Galaton v. Johnson et al

Filing 23

ORDER denying 3 Motion for Temporary Restraining Order and Motion for Preliminary Injunction. Signed by US District Judge James C. Dever III on 8/17/2011. (Sawyer, D.)

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA

WESTERN DMSION

No.5:11·CV-397-D

MARTIN GALATON, individually and
on behalf of all others similarly situated,
Plaintiff,

v.
WILLIAM D. JOHNSON, et al.,
Defendants.

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ORDER

On July 18, 2011, Martin Galaton ("Galaton" or "plaintiff') filed this action, on behalf of
himselfand all other shareholders ofcommon stock in Progress Energy, Inc. ("Progress"), regarding
Duke Energy Corp.' s ("Duke") proposed acquisition of Progress [D.E. 1]. 1 The shareholders are
scheduled to vote on August 23, 2011, and the value ofthe transaction is approximately $26 billion.
On August 2, 2011, Galaton filed a motion for a temporary restraining order and preliminary
injunction [D.E. 3]. On August 12,2011, Galaton filed the memorandum in support ofhis motion
for a temporary restraining order or preliminary injunction [D.E. 17]. Essentially, Galaton seeks
preliminary injunctive relief, enjoining the vote until Progress amends its j oint proxy statement and
prospectus ("proxy statement"). See Compl. 2, 58; Mot. for TRO & Prelim. Inj. 2. On August 15,
2011, Progress filed a response in opposition [D.E. 20]. On August 16, 2011, Duke and Diamond

1 Although Galaton did not file the complaint until July 18,2011, it is dated July 6,2011.
See Compl. 59. Galaton, "as a result ofa clerical error," initially filed the complaint on July 7, 2011,
as an amended complaint in another action. Wolfv. Johnson, No. 5:11-CV-58-D, [D.E. 21, 23]
(E.D.N.C. July 7, 2011).

Acquisition Corp. filed a response in opposition [D.E. 22]. As explained below, the court denies
Galaton's motion [D.E. 3V

1.
On January 8, 2011, Progress and Duke signed a merger agreement. Pursuant to the
agreement, Duke would acquire all outstanding shares ofProgress stock and Progress stockholders
would receive 2.6125 shares of Duke's common stock for each share of Progress common stock.
Compl. 2-3. On January 10, 2011, Progress and Duke announced the definitive merger agreement.
rd. at 2. The proposed merger between Progress and Duke is valued at $26 billion. Progress Defs.'
Opp'n 5. On March 17, 2011, Progress filed the proxy statemenf with the U.S. Securities and
Exchange Commission ("SEC") and scheduled a shareholder meeting for August 23,2011, to vote
on the proposed merger agreement. rd. at 6; see Cox Decl., Ex. 4. On July 18,2011, Galatonfiled
this action, seeking to enjoin the shareholders from voting on the merger until the court resolves the
merits ofplaintiff's claims.
The purpose of a preliminary injunction is to preserve the status quo, thereby protecting a
court's ability to render a meaningful judgment on the merits. See, e.g., In re Microsoft Corp.

A hearing is not necessary in this case. The adverse parties had sufficient notice of the
motion, see Fed. R. Civ. P. 65(a), and all parties have had the opportunity to brief the relevant legal
issues and submit pertinent evidence. Furthermore, a plaintiff's failure to allege and put forth facts
that support his claim for relief under the governing law obviates any need for a hearing. Boyd v.
Beck, 404 F. Supp. 2d 879,887 n.3 (E.D.N.C. 2005) (citing Bradleyv. Pittsburgh Bd. ofEduc., 910
F.2d 1172, 1176 (3d Cir. 1990) ("[A] district court is not obliged to hold a hearing when the movant
has not presented a colorable factual basis to support the claim on the merits or the contention of
irreparable harm."); ItA Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice
and Procedure § 2949, at 226 (2d ed. 1995) (explaining that preliminary injunctions can be denied
without a hearing, even after the movant requests one, "when the written evidence shows the lack
of a right to relief so clearly that receiving further evidence would be manifestly pointless")).
2

3 Progress amended the proxy statement on April 8, 2011, April 25, 2011, May 13,2011,
June 30, 2011, July 7, 2011, and July 15,2011. Progress Defs.' Opp'n 6.

