Zand v. DigitalGlobe, Inc. et al

Filing 27

ORDER denying 14 Motion for Preliminary Injunction, and Plaintiff Dane Gussin's Motion for Preliminary Injunction, #19 in Case No. 17-cv-01190-PAB, by Judge Philip A. Brimmer on 7/21/17. (dkals, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer

Civil Action No. 17-cv-01097-PAB-NYW
(Consolidated with Civil Action Nos. 17-cv-01140-PAB-NYW, 17-cv-01159-PABNYW, 17-cv-01190-PAB-NYW, and 17-cv-01570-PAB-NYW)
Civil Action No. 17-cv-01097-PAB-NYW
GEORGE ASSAD, individually and on behalf of all others similarly situated,
Plaintiff,
v.
DIGITALGLOBE, INC., et al.,
Defendants.
Civil Action No. 17-cv-01140-PAB-NYW
JEWELTEX MANUFACTURING INC. RETIREMENT PLAN, on behalf of itself and all
others similarly situated,
Plaintiff,
v.
DIGITALGLOBE, INC., et al.,
Defendants.
Civil Action No. 17-cv-01159-PAB-NYW
ROYCE BUSSEY, individually and on behalf of all others similarly situated,
Plaintiff,
v.
DIGITALGLOBE, INC., et al.,
Defendants.

Civil Action No. 17-cv-01190-PAB-NYW
DANE GUSSIN,
Plaintiff,
v.
DIGITALGLOBE, INC., et al.,
Defendants.
Civil Action No. 17-cv-01570-PAB-NYW
STUART ZAND, individually and on behalf of all others similarly situated,
Plaintiff,
v.
DIGITALGLOBE, INC., et al.,
Defendants.

ORDER

This matter is before the Court on Plaintiff’s Motion for Preliminary Injunction
filed by plaintiff Dane Gussin in Gussin v. DigitalGlobe, Inc., et al., Case No. 17-cv01190-PAB, Docket No. 19 (“Gussin”), and Plaintiff’s Motion for Preliminary Injunction
filed by plaintiff Stuart Zand in Zand v. DigitalGlobe, Inc., et al., Case No. 17-cv-01570PAB, Docket No. 14 (“Zand”). Movants ask the Court to preliminarily enjoin a
shareholder vote by defendant DigitalGlobe, Inc. related to a proposed merger that is
scheduled for July 27, 2017.

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I. BACKGROUND1
This securities dispute arises out of the proposed merger of DigitalGlobe, Inc.
and a subsidiary of MacDonald, Dettwiler and Associates Ltd. (“MDA”). Docket No. 25
at 2.2 There are five consolidated cases pending before this Court. Id. at 4. All five
cases assert claims under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et
seq., and Securities and Exchange Commission (“SEC”) Rule 14a-9, 17 C.F.R.
§ 240.14a, related to the proposed m erger of DigitalGlobe and MDA. See Docket No.
25 at 2-3.3 Two of the cases include motions for a preliminary injunction. Id. These
motions seek to enjoin DigitalGlobe’s shareholder vote on the merger, which is set to be
held on July 27, 2017. DigitalGlobe is a Delaware corporation with its headquarters in
Westminster, Colorado that provides high-resolution satellite imagery of the Earth and
related data and analysis to clients including the United States government. Gussin,
Docket No. 29-4 at 34. MDA is a Canadian telecommunications and information
services conglomerate. Id. at 33.
DigitalGlobe began seeking buyers of itself or some of its assets in 2015.
Gussin, Docket No. 29-4 at 100. On November 20, 2016, MDA made a “non-binding

1

These facts are generally taken from the amended registration statement at

issue.
2

Docket citations without a case name refer to the docket in the lead case,
Assad v. DigitalGlobe, Inc., No. 17-cv-01097-PAB-NYW, while citations to Gussin refer
to the docket in Gussin v. DigitalGlobe, Inc., et al., Case No. 17-cv-01190-PAB-NYW,
and citations to Zand refer to the docket in Zand v. DigitalGlobe, Inc., et al., Case No.
17-cv-01570-PAB-NYW.
3

