporary injunction-all before ruling on whether venue is proper. See In reMark
Andy, Inc., 2012 Tex. App. LEXIS 1645, at *10 (Tex. App.-Corpus Christi Feb. 29,
2012, orig. proceeding) (not enforcing mandatory venue clauses is an abuse of discretion
which "injects inefficiency into the judicial process by 'enabling forum-shopping,
wasting judicial resources, delaying adjudication on the merits, and skewing settlement
dynamics."') (quoting In re Lisa Laser US., Inc., 310 S.W.3d 880, 883 (Tex. 2010)).
Because the Bylaws are an enforceable contract between MetroPCS and its stockholders,
the trial court made a clear and prejudicial error of law, constituting an abuse of
22
discretion, in not dismissing Real Party's action and instead issuing the TRO Order and
setting a temporary injunction hearing. See AutoNation, 228 S.W.3d at 669-70.
C. The TRO Order Also Violates This State's Strong Policy Against Duplicative And Piecemeal Litigation
The trial court's refusal to grant the Motion to Dismiss and issuance of the TRO
Order also violates Texas' strong policy against duplicative litigation. '"It has long been
the policy of the courts and the legislature of this state to avoid a multiplicity of
lawsuits." Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 622-23 (Tex. 2005)
(recognizing Texas' public policy against multiplicity of lawsuits in ruling that a plaintiff
cannot maintain a lawsuit in a county of improper venue). "[A]bsent extraordinary
justification for potentially competing classes, the pendency of multiple class actions
alleging substantially the same claims on behalf of the same putative class against the
same defendants should be avoided .... " Joseph M. McLaughlin, McLaughlin on Class
Actions § 5.62 (5th ed. 2008). Texas courts should be particularly reluctant to entertain
claims arising under another state's laws when, as here, the other state offers an available
forum and the other state's laws will govern. See Coca-Cola Co. v. Harmar Bottling Co.,
218 S.W.3d 671, 686-88 (Tex. 2006) (holding that Texas courts should not entertain
claims under Arkansas, Louisiana and Oklahoma antitrust law because such claims
impact the public policy and economies of those other states, and are therefore more
properly heard in those states' courts).
This dispute is over the internal governance of a Delaware corporation, and given
the Bylaw provision establishing Delaware as the governing law for MetroPCS' internal
23
affairs and the mandatory exclusive forum selection provision and four pending lawsuits
in Delaware, could be litigated in Delaware no matter what happens in Texas. Thus,
allowing the TRO Order to stand would violate well-settled principles of judicial
economy. See Gonzalez, 159 S.W.3d at 622-23 (recognizing Texas' public policy against
multiplicity of lawsuits in ruling that a plaintiff cannot maintain a lawsuit in a county of
improper venue). If rulings in this case are allowed to stand, Relators face the risk of
multiple proceedings, duplicative costs, and inconsistent rulings-a risk that is
particularly acute given that the plaintiffs in both states are seeking to enjoin the same
proposed transaction based on the same alleged claims of breach of fiduciary duty, will
be decided under the same law (Delaware law), and all the plaintiffs in both states purport
to represent exactly the same class of stockholders. Courts have long recognized that
permitting identical actions to proceed in different jurisdictions leads to "wasted" judicial
and party resources, as well as a significant risk of inconsistent rulings on identical issues
that pose "full faith and credit problems for all involved." In re Allion Healthcare Inc.
S'holders Litig., No. 5022-CC, 2011 WL 1135016, at *4 (Del. Ch. Mar. 29, 2011);
Bartleson v. Winnebago Indus., Inc., No. C02-3008, 2003 WL 22427817, at *6 (N.D.
Iowa Oct. 24, 2003) (observing that allowing "parallel class action litigation" to proceed
in different courts would lead to "unnecessary costs, inefficiency and inconstancy of
proceedings and results; and other problems .... "). Texas courts thus have a strong
policy against permitting duplicative actions to proceed. Gonzalez, 159 S.W.3d at 623.
