Parshall v. HCSB Financial Corporation et al

Filing 29

ORDER denying 8 Emergency MOTION for Preliminary Injunction. Signed by the Honorable R. Bryan Harwell on 7/24/2017. (eney, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Paul Parshall, Individually and on Behalf
of All Others Similarly Situated,

)
)
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Plaintiff,
)
)
v.
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)
HCSB Financial Corporation, Michael S.
)
Addy, Clay D. Brittain, III, Gerald R.
)
Francis, Jan H. Hollar, James C. Nesbitt,
)
John T. Pietrzak, D. Singleton Bailey, and )
United Community Banks, Inc.,
)
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Defendants.
)
____________________________________)

Civil Action No.: 4:17-cv-01589-RBH

ORDER DENYING EMERGENCY
MOTION FOR PRELIMINARY
INJUNCTION

This matter is before the Court on Plaintiff Paul Parshall’s Emergency Motion for Preliminary
Injunction whereby Plaintiff seeks to enjoin a stockholder vote scheduled for July 27, 2017, relating to
the merger of Defendants HCSB Financial Corporation (“HCSB”) and United Community Banks, Inc.
(“UCBI”). See ECF No. 8. The Court held a hearing on July 21, 2017, and orally denied the motion
at the end of the hearing. See ECF No. 28. The Court now issues the following Findings of Fact and
Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent that
any Findings of Fact constitute Conclusions of Law, or vice-versa, they shall be so regarded.1
Findings of Fact2
On June 16, 2017, Plaintiff filed a complaint naming as defendants HCSB, HCSB’s Board of
Directors (who are named as individual defendants), and UCBI. See ECF No. 1. Plaintiff alleges in

1

2

The Court prepared this Order in an expedited manner due to obvious time constraints.

The Court gleans these facts from Plaintiff’s complaint, Plaintiff’s current motion and attachments,
Defendants’ responses and attachments, and representations made by the parties at the expedited hearing. See ECF
Nos. 1, 8, 24, & 26. The Court cites these filings where practicable.

his complaint that (1) “[t]his action stems from a proposed transaction announced on April 20, 2017,”
pursuant to which HCSB will be acquired by UCBI; (2) on April 19, 2017, HCSB’s Board of Directors
caused HCSB to enter into an agreement and plan of merger with UCBI, and pursuant to the terms of
the Merger Agreement, stockholders of HCSB will receive 0.005 shares of UCBI per share of HCSB;
(3) “[o]n May 17, 2017, defendants filed a Form S-4 Registration Statement (the ‘Registration
Statement’) with the United States Securities and Exchange Commission (‘SEC’) in connection with
the Proposed Transaction”; and (4) “[t]he Registration Statement omits material information with
respect to the Proposed Transaction, which renders the Registration Statement false and misleading”
and violates Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (“the Exchange Act”).
Id. at ¶¶ 1–4.
On July 14, 2017, Plaintiff filed the instant Emergency Motion for Preliminary Injunction and
attached a copy of the Registration Statement. See ECF No. 8. He seeks to preliminary enjoin the
stockholder vote on the proposed transaction challenged in this action scheduled for this Thursday, July
27, 2017, pursuant to which HCSB will be acquired by UCBI through a wholly-owned subsidiary. Id.
He seeks to enjoin the stockholder vote pending what he claims are necessary corrective disclosures by
Defendants.3 Id. Defendants have filed responses in opposition with attached exhibits, including
several declarations. See ECF Nos. 24 & 26.
Plaintiff argues the Registration Statement is materially misleading and incomplete and omits
material information, to wit: (1) the financial projections prepared by HCSB (and UCSB) and relied

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Plaintiff Paul Parshall is a frequent litigant of these types of actions. In the last year alone, he has filed at
least thirty-two complaints seeking to enjoin merger transactions in state and federal courts across the country. Thirty
of these suits were filed by Plaintiff’s Delaware counsel in this case, Rigrodsky & Long, P.A., most with RM Law,
P.C. serving as co-counsel. See ECF No. 24 at 2–3 n.1 (listing all thirty-two cases). Additionally, the Court notes
Mr. Parshall was not present at the hearing on his emergency motion. HCSB refers to these lawsuits as ‘“shakedown’
cases.” See ECF No. 26 at 26.