Four of the cases are putative class actions under the Private Securities
Litigation Reform Act of 1995 (the “PSLRA”), while Gussin has filed an individual claim.
Docket No. 15 at 3; Gussin, Docket No. 1.
3

indication of interest to merge with DigitalGlobe in an all-stock transaction at no
premium to the trading price of DigitalGlobe.” Id. at 100-101. MDA and DigitalGlobe
negotiated over the next several months. Id. at 101-07. DigitalGlobe also discussed
potential transactions with other entities. Id. at 104-05. On December 6, 2016,
DigitalGlobe’s board of directors formed a transactions committee to explore potential
offers. Id. at 102. On January 27, 2017, MDA offered a combination of $17.50 in cash
and $17.50 worth of stock in MDA for each share of DigitalGlobe, which became the
framework for the final deal. Id. at 107. On February 17, 2017, news of the proposed
merger leaked out, and media reports were published that MDA was in discussions to
acquire DigitalGlobe. Id. at 111.
On February 24, 2017, DigitalGlobe and MDA entered into and announced an
agreement and plan of merger (“Merger Agreement”). Gussin, Docket No. 29-4 at 4.
Pursuant to the terms of the Merger Agreement, DigitalGlobe will merge with a specialpurpose subsidiary of MDA, with DigitialGlobe’s shareholders receiving $17.50 in cash
and 0.3132 shares of MDA for each share of DigitalGlobe that they own. Id. The day
before news of the proposed merger broke, the market value of this consideration was
approximately $35.00, representing a premium of approximately 18% over
DigitalGlobe’s closing price on that date. Id.
The transaction will result in DigitalGlobe shareholders owning approximately
37.1% of the combined company. Gussin, Docket No. 29-4 at 4-5. After the
completion of the transaction, three members of DigitalGlobe’s board will be appointed
to positions on MDA’s board of directors. Id. at 162. DigitalGlobe board member Nick

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S. Cyprus, who served on DigitalGlobe’s transactions committee, is one of the people
set to be appointed to MDA’s board. Id.
On April 27, 2017, DigitalGlobe and MDA filed an F-4 registration statement in
relation to the proposed transaction. Gussin, Docket Nos. 29-2, 29-3. The SEC
reviewed the filing and, on May 24, 2017, the SEC commented on the registration
statement, requesting nine changes. Gussin, Docket No. 29-7. None of the requested
changes is related to issues raised by movants in the present motions. In response to
the SEC’s comments, DigitalGlobe and MDA filed an amended F-4 registration
statement on June 2, 2017. Gussin, Docket No. 29-4 at 2. References to the
“registration statement” below refer to the amended version.
During the negotiations process, DigitalGlobe engaged PJT Partners LP and
Barclays Capital, Inc. (“Barclays”) to provide financial advice related to possible
transactions. Gussin, Docket No. 29-4 at 36. Both financial advisors provided fairness
opinions to the DigitalGlobe board on February 23, 2017, which were attached to the
registration statement. Id.; Gussin, Docket No. 29-6. The registration statement also
contains a summary of financial analyses performed by the financial advisors. Gussin,
Docket No. 29-4 at 123-47.
The financial advisors’ analyses were based, in part, on non-public information
supplied by MDA and Digital Globe, some of which was later included in the registration
statement. Gussin, Docket No. 29-4 at 123-24, 134-36. In particular, DigitalGlobe
management’s financial projections for fiscal years 2017-21 are included. Id. at 147-50.
These projections are based on three similar scenarios regarding performance of the