This policy directly applies to this action The claims, law, transaction at issue,
facts, and putative class are the same-which means that any decision in Texas will be
24
based on the identical claims, law and facts of the Delaware Actions. At the hearing on
November 14, 2012, Plaintiffs counsel had an opportunity to be, and was in fact, heard
on the issues raised by Relators' Motion to Dismiss. Rec. pp. 1339-1447. The trial court
thus clearly abused its discretion granting the TRO Order and ordering a hearing on Real
Party's request for temporary injunction despite Relators' Motion to Dismiss.
II. The Trial Court Abused Its Discretion in Refusing to Rule on Relators' Motion to Stay the TRO Motion Until After Ruling on the Motion to Dismiss.
The trial court also abused its discretion by refusing to rule on Relators' Motion to
Stay (contained in the Opposition to the TRO Motion) and by not staying the TRO
Motion until after deciding Relators' Motion to Dismiss based on the mandatory
exclusive forum selection provision.
Prior to Real Party moving for a TRO, his counsel had entered into a Rule 11
agreement on October 19, 2012, agreeing that Relators need not "answer or otherwise
respond" to the Petition until November 27, 2012.8 Rec. pp. 1277-1278. Further
contradicting their arguments of imminent harm, Real Party waited to file his TRO
Motion until more than two weeks later, on November 5, 2012. Rec. p. 730. Because
Real Party was seeking a TRO, Relators were forced to file their Motion to Dismiss and
Motion to Stay on November 12, 2012, before the hearing on Real Party's TRO Motion.
Rec. pp. 1059-1075, 1255. In the Motion to Stay, Relators requested that the trial court
8 The Rule 11 agreement also allowed 30 days for responses to any written discovery, and Relators retained their right to object to any such discovery occurring in this case.
25
rule upon their Motion to Dismiss9 before considering Plaintiffs TRO Motion, and
objected to the trial court ruling on Plaintiffs TRO Motion before first ruling on
Relators' Motion to Dismiss. App. 0032/Rec. pp. 1073, 1255.
At the TRO hearing, Relators' counsel disclosed that the earliest the trial court's
clerk would set the Motion to Dismiss was January 25, 2013, so Relators requested that
the trial court stay any ruling on the TRO Motion until the Motion to Dismiss could be
heard. Rec. pp. 1383-1384. When Real Party submitted to the trial court his proposed
form ofTRO, Realtors again objected to the trial court ruling on a TRO Order before first
ruling upon the Motion to Stay and Motion to Dismiss, and Relators also objected to the
trial court's refusal to rule on their Motion to Stay the TRO ruling until the Motion to
Dismiss could be heard. App. 0033-35/Rec. pp. 1310-1317. Nevertheless, the trial court
refused to rule on the Motion to Stay, over Relators' objection to such refusal to rule, and
instead issued the TRO Order and ordered a temporary injunction hearing for November
29, 2012. App. 0002-05/Rec. pp. 1326-1329.
Refusing to rule on the Motion to Stay in such circumstances, and granting the
TRO Order (as well as setting a temporary injunction hearing) with the Motion to Stay
and Motion to Dismiss pending, also constitute an abuse of discretion by the trial court.
See In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding)
(granting mandamus when trial court "subjects taxpayers, defendants, and ... the state's
district courts to meaningless proceedings and trials" by "ma[king] no effort to follow"
9 Relators also requested in the Motion to Stay that the trial court to first rule on their Plea to the Jurisdiction and Special Exceptions that related only to Counts 1-5 of the Petition. Rec. p. 1255
26
the venue rule). The Texas Supreme Court's opinion in AutoNation makes clear that
before issuing injunctive relief, a trial court must first rule upon contractual forum
selection clauses. See 228 S.W.3d at 669-70.
III. The Trial Court Abused Its Discretion By Granting the TRO Order Without Any Verified Facts, Affidavit Evidence Or Any Other Evidence Supporting The Elements Of A Temporary Restraining Order.