2

Antitrust Litig., 333 F.3d 517,525-26 (4th Cir. 2003); Omega World Travel. Inc. v. Trans World
Airlines, 111 F.3d 14, 16 (4th Cir. 1997). Because a preliminary inj unction grants reliefbefore trial,
it is "an extraordinary remedy never awarded as ofright." Winter v. Natural Res. Def. Council. Inc.,
555 U.S. 7,24 (2008). A preliminary injunction may only be awarded upon a "clear showing" that
a plaintiff is entitled to such relief. Id. at 22-23; Mazurek v. Armstrong, 520 U.S. 968, 972 (1997)
(per curiam); Real Truth About Obama. Inc.. v. FEC, 575 F.3d 342, 345-46 (4th Cir. 2009), vacated

on other grounds, 130 S. Ct. 2371 (2010), reissued in relevant J2m1, 607 F.3d 355 (4th Cir. 2010)
(per curiam). To receive a preliminary injunction, a plaintiff must clearly show four things: (1) that
he is likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of
preliminary relief; (3) that the balance ofequities tips in his favor; and (4) that an injunction is in the
public interest. Winter, 555 U.S. at 20; Real Truth, 575 F.3d at 346. Plaintiff must satisfy all four
of these requirements. Real Truth, 575 F.3d at 346.
"Equity demands that those who would challenge the legal sufficiency of [a defendant's]
decisions ... do so with haste and dispatch." Quince Orchard Valley Citizens Ass'n v. Hodel, 872
F.2d 75,80 (4th Cir. 1989). Progress and Duke announced the definitive merger agreement over
seven months ago, and Progress filed the proxy statement on March 17, 2011. In response, multiple
shareholders promptly filed suit in North Carolina Business Court. See Progress Defs.' Opp'n 1-2,
6; Cox Decl., Exs. 1,3. The shareholder suits were consolidated into one state-court action, where
the parties conducted significant discovery and ultimately reached a settlement. See Progress Defs.'
Opp'n 6-8. The North Carolina Business Court has given preliminary approval of the settlement
agreement. See Cox Decl., Exs. 1,3. Galaton, on the other hand, did not join the state-court action.
Instead, he prepared a complaint dated July 6, 2011, but did not file the complaint in this court until

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July 18,2011.4 After filing the complaint, Galaton did not file a motion for a TRO and preliminary
injunction until August 2,2011. Moreover, Galaton did not file a supporting memorandum with
his August 2nd motion. Instead, Galaton waited to file his supporting memorandum until Friday
afternoon, August 12, 2011, eleven days before the scheduled shareholder vote. Galaton's August
2nd motion violates Local Rule 7.1(d), EDNC, which states "all motions made, other than in a
hearing or trial, shall be filed with an accompanying supporting memorandum."
In light of Galaton' s dilatory approach in this case and his abject disregard for the rules of
this court, the court finds that the balance of equities do not favor Galaton. See Quince, 872 F .2d
at 79-80; Union Pac. COlp. v. Santa Fe Pac. Corp., Nos. CIY. A. 13778, 13587, 1995 WL 54428,
at *1-4 (Del. Ch. Jan. 30, 1995) (unpublished). Galaton has been aware of the facts forming the
basis of his claims for months, yet waited until the fifty-ninth minute of the eleventh hour to seek
an extraordinary equitable remedy. See Quince, 872 F .2d at 79-80; NACCO Indus .. Inc. v. Applica.
Inc., No. 1:06-CV-3002, 2006 WL 3762090, at *8-9 & n.12 (N.D. Ohio Dec. 20, 2006)
(unpublished). Galaton's proposed preliminary injunction would disrupt Progress's scheduled
shareholder meeting to vote on the merger agreement and thereby prejudice Progress and the public.
Galaton could have avoided this disruption with a prompt challenge. See Quince, 872 F.2d at 80.
Galaton's argument that he is likely to suffer irreparable harm is due to his own delay. Id. at 79
(affinning denial ofpreliminary injunction where plaintiff s potential harm ''was a product ofits own
delay in pursuing th[e] action"). Equity need not and will not provide a balm for Galaton's selfinflicted wound. Moreover, based on its review to date, the court does not believe that Galaton is

4 Galaton' s complaint is nearly identical to the complaint that Galaton's counsel filed in this
court on February 2, 2011, on behalfofanothershareholder, Noah Wolf. Wolfv. Johnson, No.5: 11­
CV-58-D, [D.E. 1] (B.D.N.C. Feb. 10,2011). After Wolfamended the complaint on April 7, 2011,
Wolf voluntarily dismissed the action on July 22,2011. M., [D.E. 23].

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likely to succeed on the merits or that the proposed injunction is in the public interest. Accordingly,
the court denies Galaton's request for preliminary injunctive relief.
II.

In sum, Galaton has failed to meet the heavy burden necessary to obtain a temporary
restraining order or preliminary injunction. Galaton's motion for a temporary restraining order and
preliminary injunction is DENIED [D.E. 3].
SO ORDERED. This J../Q.. day of August 2011.

fut-".~vu

SC.DEVERm
United States District Judge

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