5

company’s divisions. Id. The projections are presented in terms of revenue; earnings
before interest, taxes, depreciation, and amortization (“EBITDA”) pre-stock based
compensation; EBITDA post-stock based compensation; capital expenditures; levered
free cash flow; and unlevered free cash flow. Id. at 150-51. The registration statement
provides figures to reconcile the financial measures used in the projections that do not
comply with generally accepted accounting principles (“non-GAAP”) with financial
measures that do comply with generally accepted accounting principles (“GAAP”), but
only for fiscal year 2017. Id. at 154-56.
The first lawsuit related to the proposed transaction was filed in this district on
May 3, 2017, four business days after the initial registration statement was filed.
Docket No. 1. Three other cases related to the transaction were later filed in this
district, including Gussin. The complaint in Zand, however, was filed on May 22, 2017
in the United States District Court for the District of Delaware. Zand, Docket No. 2. On
June 5, 2017, Zand filed his motion for a preliminary injunction. Zand, Docket No. 14.
On June 14, 2017, Gussin filed a similar motion. Gussin, Docket No. 19. The Zand
case was transferred to this Court on June 27, 2017. Zand, Docket No. 1. On July 6,
2017, the Court ordered the five then-pending actions consolidated. Docket No. 25.
The Court held a hearing on the preliminary injunction motions on July 14, 2017.
II. DISCUSSION
“A preliminary injunction is an extraordinary remedy never awarded as of right.”
Winter v. NRDC, 555 U.S. 7, 24 (2008). “To obtain a preliminary injunction, the moving
party must demonstrate four factors: (1) a likelihood of success on the merits; (2) a

6

likelihood that the movant will suffer irreparable harm in the absence of preliminary
relief; (3) that the balance of equities tips in the movant’s favor; and (4) that the
injunction is in the public interest.” RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1208
(10th Cir. 2009) (citing Winter, 555 U.S. at 20). “Moreover, ‘because a preliminary
injunction is an extraordinary remedy, the right to relief must be clear and unequivocal.’”
Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, 562 F.3d 1067, 1070 (10th
Cir. 2009) (quoting Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1256 (10th
Cir. 2003)) (internal quotation marks omitted).4
SEC Rule 14a-9(a) prohibits “solicitation . . . by means of any proxy statement
. . . containing any statement which, at the time and in the light of the circumstances
under which it is made, is false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the statements therein not
false or misleading.” 17 C.F.R. § 240.14a-9(a). To state a claim under Rule 14a-9, a
plaintiff must establish: “(1) that the proxy contained a material misrepresentation or
omission; (2) that the defendant acted with the requisite state of mind [negligence], and
(3) that the proxy was the essential link in completing the transaction in question.” In re
Zagg Sec. Litig., 2014 WL 505152, at *7 (D. Utah Feb. 7, 2014) (internal quotation

4

The Tenth Circuit disfavors three types of injunctions and requires movants to
meet a heightened standard of proof before a preliminary injunction may issue when
such an injunction is sought. Fish v. Kobach, 840 F.3d 710, 723-24 (10th Cir. 2016).
“They are (1) preliminary injunctions that alter the status quo; (2) mandatory preliminary
injunctions; and (3) preliminary injunctions that afford the movant all the relief that it
could recover at the conclusion of a full trial on the merits.” Id. (internal quotation
marks omitted). Because the parties did not brief whether the heightened burden
applies here, the Court will not address the issue. See New Mexico Dep’t of Game &
Fish v. United States Dep’t of the Interior, 854 F.3d 1236, 1246 n.15 (10th Cir. 2017).
7

marks omitted). The parties do not dispute that the registration statement is an
essential link in completing the merger and whether the defendants were negligent;
instead, the parties focus on whether the omissions are material.
Movants do not identify any misrepresentations in the proxy statement. Instead,
they identify several alleged omissions they claim make the proxy statement misleading
and suggest supplemental information that should be provided. The Supreme Court
addressed the standard to determine whether an omission is material under Rule 14a-9
in TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 445 (1976):
An omitted fact is material if there is a substantial likelihood that a
reasonable shareholder would consider it important in deciding how to
vote. . . . It does not require proof of a substantial likelihood that
disclosure of the omitted fact would have caused the reasonable investor
to change his vote. What the standard does contemplate is a showing of
a substantial likelihood that, under all the circumstances, the omitted fact
would have assumed actual significance in the deliberations of the
reasonable shareholder. Put another way, there must be a substantial
likelihood that the disclosure of the omitted fact would have been viewed
by the reasonable investor as having significantly altered the “total mix” of
information made available.
Id. at 449.
A. Financial Analyses Omissions
First, movants argue that the registration statement is misleading under Rule
14a-9 because the financial analyses and projections do not provide a reconciliation to
GAAP financial measures as required by SEC Regulation G, 17 C.F.R. § 244.100.
Zand, Docket No. 17 at 15; Gussin, Docket No. 19 at 15. 5 Movants complain about
5