Mandamus also is appropriate to correct a wrongfully issued temporary restraining
order. In re Office of Attorney Gen., 257 S.W.3d at 697-98. The TRO Order in this case
was wrongfully issued. No verified facts, affidavits or any other evidence supports any
of the findings in the TRO Order.
Initially, Real Party failed to verify his petition and his TRO Motion, in violation
of Tex. R. Civ. P. 682. "A temporary restraining order is basically a writ of injunction
within the meaning of Tex. R. Civ. P. 682." Williams v. Bagley, 875 S.W.2d 808, 810
(Tex. App.-Beaumont 1994, no writ) (citing Ex Parte Coffee, 328 S.W.2d 283 (Tex.
1959)). The TRO Order thus violates Rule 682. Further, Real Party did not attach to his
TRO Motion affidavit evidence or other evidence supporting the trial court's findings,
and did not even attach the Rights Agreement which was specifically requested to be
enjoined. Rec. pp. 730-1055.
The Texas Supreme Court has held that "a trial court has no discretion to grant
injunctive relief . .. without supporting evidence." Operation Rescue-Nat'!., 975
S.W.2d at 560 (emphasis added). Here, Real Party did not present any verified facts,
affidavits or other evidence in support of the TRO Order other than an affidavit
authenticating the Business Combination Agreement and terms of that one agreement.
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The TRO Order, however, made findings that went beyond the Business Combination
Agreement-by finding that "harm is imminent," that "Plaintiffs will be irreparably
injured," and that the "Poison Pill" and "force the vote" provisions, in conjunction with
other unnamed defensive measures, "eliminate potential acquirers from making a
competitive and superior bid for [Metro ]PCS, or any other offer .... " App. 0003/Rec. p.
1327. No evidence exists in the record to support these findings-and the trial court did
not have discretion to find them without any evidence. See Operation Rescue-Nat'!., 975
S.W.2d at 560. Importantly, no evidence exists that any "potential acquirer" exists who
might make a "competitive and superior bid for [Metro ]PCS"-as found by the trial court
in the TRO Order-or that any terms of any agreement might dissuade any person or
entity from making a superior proposal. Id. Indeed, because any such evidence cannot
be discerned from the Business Combination Agreement, some other sworn evidence was
required to support the trial court's apparent finding (but was not presented and is not of
record, let alone verified).
The trial court issued the TRO Order without any supporting verified facts,
affidavit evidence or other evidence required by Texas law to obtain injunctive relief
i.e., that he has a viable claim, a probable right to recovery, or an imminent and
irreparable injury-let alone that any such injury would occur within the next 15 days.
See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (required elements for
injunctive relief). "The commission of the act to be enjoined must be more than just
speculative, and the injury that flows from the act must be more than just conjectural."
Texas Indus. Gas v. Phoenix Metallurgical, 828 S.W.2d 529, 532 (Tex. App.-Houston
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[1st Dist.] 1992, no writ). Indeed, given that any stockholder vote is at least sixty (60)
days away, and the only evidence before the trial court-the Business Combination
Agreement-provides that the stockholder meeting could not occur before at least 45
days from the filing of the Proxy (Rec. p. 847)-and Real Party chose not to file a TRO
Motion for almost a month after his Original Petition and the announcement of the
proposed transaction, there is no imminent harm.
The only "evidence" Real Party offered in support of his request for a TRO was
the Business Combination Agreement itself. This is plainly insufficient. See Butnaru, 84
S.W.3d at 204. As an initial matter, the Business Combination Agreement does not
provide evidence that any potential acquirer exists. Further, if any such person or entity
were to materialize and make a superior bid, the Business Combination Agreement
actually proves the opposite point from what the TRO Order found. Sections 4.5( c) and
(e) of the Business Combination Agreement contain a "fiduciary out" clause allowing
MetroPCS' board to negotiate with the superior bidder and change the recommendation
to MetroPCS' stockholders to the superior proposal. Rec. p. 848-850. The Business
Combination Agreement itself simply does not provide evidence of potential harm.