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upon by HCSB’s financial advisor, Hovde Group, LLC (“Hovde”); (2) potential conflicts of interest
affecting Hovde, financial advisor to the Board; and (3) terms of a nondisclosure agreement (“NDA”)
executed by another bidder and Plaintiff’s concerns about the potential presence of a standstill provision
preventing the competing bidder from making a topping bid. ECF No. 8-1 at 9, 14. At the hearing,
Plaintiff’s counsel appeared to be satisfied with HCSB’s response and evidence indicating there was
no standstill provision in the NDA. Regardless, as explained in this Order, Plaintiff has not met his
burden of proof for purposes of this motion as to any of these allegations or arguments.
Plaintiff owns two one-hundred thousandths of a percent (only 0.00002%) of the outstanding
shares of HCSB. He purchased $11 in stock on November 3, 2016, which converts to less than one
share of UCBI stock under the proposed merger. See ECF No. 26-3. While he has brought this case
as a putative class action, no class has been certified, and Plaintiff has presented no evidence that he
represents the interests (adequately or otherwise) of other shareholders. No affidavit or declaration from
Plaintiff or any other shareholder has been submitted alleging the Registration Statement was
misleading or contained material omissions. In his motion, Plaintiff seeks to enjoin the shareholders
from voting on the merger with UCBI that is currently valued at approximately $66 million, even
though HCSB shareholders have already returned proxies demonstrating overwhelming support for the
proposed merger, far in excess of the threshold of outstanding shares needed for approval. The sole
basis for the extraordinary relief Plaintiff seeks is that the Final Proxy (i.e., the Registration Statement),
which is sixty-one pages long with fifty pages of attachments and refers to voluminous other public
information, is allegedly inadequate under Sections 14(a) and 20(a) of the Exchange Act.
In support of his position, Plaintiff relies solely on arguments of counsel, his memorandum, and
the filed Registration Statement. Plaintiff was not present at the hearing, and no declaration or affidavit

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from Plaintiff was submitted. However, HCSB submitted the declaration of Defendant Jan Hollar, who
is the CEO of HCSB. See ECF No. 26-5. Ms. Hollar states the following: (1) to her knowledge, no
shareholder other than Plaintiff has contacted HCSB and suggested that the proxy disclosures are
misleading or inadequate, or that he or she needs more information in order to decide how to vote on
the proposed transaction; (2) as of July 20, 2017, the holders of 339,821,636 (or 83.86%) of the
405,232,383 outstanding shares of HCSB voting common stock have delivered their proxies, and of
those voting so far, 99.96% of shares have been voted in favor of the proposed merger, which represents
a shareholder approval rate well in excess of the 66.7% (or two-thirds) required to approve the merger
under South Carolina law; (3) as of July 20, 2017, the holders of all 90,531,557 outstanding shares of
HCSB non-voting common stock had delivered their proxies, and of those voting so far, 100.0% of all
shares have been voted in favor of the proposed merger, which is substantially higher than the simple
majority of non-voting shareholder approval needed under South Carolina law; (4) in addition to the
SEC’s review of the Registration Statement/Preliminary Proxy, the proposed merger has been approved
by the state banking regulators in both Georgia and South Carolina; (5) the proposed merger
applications have also been approved by the FDIC and the Board of Governors of the Federal Reserve
System; (6) there is no higher priced alternative to the merger with UCBI and no other bidders have
come forward since the announcement of the merger with UCBI; (7) HCSB entered into a NDA dated
January 25, 2017, with Institution A, and this agreement did not include a standstill or any other
provision which would have precluded or limited Institution A’s ability to submit a topping bid or any
other merger offer; (8) after reviewing all relevant expenses and obligations related to the proposed
merger, Ms. Hollar has determined that a thirty-day delay in vote would likely cost HCSB more than
$420,000 that would otherwise not be incurred if the vote proceeded as scheduled (and if the delay is

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longer, the cost will be even higher); (9) a delay of the shareholder vote would result in delaying the
consummation of the transaction and would impose other significant logistical problems and expenses
upon HCSB and its employees; (10) a delay of the HCSB shareholder vote would have an adverse
impact on the public, including consumers of HCSB’s banking services; (11) the HSCB Board
determined in good faith exercise of their business judgment that the merger with UCBI represented the
best opportunity to maximize shareholder value, and postponing the shareholder vote could jeopardize
the merger and present some risk of the transaction not being consummated; (12) HCSB stockholders
could be further harmed because a delay in the vote may result in a reduction in share value of the stock
of either HCSB or UCBI and endanger the premium to HCSB shareholders sought to be achieved by
the merger; (13) an injunction would create uncertainty among HCSB’s shareholders, customers, and
employees and potentially hinder HCSB’s operations if bank employees or customers leave HCSB in
the wake of such uncertainty and instability; and (14) HCSB has already incurred substantial expenses
related to the proposed merger, most of which would not be recoverable if this merger opportunity is
lost. Id. at 1–3.
Additionally, HCSB submitted declarations of various shareholders who own millions of shares
of HCSB common stock and who have significant holdings in HCSB. See ECF No. 26-8. Specifically,
HCSB submitted declarations from: (1) David Volk, who serves as the principal of Castle Creek Capital
Partners VI, LP, which owns approximately 22.19% of all HCSB common shares outstanding; (2) Ben
Mackovak, who serves as the managing member of Strategic Value Investors LP, which owns 6.07%
of all HCSB common shares outstanding; (3) Michael Rosinus, who serves as a senior advisor for
Tricadia Capital Management, LLC, which owns approximately 4.49% of all HCSB common shares
outstanding; and (4) John J. Lyons, who serves as the managing principal of Commerce Street Keefe