Movants do not argue that the failure to include GAAP reconciliation
information violated Section 14(a) of the Exchange Act by soliciting proxies “in
contravention of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of investors.” 15
8

defendants’ use of EBITDA as a measure of the projected future performance of
DigitalGlobe and MDA. Gussin, Docket No. 19 at 14-15. Movants also point to the
proxy’s discounted cash flow analysis, id. at 15, and free cash flow analysis. Zand,
Docket No. 17 at 16. Second, movants argue that defendants misleadingly fail to
provide an explanation for some of the assumptions used in the registration statement’s
financial analyses. Zand, Docket No. 17 at 17-19; Gussin, Docket No. 19 at 15-17. As
a result of these issues, movants urge that DigitalGlobe should be required to provide
GAAP reconciliation for DigitalGlobe’s board of directors’ financial projections for the
years 2018-2021 and provide further explanations for financial analyses. Zand, Docket
No. 17 at 24; Gussin, Docket No. 19 at 32.
Defendants argue that they are not required to disclose the GAAP reconciliation
figures and that none of the information sought by movants is material. As to
Regulation G, defendants argue that they are exempted from it because the registration
statement, and the projections of which movants complain, relate to a “proposed
business combination.” 17 C.F.R. § 244.100(d) (exempting certain regulated
U.S.C. § 78n(a); see also Resnik v. Swartz, 303 F.3d 147, 151 (2d Cir. 2002)
(“[O]mission of information from a proxy statement will violate [Section 14(a) if] the SEC
regulations specifically require disclosure of the omitted information in a proxy
statement.”). Rather, movants argue that defendants’ failure to disclose GAAP
reconciliation information was a materially misleading omission under SEC Rule 14a-9.
Zand, Docket No. 17 at 15 (“The failure to provide a GAAP reconciliation of these
non-GAAP projections for only one of the five years of projections included in the
Registration Statement renders it materially incomplete and misleading.”); Gussin,
Docket No. 19 at 14 (“The Registration Statement omits material information with
respect to the Proposed Transaction and, therefore, is materially false and
misleading.”). Because movants did not make specific, substantive arguments on this
issue, the Court will not address whether defendants’ failure to provide GAAP
reconciliation was a violation of Section 14(a), but rather will only address whether such
failure was materially misleading under Rule 14a-9.
9

communications from Regulation G); Zand, Docket No. 19 at 17. Defendants do not,
however, point to authority that 17 C.F.R. § 244.100(d) exempts defendants from their
obligations under Rule 14a-9 not to submit materially misleading proxies. As to
materiality, defendants argue that the reconciliations and explanations movants seek do
not rise to the level of materiality in light of the large volume of information disclosed in
the registration statement and the nearly 18% share price premium offered as part of
the merger. Zand, Docket No. 19 at 19-22; Gussin, Docket No. 29 at 16-20.
The question before the Court is whether movants have shown a likelihood of
proving that the financial analyses in the registration statement are materially
misleading under Rule 14a-9 in its use of non-GAAP financial measures and in its
omission of explanations for the financial analyses. Gussin’s arguments consist of a
laundry list of financial information that defendants could have provided in the proxy,
but did not. Gussin, Docket No. 19 at 14-16. Gussin states in conclusory fashion that
the omitted information would “provide[] stockholders with a basis to project the future
financial performance of a company, and allow[] stockholders to better understand the
financial analyses performed by the company’s financial advisor in support of its
fairness opinion,” but he does not otherwise explain why any of the additional
information would be material to a shareholder in making his or her determination about
whether to vote for the merger, id. at 17, or how defendants’ failure to provide the
identified information renders the proxy materially misleading. Id. at 14 (“The
Registration Statement omits material information with respect to the Proposed
Transaction and, therefore, is materially false and misleading.”).
Gussin cites a number of Delaware state law cases that generally indicate the
10