Likewise, the Business Combination Agreement provides no evidence supporting
the trial court's determination that harm is imminent or that Real Party will suffer
irreparable harm in the absence of injunctive relief. To the contrary, as set forth above,
the Business Combination Agreement expressly allows MetroPCS to negotiate with any
"potential acquirer" who might materialize and make a superior proposal, to change the
MetroPCS Board's recommendation to the stockholders to the superior proposal, and to
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terminate the Business Combination Agreement if the stockholders vote against it. Rec.
pp. 848-850. Moreover, the Business Combination Agreement also establishes that no
harm can possibly be imminent. There are conditions for the closing of the proposed
transaction which must occur before the parties may close, including (among others):
• The SEC must review and approve (or decide not to review) the Proxy materials
(which usually takes at least thirty (30) days);
• Once the SEC approves (or decides not to review) the Proxy materials, they must
be mailed at least 20 business days before the special meeting of the stockholders,
and the special meeting must be held within 45 days after such SEC approval;
• At that special meeting, MetroPCS' stockholders will have an opportunity to vote
on the necessary actions to close the proposed transaction and decide for
themselves whether this is a good deal; and
• Certain governmental regulators must approve the proposed transaction.
Rec. pp. 847, 865-868. Because of these time periods, the earliest the special meeting for
a stockholder vote could occur is late January 2013.
Moreover, Real Party did not even furnish evidence of the terms of the "Rights
Agreement" referenced in the TRO Order. See App. 0003-05/Rec. pp. 1327-1329
(enjoining Relators from declaring a Distribution Date under MetroPCS' 2007 Rights
Agreement and from causing MetroPCS' "Rights Agent" from issuing any "Rights
Certificates" to MetroPCS' common stockholders pursuant to the Rights Agreement).
Likewise, no evidence exists in the record of: (a) how the "Rights Agreement" or
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"shareholder rights plan (the 'Poison Pill')" works (as those terms are used in the TRO
Order); (b) what the "Distribution Date" under the Rights Agreement is or what effect it
has; (c) what the "Rights Certificates ... pursuant to the Rights Agreement" are or what
is their effect; (d) what harm might result if the trial court did not stop the Rights
Agreement, of any declaration of a "Distribution Date," and of any issuance of Rights
Certificates under the Rights Agreement; (e) any threat that the MetroPCS directors
would breach their fiduciary duties by performing the terms of the Rights Agreement, or
that they would not agree to waive its terms if the speculative prospective acquirer
appeared with a superior proposal which led to a contract requiring such waiver Gust like
the Board waived the Rights Agreement for the DT contract). The trial court had no
evidence supporting any of its findings or the injunctive order related to the Rights
Agreement.
In addition, no verified facts, affidavits or other evidence exists of any
"irreparable" injury that could not be remedied through money damages, let alone any
irreparable harm that would occur within 15 days or was otherwise "imminent." See
Perez v. Gill, No. 04-03-00037-CV, 2003 WL 21011139 (Tex. App.- San Antonio May
7, 2003, orig. proceeding) (trial court abuses discretion in granting temporary injunctive
relief when "there is not a shred of evidence" of irreparable injury). In fact, Real Party's
counsel argued at the hearing that "all we want to do if allow the process to open up
enough so that [another bidder] can come in" (Rec. p. 1434), thus further confirming that
this is a just a case for damages. See Camp Mystic, Inc. v. Eastland, No. 04-12-00102-
CV, 2012 WL 4903019, at *5 & n.7 (Tex. App. - San Antonio, Oct. 17, 2012, orig.
31
proceeding) (no irreparable harm when "an adequate remedy at law-a claim for
damages in the underlying suit-is available;" because "minority shareholders could
recover possible lost dividends in a suit for damages," they were not entitled to TRO).
Irreparable injury requires sworn evidentiary support that money damages are
insufficient. Real Party did not present any sworn evidence that the current provisions
are chilling bidding, that any other bidders exist, or that bidders are being deterred.
