Louisiana Municipal Police Employees Retirement System v. Continental Resources Inc et al

Filing 63

ORDER granting in part and denying in part 52 Motion for Discovery. Signed by Honorable Timothy D. DeGiusti on 8/3/2012. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
LOUISIANA MUNICIPAL POLICE
EMPLOYEES’ RETIREMENT SYSTEM,

)
)
)
Plaintiff,
)
)
v.
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CONTINENTAL RESOURCES, INC.,
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HAROLD G. HAMM, H. R. SANDERS, JR., )
JOHN T. McNABB II, MARK E. MONROE, )
ELLIS L. McCAIN, ROBERT J. GRANT,
)
JEFFREY B. HUME, and WHEATLAND
)
OIL INC.,
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Defendants.
)

NO. CIV-12-667-D

ORDER
Before the Court is Plaintiff’s renewed motion to conduct expedited discovery [Doc. No. 52],
seeking to conduct discovery in connection with its motion for a preliminary injunction [Doc. No.
51]. The two pending motions were filed shortly before the Court conducted its scheduled July 30,
2012 hearing on Plaintiff’s motion seeking a temporary restraining order (“TRO”) [Doc. No. 11].
In both the TRO and the preliminary injunction, Plaintiff asks the Court to enjoin the August 10,
2012 vote of the shareholders of Continental Resources, Inc. (“Continental”).
In connection with its request for a TRO, filed July 16, 2012, Plaintiff also filed a motion for
expedited discovery. On July 24, 2012, the Court entered its Order [Doc. No. 33] denying the
motion for expedited discovery, without prejudice to Plaintiff’s resubmission of the request after the
filing of an anticipated motion for a preliminary injunction.1

1

The motion seeking a TRO was filed on July 16, 2012, and it was not accompanied by a preliminary injunction
motion. Notice was given to all parties, and the TRO was fully briefed before the July 30 hearing.

By separate Order entered this date, the Court has denied the TRO request. That Order is
adopted and fully incorporated herein. As set forth in detail in the Order, the Court concluded the
evidence and governing law establish that Plaintiff failed to show a likelihood of success on the
merits of its claim that Continental’s directors breached their fiduciary duties to the minority
shareholders by failing to disclose, in the definitive proxy regarding the August 10 vote, detailed
information underlying the fairness opinion of Evercore Group, L.L.C. (“Evercore”). Further, as
explained in detail in the Order, the Court also concluded that Plaintiff failed to demonstrate in
connection with the arguments advanced at the TRO hearing that it will suffer irreparable harm if
injunctive relief is not granted and the scheduled August 10 vote takes place.
Plaintiff’s request for discovery seeks four categories of documents,2 and each seeks
production of information underlying the Evercore fairness opinion. See Motion [Doc. No. 52] at
p. 4.

This information is effectively the same material Plaintiff contends should have been

disclosed in the definitive proxy. Inasmuch as the Court has ruled that Continental was not
obligated to disclose this information in the definitive proxy, the subject matter of the four requested
categories of documents cannot form the basis for a preliminary injunction, and there is no need for
expedited discovery. The request for expedited discovery requiring production of these documents
is denied.
The only other discovery sought by Plaintiff consists of the deposition of the Evercore
officer or employee most knowledgeable with respect to the proposed acquisition which is the
subject of the scheduled shareholder vote and a deposition of one of the co-trustees of the Hamm

2

The motion states that it is accompanied by an exhibit setting out a document request. However, no exhibit
is attached to the motion. As a result, the Court has confined its ruling to the documents listed in Plaintiff’s motion at
page 4.

2

Children Trusts which own some shares in Continental.
The motion to conduct expedited discovery is denied to the extent Plaintiff seeks to depose
a representative of Evercore for the same reasons, set forth above and fully explained in the Order
denying the TRO, that the Court has denied expedited document production on this topic.
With respect to the requested deposition of a trustee of the Hamm Children Trusts
(“Trusts”), the Court notes that Plaintiff contends the Trusts should not be allowed to vote on the
proposed acquisition because they are allegedly controlled by Defendant Harold Hamm, the Chief
Executive Officer and majority shareholder of Continental. Plaintiff does not contend that the
existence of the Trusts and their stock ownership was not disclosed in the proxy statement. In fact,
the proxy expressly discloses that certain shares are owned by irrevocable trusts established for the
benefit of Harold Hamm’s children. See July 9, 2012 proxy at page 13. The proxy also discloses that
those trusts own approximately 8.11% of the outstanding common stock of Continental. Id. It
further explains that, because Harold Hamm does not possess any voting or investment power over
the shares owned by the trusts, they are not considered excluded shareholders, and the Trusts’ vote
at the August 10 meeting will be counted.

Plaintiff contends that, notwithstanding these

statements, Harold Hamm controls the vote which will be cast by the Trusts and such vote should
not be counted.
During the TRO hearing, counsel expressly stated Plaintiff did not seek a TRO on this issue,
but confined Plaintiff’s argument to the claim that the definitive proxy omitted data underlying the
Evercore opinion. Plaintiff’s counsel did, however, suggest that he would seek narrowly tailored
discovery inquiring whether the Trustees have in some way submitted to the control of Harold
Hamm in connection with their votes. And, as is apparent from Plaintiff’s pending Motion for

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Preliminary Injunction [Doc. No. 51], Plaintiff continues to seek injunctive relief regarding the
ability of the Trusts to vote at the upcoming shareholders meeting.
Having considered this issue, the Court concludes that Plaintiff should be allowed to conduct
limited, expedited discovery, in the form of a deposition of the subject Trustee(s). Such deposition
discovery shall be completed on or before August 7, 2012, and shall be limited to subject matter
reasonably related to the independence of the Trustees in voting the shares of stock owned by the
Trusts.
For the foregoing reasons, the motion [Doc. No. 52] to conduct expedited discovery is
GRANTED in part and DENIED in part, as set forth herein.
IT IS SO ORDERED this 3rd day of August, 2012.

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