importance of financial projections. Id. at 24 (“It is well-settled that financial projections
are among the most important information a shareholder can have when evaluating the
proposed consideration in a merger.”) (citing cases).6 But these cases relate to
determining directors’ duties of disclosure under Delaware law in the context of cashout mergers.7 E.g., In re Netsmart Techs., Inc. Shareholders Litig., 924 A.2d 171, 192
(Del. Ch. 2007). While these cases indicate that financial projections are particularly
important in the context of a cash-out merger, they do not create a per se rule that
financial projections and their underlying financial information are material or must be
disclosed. See Goldfinger v. Journal Commc’ns Inc., 2015 WL 2189752, at *4 (E.D.
Wis. May 8, 2015) (“There is no ‘per se’ duty to disclose financial projections given to
and relied on by a financial advisor.” (citing Dent v. Ramtron Int'l Corp., 2014 WL
2931180, at *11 (Del. Ch. June 30, 2014))); see also Malon v. Franklin Fin. Corp., 2014
WL 6791611, at *6 (E.D. Va. Dec. 2, 2014) (“Courts have consistently held that the duty
of disclosure does not extend to the provision of information so extensive and detailed
as to permit stockholders to make an independent determination of fair value or
recreate the analysis of a financial advisor.”). Additionally, courts have recognized that
such information is of less importance outside the cash-out merger context. Gottlieb v.
Willis, 2012 WL 5439274, at *5 (D. Minn. Nov. 7, 2012). Here, approximately half of the
merger compensation is cash, but DigitalGlobe’s shareholders will retain a significant

6

Zand makes a similar argument citing similar cases. Zand, Docket No. 17 at

13-14.
7

In a cash-out merger, a company is sold for monetary compensation and the
stockholders do not receive an ownership stake in the merged entity.
11

ownership stake in the merged entity. Gussin, Docket No. 29-4 at 5-6. Moreover, even
if these cases showed the importance of the identified omissions, they do not show that
any of the omitted information is “necessary in order to make the statements [in the
registration statement] not false or misleading.” 17 C.F.R. § 240.14a-9(a). Thus, the
Court finds that Gussin’s arguments fail to make a “showing of a substantial likelihood
that, under all the circumstances, the omitted fact would have assumed actual
significance in the deliberations of the reasonable shareholder.” TSC Indus., Inc., 426
U.S. at 449.
Zand argues that the omitted information is “plainly material because
stockholders would find it important to understand the Company’s standalone prospects
in deciding whether or not to approve the Proposed Transaction.” Zand, Docket No. 17
at 14. Zand claims that the registration statement’s non-GAAP financial measures are
potentially misleading by pointing to various indicators that the SEC has “heightened its
scrutiny” of unreconciled, non-GAAP projections. Zand, Docket No. 17 at 15-16 (citing,
e.g., Keynote Address, International Corporate Governance Network Annual
Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board
Diversity, Non-GAAP, and Sustainability (June 27, 2016),
www.sec.gov/news/speech/chair-white-icgn-speech.html#_ftnref38). However, the
information Zand cites regarding the potentially misleading nature of non-GAAP
financial measures also shows that such measures have been extensively used in
financial disclosures even after Regulation G was finalized in 2003. See, e.g.,
Gretchen Morgenson, Fantasy Math Is Helping Companies Spin Losses Into Profits,

12

N.Y. TIMES, Apr. 22, 2016 (“According to a recent study in The Analyst’s Accounting
Observer, 90 percent of companies in the Standard & Poor’s 500-stock index reported
non-GAAP results last year, up from 72 percent in 2009.”), available at
http://www.nytimes.com/2016/04/24/business/fantasy-math-is-helping-companies-spin-l
osses-into-profits.html?_r=0. Zand’s burden is to show that there is a “substantial
likelihood that the disclosure of the omitted fact[s] would have been viewed by the
reasonable investor as having significantly altered the ‘total mix’ of information made
available” in making his decision. TSC Indus., Inc., 426 U.S. at 449.
Zand’s argument that non-GAAP measures are generally suspect fails to show
that the specific omissions he identifies would take on actual significance to a
shareholder in determining how to vote. For example, Zand argues that the lack of
GAAP reconciliation for economic projections for 2018-21 renders the proxy “materially
incomplete and misleading.” Zand, Docket No. 17 at 15. But Zand acknowledges that
defendants did provide a GAAP reconciliation for its projections for 2017. Id. at 14.8
Zand does not explain why added reconciliation information for the omitted, later years
would be expected to assume actual significance in a shareholder’s determination
about the present value of the company or why such information would be viewed as
significantly altering the information available where defendants have already made
similar disclosures. See TSC Indus., Inc., 426 U.S. at 449; Gussin, Docket No. 29-4 at
154 (“DigitalGlobe has not provided reconciliations for fiscal years 2018 through 2021
8