The wholly unsupported TRO Order was wrongfully issued by the trial court;
therefore, mandamus relief is appropriate to correct this abuse of discretion pursuant to In
re Office of Attorney Gen., 257 S.W.3d at 697-98.
IV. The Trial Court Committed a Clear and Prejudicial Error of Law By Enjoining Contractual Provisions That Are Expressly Permitted Under Controlling Delaware Law.
The trial court also committed a clear and prejudicial error of law by enjoining
contractual provisions that are plainly permissible under Delaware law. It is well-settled
that a company entering a business combination transaction may enter into provisions
that: (i) enforce rights under a stockholder rights agreement in the event of another bid
while the agreement is in effect (e.g., a "poison pill" provision); (ii) adopt a provision that
requires a company to take a proposal to a stockholder vote even if the board changes its
recommendation; (iii) requiring payment of a "termination fee" if the deal is not
consummated; (iv) restricting the target company from soliciting bids from other
potential acquirers; (v) adopting a "matching rights" or "information rights" provision
allowing the other party to match or obtain information about a subsequent competing
bid; or (vi) do all of the above simultaneously. See, e.g., In re Micromet, Inc. S'holders
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Litig., C.A. No. 7197-VCP, 2012 WL 681785, at *10 (Del. Ch. Feb. 29, 2012) (approving
similar combination of poison pill, 3% termination fee, no-shop provision, matching and
information rights provisions); In re Orchid Cellmark Inc. S'holder Litig., C.A. No.
6373-VCN, 2011 WL 1938253, at *7 (Del. Ch. May 12, 2011) (approving similar
combination of poison pill, 3% termination fee, no-shop provision, matching and
information rights provisions, and holding that "if a board retains the ability to pull the
pill if presented with a superior offer, the mere presence of the pill would likely have
little deterrent effect on a bidder desiring to make such an offer"); In re Cogent, Inc.
S'holder Litig., 7 A.3d 487, 502 (Del. Ch. 2010) (no shop provision is acceptable when
coupled with fiduciary out that gives the board the "ability to engage with any bidder
who, for example, makes a definitively higher bid"). 10 As stated above, Sections 4.5(c)
and (e) of the Business Combination Agreement contain a "fiduciary out" clause allowing
MetroPCS' board to negotiate with the superior bidder and change the recommendation
to MetroPCS' shareholders to the superior proposal. Rec. pp. 848-850. The TRO thus
violates controlling Delaware law.
The trial court's decision to enjoin the 2007 Rights Agreement is a particularly
egregious error of law. The Delaware Court of Chancery has consistently held that
10 See also State of Wis. Inv. Bd. v. Bartlett, No. 17727, 2000 Del. Ch. LEXIS 42, at *30 (Del. Ch. Feb. 24, 2000) (citation omitted) (noting the well-established case law affirming the use of such provisions); In re !XC Communs. S'holders Litig., C.A. Nos. 17324, 17334, 1999 Del. Ch. LEXIS 210, at *16-17 (Del. Ch. Oct. 27, 1999) (applying business judgment rule and dismissing claim that board breached its duty of care in agreeing to "no talk" clause); Louisiana Mun. Police Emps. Ret. Sys. v. Crawford, 918 A.2d 1172 (Del. Ch. 2007) (refusing to enjoin merger with force-the-vote provision); In re Toys "R" Us, Inc. S'holder Litig., 877 A.2d 975, 1014-15 (Del. Ch. 2005) (approving 3.75% termination fee); McMillan v. Intercargo Corp., 768 A.2d 492, 505 (Del. Ch. 2000) (upholding no shop clause as "rather ordinary").
33
similar rights agreements are lawful, and that it is permissible to exempt a business
combination transaction from a preexisting rights agreement. See In re Micromet, Inc.
