SOLAK v. PASSMAN et al

Filing 25

ORDER denying 14 Motion for Discovery; denying 14 Motion for TRO; denying 14 Motion for Preliminary Injunction Briefing Schedule. Ordered by US DISTRICT JUDGE CLAY D LAND on 06/14/2016. (CCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
IN RE CARMIKE CINEMAS, INC.

*

SHAREHOLDER LITIGATION

*

Lead Case No. 4:16-cv-154 (CDL)
ALL CASES
*
O R D E R
On March 3, 2016, Carmike Cinemas, Inc. (“Carmike”) and AMC
Entertainment

Holdings,

Inc.

(“AMC”)

announced

that

AMC

had

agreed to acquire all of the outstanding common stock of Carmike
for $30 per share in cash.

Compl. ¶ 2, ECF No. 1.

Plaintiffs,

who are Carmike shareholders, contend that $30 per share is not
enough.

They

complain

that

the

negotiated

acquisition

of

Carmike was “at an unfair price through an unfair process that
was

tilted

shareholders.

in

favor

of

Id. ¶ 1.

AMC”

to

the

detriment

of

Carmike

Fifty-three days after the announcement

of the acquisition, on April 25, 2016, Plaintiffs filed the
present action alleging claims for breach of fiduciary duty by
the

Carmike

Board

of

Directors

and

claims

arising

from

violations of Sections 14(a) and 20(a) of Securities Exchange
Act of 1934, 15 U.S.C. § 78a et seq.

Plaintiffs seek damages

and injunctive relief.
Presently pending before the Court is Plaintiffs’ Motion
for a Temporary Restraining Order, Expedited Discovery, and a
Preliminary

Injunction

Briefing

Schedule

(ECF

No.

14).

Plaintiffs seek an injunction to prevent the shareholder vote on
the acquisition, which is scheduled for June 30, 2016.

Although

Plaintiffs waited until June 6, 2016 to file their motion, they
want the Court to expedite discovery, briefing, and its own
decision making so that all of this can be completed in time for
a decision to be made on whether to halt the vote scheduled for
June 30.

The Court held a telephone conference with counsel on

June 9 at which they had an opportunity to argue the issues
raised

by

Plaintiffs’

motion.

Having

fully

considered

Plaintiffs’ motion, the Court finds for the reasons explained in
the remainder of this order that it should be denied.
DISCUSSION
Plaintiffs
information

maintain

than

what

that

was

Carmike

provided

shareholders

in

the

proxy

need

more

statements

regarding the acquisition in order to cast an informed vote at
the shareholder meeting.
contained

in

misleading.

the

proxy

They also contend that information
statement

was

materially

false

and

Therefore, Plaintiffs seek to delay the vote until

this information can be developed through expedited discovery
which

they

then

intend

to

use

in

support

of

a

preliminary

injunction to prevent the acquisition.
Although
presently

a

pending

motion
before

for
the

“preliminary
Court,

the

injunction”
Court

must

is

not

consider

whether such relief is likely to be granted in the future and

2

whether any amount of discovery will affect a decision on that
relief.1

If that issue can be decided without discovery, then

Plaintiffs’ motion for expedited discovery is moot.
preliminary

injunction

or

temporary

restraining

Before a

order

may

be

issued, the party seeking the injunction or TRO must show that:
“(1) it has a substantial likelihood of success on the merits;
(2) irreparable injury will be suffered unless the injunction
[is] issue[d]; (3) the threatened injury to the movant outweighs
whatever damage the proposed injunction may cause the opposing
party; and (4) if issued, the injunction would not be adverse to
the public interest.”

Siegel v. LePore, 234 F.3d 1163, 1176

(11th Cir. 2000) (en banc) (per curiam).
The key, and ultimately dispositive, issue that the Court
must decide is whether Plaintiffs will likely suffer irreparable
injury if the shareholder vote is allowed to proceed on June 30.
“An injury is ‘irreparable’ only if it cannot be undone through
monetary remedies.”
(11th Cir. 1987).
word

in

however

this

Cunningham v. Adams, 808 F.2d 815, 821
As the Supreme Court observed, “[t]he key

consideration

substantial,

in

is

terms

irreparable.
of

money,

Mere
time

injuries,

and

energy

necessarily expended in the absence of a stay, are not enough.
The possibility that adequate compensatory or other corrective
1

Plaintiffs presently seek a temporary restraining order to delay the
shareholder vote, so that they may conduct expedited discovery. They
then intend to seek a preliminary injunction based upon that
discovery.

3

relief will be available at a later date, in the ordinary course
of litigation, weighs heavily against a claim of irreparable
harm.”

Sampson v. Murray, 415 U.S. 61, 90 (1974) (quoting Va.

Petroleum Jobbers Ass’n v. Fed. Power Comm’n, 259 F.2d 921, 925
(D.C. Cir. 1958)).
The Court finds that Plaintiffs are unable to establish
that they will suffer irreparable harm if the shareholder vote
is allowed to proceed on June 30.

The essence of Plaintiffs’

complaint is that they do not believe $30 per share is a fair
price for their Carmike shares.
this

undervaluation

of

their

Although they maintain that

shares

resulted

from

an

unfair

process, their disclosure claims are inextricably intertwined
with their damages claims.
any

unique

value

that

Moreover, Plaintiffs do not suggest

Carmike

has

to

them

other

than

its

financial value, which would be reflected in a fair stock price.
If they are successful in demonstrating that Defendants breached
some

duty

associated

with

the

acceptance

of

$30

per

share,

presumably Plaintiffs will be able to obtain what they truly
seek, which is a fair price for their shares.2
Plaintiffs

once

the

shareholder vote occurs, “the eggs cannot be unscrambled.”

But

the

Court

does

make

not

the

colorful

understand

why

2

argument

the

that

“scrambling”

prevents

Plaintiffs have not explained why they will be unable to do so either
in this action or through an appraisal process under applicable state
law.

4

Plaintiffs from ever obtaining the full value of their “eggs.”
If the stock is worth more than $30 per share and Defendants’
conduct caused it to be improperly undervalued due to a breach
of fiduciary duty or violation of the securities laws, then
Plaintiffs should be able to unscramble them to the extent that
they will eventually be paid for the full value of their “eggs.”
Plaintiffs have offered no basis for concluding that they
will be irreparably harmed if the vote on the acquisition is
allowed to proceed.

The bottom line is the bottom line.

If

Plaintiffs prevail on their claim for damages, they will receive
what they seek—fair value for their shares.

Plaintiffs have

pointed the Court to nothing that suggests a positive vote on
June 30 will prevent them from doing so.3
CONCLUSION
Because Plaintiffs have not demonstrated how they will be
irreparably harmed if the June 30 shareholder vote is allowed to
proceed,

their

motion

for

the

extraordinary

remedy

of

a

temporary restraining order is denied.

The Court finds that no

discovery will alter this conclusion.

Accordingly, Plaintiffs’

3

The Court hastens to add that there may be circumstances when damages
or other legal remedies cannot repair harm caused by a shareholder
vote. But the Court does not find those circumstances present here.
The Court acknowledges the right of a shareholder to be able to make a
fully informed voted based upon truthful and material information, but
if that right is violated under the circumstances alleged here, it can
be vindicated through available legal remedies.
Thus, preliminary
injunctive relief is not necessary or appropriate.

5

motion for expedited discovery and expedited briefing schedule
is moot.

IT IS SO ORDERED, this 14th day of June, 2016.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

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