Likewise, Zand’s arguments regarding the valuations provided by PJT Partners
and Barclays, id. at 17-19, emphasize that the financial advisors’ analysis is important,
but Zand does not explain how or why the omitted information would be expected to
significantly alter the information available to a shareholder if it were provided.
13

because, with the passage of time, it becomes increasingly difficult to estimate the
reconciling items without unreasonable effort.”). Additionally, it is clear that some of the
non-GAAP financial measures Zand challenges are recognized and specifically defined
such that they have less potential to be misleading. In particular, the SEC has provided
a definition of EBITDA and allows its broader use than other non-GAAP financial
measures in recognition that EBITDA is regularly used and well understood. NonGAAP Financial Measures, Sec. Com. Discl. 5620589, Question 103.01, available at
https://www.sec.gov/divisions/corpfin/guidance/nongaapinterp.htm (updated May 17,
2016) (requiring that variances from the SEC’s definition of EBITDA be identified and
discussing Exchange Act Release No. 47226, which defines and exempts EBITDA from
certain requirements of Item 10 of Regulation S-K stating, “[w]e are exempting EBIT
and EBITDA from this provision because of their wide and recognized existing use.”).
Although Zand is concerned that there is something lurking in the undisclosed
reconciliation figures based on generalized information about the type of financial
measures at issue, Zand does not provide any evidence that would support a
conclusion that defendants made a materially misleading omission. See In re
CheckFree Corp. Shareholders Litig., 2007 WL 3262188, at *2 (Del. Ch. Nov. 1, 2007)
(“It is not sufficient that information might prove helpful.”).
By contrast, defendants identify a more objective measure against which the
materiality of the omissions could be measured by pointing to the value of the
compensation shareholders will receive. Gussin, Docket No. 29 at 4; Zand, Docket No.
19 at 8. The $35 per share value that DigitalGlobe shareholders would receive
(representing an 18% premium over DigitalGlobe’s share price at the time the
14

transaction was reported) represents a yardstick against which movants’ arguments that
the financial analysis undervalues DigitalGlobe can be measured to determine if
movants are likely to show a material omission. As Zand acknowledges, the
shareholders’ choice is between the transaction price and maintaining DigitalGlobe as a
separate entity. See Zand, Docket No. 17 at 14 (“This information is plainly material
because stockholders would find it important to understand the Company’s standalone
prospects in deciding whether or not to approve the Proposed Transaction.”). But
movants make no attempt to show the potential impact of the identified omissions or
challenged assumptions on the proper valuation of the company despite identifying
some omissions and assumptions whose impact should be at least estimable, for
example, the use of a 1.5% to 2.5% perpetuity growth rate instead of a higher value,
which allegedly led to DigitalGlobe being undervalued. See Zand, Docket No. 20 at 9
(arguing that a 2% to 4% perpetuity growth rate would be more appropriate and that the
“growth rates used in this transaction appear to be lower than reasonable and could
have skewed these analyses towards a more favorable opinion of the Proposed
Transaction.”).9 Zand’s assertion, made without supporting evidence and analysis to
show the materiality of the omissions, does not constitute a clear showing that Zand is
likely to succeed on the merits.
Accordingly, the Court finds that movants have not shown that they are likely to
9