S'holders Litig., 2012 WL 681785, at *10 (refusing to enjoin transaction involving
similar provision); In re Orchid Cellmark Inc. S'holder Litig., 2011 WL 1938253, at *7
("if a board retains the ability to pull the pill if presented with a superior offer, the mere
presence of the pill would likely have little deterrent effect on a bidder desiring to make
such an offer").
No evidence was presented that the MetroPCS Board of Directors is prevented
from following its fiduciary duties if, as and when a superior proposal is made. In fact,
while MetroPCS is under the existing Business Combination Agreement, to enter into
another contract with another bidder without the existing Business Combination
Agreement being terminated would be a breach of the existing agreement; thus, the
provision in the Business Combination Agreement prohibiting amendment of the Rights
Agreement is not controlling on the issue argued by Real Party-since MetroPCS
effectively could not enter into a new agreement with another bidder until the current
Business Combination Agreement terminates. Rec. pp. 847-851, 869-871. Accordingly,
the provision in the Business Combination Agreement does nothing different than what
MetroPCS would be obligated to do anyway.
Moreover, no evidence exists that the MetroPCS Board is violating its fiduciary
duties by not waiving rights under the 2007 Rights Agreement with respect to unknown
and speculated "potential acquirers" (no evidence says any exist), and no evidence exists
that anyone might make a superior proposal. If any person or entity does so, the fiduciary
34
out clauses in Sections 4.5(c) and (e) of the Business Combination Agreement expressly
permit MetroPCS to negotiate with such superior bidder, to change the Board's
recommendation, and to terminate the Business Combination Agreement to accept it if
the stockholders do not approve the current transaction. Rec. pp. 848-850. Nothing
prevents the MetroPCS Board of Directors from waiving its right to declare a
Distribution Date or issue Rights Certificates under the Rights Agreement in the event the
Business Combination Agreement is terminated and MetroPCS is entering into a new
combination. agreement with a superior bidder. 11 !d. Without any verified facts or
evidence of the terms of the Rights Agreement, the trial court's TRO Order enjoining
MetroPCS and the Individual Relators from enforcing the Rights Agreement is a clear
error of law for which the trial court had no discretion to commit.
The trial court's decision to enjoin the provision in the Business Combination
Agreement that requires MetroPCS to hold a stockholder vote on this proposal even if the
Board has changed its recommendation (called a force-the-vote provision in the TRO
Order) is equally indefensible. Delaware law expressly permits companies to include
such a provision in a business combination agreement. See 8 Del. C. § 146 ("A
corporation may agree to submit a matter to a vote of its stockholders whether or not the
board of directors determines at any time subsequent to approving such matter that such
matter is no longer advisable and recommends that the stockholders reject or vote against
the matter"); Energy Partners, Ltd. v. Stone Energy Corp., No. Civ. A. 2402-A, 2006 WL
11 This is because MetroPCS cannot have two agreements in effect at the same time to enter into combination with two different entities. If the Business Combination Agreement is terminated, Section 4.5(h) is not in effect.
35
2947483, at *3 n.25 (Del. Ch. Oct. 11, 2006) (force-the-vote provision is "permissible
under 8 Del. C. § 146"). This makes sense. Agreeing to such a proposal does not
diminish stockholder rights-indeed, it increases them by allowing the stockholders to
vote on proposals that the board does not recommend. The Delaware courts have
determined that the benefits of this provision are not outweighed by the possibility that it
might deter a potential bidder. Here, Real Party has presented no evidence that a
potential bidder might come. Accordingly, the balance clearly favors the provision
requiring a stockholder vote. The portion of the TRO Order enjoining the force-the-vote
provision directly contravenes Delaware corporate law and is a clear and prejudicial error
of law.
The trial court clearly abused its discretion by enjoining provisions of the Business
Combination Agreement and Rights Agreement that are expressly permitted by
controlling Delaware law.
V. Relators Have No Adequate Remedy on Appeal.
A party has no adequate remedy on appeal when a trial court fails to enforce a
mandatory exclusive venue provision. See, e.g., In re Hardwick,_ S.W.3d _, 2012 WL
3132670, at *3 (wrongful failure to enforce mandatory venue provision). Relators also
have no adequate remedy at law to correct the trial court's issuance of the TRO Order
wholly unsupported by verified facts, affidavit evidence and any other evidence, and
which is based on a clear and prejudicial error of law. See In re Office of Attorney Gen.,
257 S.W.3d at 697-98; In re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998).
Allowing the TRO Order to stand, and allowing the temporary injunction hearing to
36
proceed as ordered, deprives Relators of the benefits of the forum selection clause,
violates the requirement that injunctive relief be supported by proof, maintains a clear
and prejudicial error of law, and interferes with a multi-billion dollar transaction and
itself could cause irreparable harm to the many MetroPCS stockholders who have not
complained and those who honored the Bylaws' provision for any litigation to occur in
Delaware; thus, the benefits of mandamus review outweigh any detriments. Mandamus
relief is appropriate.
CONCLUSION AND PRAYER FOR RELIEF
Respectfully, the present case presents a textbook clear abuse of discretion.
Relators thus respectfully pray that the Court issue a writ of mandamus directing the trial
court to: (i) vacate its TRO Order signed on November 16, 2012, including the setting
for the temporary injunction hearing on November 29, 2012; (ii) deny the Plaintiff/Real
Party's TRO Motion; and (iii) grant Relators' Motion to Stay the case until Relators'
Motion to Dismiss · is decided. Relators have requested expedited relief by separate
motion filed along with this petition. Relators also request all other appropriate relief to
which they may be entitled.
37
State Bar No. 1268920 Garreth Sarosi Staff Vice President and Assistant General Counsel State Bar No. 24039373 MetroPCS Communications, Inc. 2250 Lakeside Boulevard Richardson, Texas 75082
Counsel for Relators MetroPCS Communications, Inc., Roger D. Linquist, W Michael Barnes, Jack F. Callahan, Jr., C. Kevin Landry, Arthur C. Patterson, and James N Perry, Jr.
39
AFFIDAVIT AUTHENTICATING PETITION AND RECORD
THE STATE OF TEXAS
COUNTY OF DALLAS
§ § §
Before me, the affiant, Karl G. Dial, appeared in person before me, a notary public, who knows the affiant to be the person whose signature appears on this document. According to the affiant's statements under oath, the affiant is mandamus counsel for Relators MetroPCS Communications, Inc., Roger D. Linquist, W. Michael Barnes, Jack F. Callahan, Jr., C. Kevin Landry, Arthur C. Patterson, and James N. Perry, Jr. The affiant states under oath that that he has read the foregoing petition for writ of mandamus and concluded that all factual statements in the petition are supported by competent evidence included in the Appendix or Record. The affiant further states under oath that the exhibits in the mandamus appendix and mandamus record accompanying the petition for writ of mandamus are true and correct copies of the original documents that were
filed with the trial court in the underlying caus"Q.Jj'\;j I 'J Karl G. Dial
GIVEN UNDER MY HAND AND SEAL OF OFFICE on this 19th day of November 2012
40
CERTIFICATE OF SERVICE
I certify that on November 19, 2012, a copy of this petition (with accompanying appendix and record) brief was delivered by electronic mail (counsel only) and by certified mail, return receipt requested, to the following:
Kendall Law Group, LLP Joe Kendall Texas Bar No. 11260700 Jamie J. McKey Texas Bar No. 24045262 3232 McKinney Avenue, Suite 700 Dallas, Texas 75204
Robbins Geller Rudman & Dowd LLP Randall J. Baron A. Rick Atwood, Jr. David T. Wissbroecker Edward M. Gergosian 655 West Broadway, Suite 1900 San Diego, CA 92101
Ryan & Maniskas, LLP Richard A. Maniskas 995 Old Eagle School Road, Suite 311 Wayne, PA 19087
The Honorable D'Metria Benson Dallas County Court at Law No. 1 600 Commerce Street 5th Floor Dallas, Texas 75202
41