At the hearing, Gussin argued that it is suspicious that all three scenarios
provided by DigitalGlobe management project a drop in EBITDA for fiscal year 2021,
leading to an undervaluation of DigitalGlobe. But Gussin did not explain how much
impact this projected drop would have on the valuation of DigitalGlobe or why a
shareholder would consider the omitted explanation for the drop in projected EBITDA
for 2021 in determining how to vote on July 27, 2017.
15

succeed in showing the non-GAAP financial measures and omitted explanations are
materially misleading.
B. Conflict of Interest Omissions
Movants further argue that the registration statement fails to disclose conflicts of
interest by the financial advisors and board members. Although the registration
statement provides general information about the investment advisors’ past work for
defendants and the compensation for that work, movants argue that the registration
statement is misleading because it fails to disclose the “full scope of services performed
by PJT Partners to [MDA] in the past and the compensation received, the amount of
compensation paid to Barclays by DigitalGlobe for past services, and whether Barclays
performed work for [MDA] in the past and the compensation paid for those services.”
Zand, Docket No. 17 at 19; see also Gussin, Docket No. 19 at 20. Movants argue that
DigitalGlobe should disclose the specific amounts paid to the financial advisors during
the past two years and disclose communications related to the determination that three
directors of the merged entity would be DigitalGlobe directors who voted in favor of the
transaction.10
Defendants respond that they have disclosed the financial advisors’ contingent
interest in the transaction, that they have nothing further to disclose, and that the
registration statement’s general description of the past work done by the financial

10

Gussin argues that DigitalGlobe should be required to disclose why its board
did not undertake an extensive investigation of the pre-announcement leak of the
merger negotiations, but he fails to provide more than a conclusory statement that a
shareholder would consider this important in deciding how to vote on the merger.
Gussin, Docket No. 19 at 19.
16

advisors, and compensation they received, is sufficient to render the registration
statement not misleading because it contains all information relevant to the financial
advisors’ “potential financial incentives.” Zand, Docket No. 19 at 22. The Court finds
that movants have not shown that they will likely succeed in showing that the
registration statement contains a material omission regarding potential conflicts by the
financial advisors. See In re Micromet, Inc. Shareholders Litig., 2012 WL 681785, at
*12 (Del. Ch. Feb. 29, 2012) (declining to require supplementation because the
plaintiffs “fail[ed] to provide any persuasive explanation . . . as to why the actual amount
of fees paid by [a company] to [a financial advisor] would be material to shareholders”
where the company disclosed the financial advisor’s contingent interest in the
transaction and generally disclosed that the financial advisor had performed
compensated services to both parties to the transaction in the past).
Gussin argues that defendants should be compelled to disclose communications
that relate to the determination that three DigitalGlobe board members would join the
board of the merged entity. Gussin, Docket No. 19 at 17-19. The Court finds that
Gussin has failed to show a likelihood of success on his claim that the failure to
disclose specific communications regarding the MDA board seats is misleading. To the
extent that the promise of MDA board seats shows that the directors set to occupy
those seats are interested in the transaction, the m aterial facts underlying the potential
conflict are disclosed. It is unclear how the failure to disclose the communications in
relation to the board seats “omits to state any material fact necessary in order to make
the statements therein not false or misleading.” 17 C.F.R. § 240.14a-9(a).
The Court finds that movants have failed to show that they are likely to succeed
17

on the merits. Because a movant must succeed on all the factors to prevail, the Court
will not address the remaining factors. See Johnson & Johnson Vision Care, Inc. v.
Reyes, 665 F. App’x 736, 747 (10th Cir. 2016) (unpublished) (“Because we conclude
that the district court didn't abuse its discretion in concluding that the Manufacturers are
unlikely to succeed on the merits of their claims, it is unnecessary to address the
remaining factors of the preliminary injunction standard.” (citing Winter, 555 U.S. at 2324)).
III.

CONCLUSION
Accordingly, it is
ORDERED that Plaintiff’s Motion for Preliminary Injunction filed by plaintiff Dane

Gussin in Gussin v. DigitalGlobe, Inc., et al., Case No. 17-cv-01190-PAB, Docket No.
19, is DENIED. It is further
ORDERED that Plaintiff’s Motion for Preliminary Injunction filed by plaintiff Stuart
Zand in Zand v. DigitalGlobe, Inc., et al., Case No. 17-cv-01570-PAB, Docket No. 14, is
DENIED.

DATED July 21, 2017.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

18