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Ventures Fund III, LP, which owns approximately 4.49% of all HCSB common shares outstanding. Id.
All four declarants state that (1) they have studied the proposed merger between HCSB and UCBI,
concluded the disclosures in the Proxy Statement are fully adequate, and do not need any further
information in order to decide whether to vote in favor of the merger; (2) they are in favor of the
proposed merger, have delivered their proxy cards with instructions to vote all their shares in favor of
the merger, want the vote to proceed and the merger to close as soon thereafter as possible, and would
be very disappointed and believe it would be detrimental to the HCSB shareholders if the vote or
consummation of the merger is delayed or the opportunity lost; and (3) they have reviewed Plaintiff’s
complaint, do not believe Plaintiff represents their interests in connection with the proposed merger or
the issues raises in the pleading, do not find the disclosure issues raised by Plaintiff are material to them
in deciding whether to vote for or against the merger in light of the total mix of information disclosed
in the Proxy Statement and the publicly available information, and would be very disappointed with any
delay of the shareholder vote or consummation of the merger because of any issues raised in Plaintiff’s
lawsuit. Id.
UCBI has submitted the declaration of Christian Zych, who is UCBI’s Senior Vice President,
Director of Mergers & Acquisitions and Management Reporting and who has been involved in the
pending transaction with HCSB. ECF No. 24-1 at ¶ 3. Zych states that as disclosed in the Proxy
Statement, Hovde has not provided any investment banking or financial advisory services to UCBI; and
in fact, Hovde has never provided any investment banking or financial advisory services to UCBI. Id.
at ¶ 4. Zych further avers that regarding any internal management projections prepared by UCBI, UCBI
did not provide any of its internal forecasts or projections to HCSB’s management, board of directors,
or Hovde, including in connection with UCBI’s offer to acquire HCSB or the subsequent negotiation

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and review of the merger agreement. Id. at ¶ 5. Finally, Zych avers that to the extent UCBI prepares
any internal forecasts or projections, UCBI regards this information as confidential and as a matter of
course does not publicly disclose such forecasts or projections. Id. at ¶¶ 6–7.
As explained in more detail below, the Court finds that Plaintiff has not met his burden of proof
with regard to each of the elements for a preliminary injunction, and that his request must therefore be
denied.
Conclusions of Law
I.

Preliminary Injunction Standard
Federal Rule of Civil Procedure 65 establishes the procedure for federal courts to grant

preliminary injunctions. See Fed. R. Civ. P. 65. Because of the extraordinary nature of injunctive relief,
the United States Supreme Court has admonished that preliminary injunctions “may only be awarded
upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22.
A plaintiff seeking a preliminary injunction must establish all four of the following criteria: (1)
that the plaintiff is likely to succeed on the merits, (2) that the plaintiff is likely to suffer irreparable
harm in the absence of preliminary injunctive relief, (3) that the balance of equities tips in the plaintiff’s
favor, and (4) that the injunction is in the public interest. League of Women Voters of N. Carolina v.
N. Carolina, 769 F.3d 224, 236 (4th Cir. 2014) (citing Winter, 555 U.S. at 20). A plaintiff must make
a clear showing that it is likely to succeed on the merits of its claim. Winter, 555 U.S. at 20-22.
Likewise, a plaintiff must make a clear showing that it is likely to be irreparably harmed absent
injunctive relief. Id. Only then may the court consider whether the balance of equities tips in the
plaintiff’s favor. Real Truth About Obama, Inc. v. Fed. Election Comm’n, 575 F.3d 342, 346-47 (4th
Cir. 2009), vacated on other grounds, 559 U.S. 1089 (2010), reissued in part, 607 F.3d 355 (4th Cir.

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2010), overruling Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189 (4th Cir.
1977). Finally, the court must pay particular regard to the public consequences of employing the
extraordinary relief of injunction. Id. at 347.
II.

Discussion
A.

Likelihood of Success on the Merits

The first Winter factor requires Plaintiff to clearly show he will likely succeed on the merits of
his claims. See 555 U.S. at 20. Plaintiff alleges Defendants violated sections 14(a) and 20(a) of the
Exchange Act.4 ECF No. 8-1 at 11. Section 14(a) of the Exchange Act “was intended to promote the
free exercise of the voting rights of stockholders by ensuring that proxies would be solicited with
explanation to the stockholder of the real nature of the questions for which authority to cast his vote is
sought.” TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 444 (1976) (internal quotation marks
omitted). “It is well settled that § 14(a) of the Securities Exchange Act grants an implied private right
of action.”5 Edge Partners, L.P. v. Dockser, 944 F. Supp. 438, 440 (D. Md. 1996) (citing J. I. Case Co.
v. Borak, 377 U.S. 426, 430 (1964)).
Section 14(a) prohibits “the solicitation of a proxy regarding any security, by way of interstate
commerce, in contravention of the rules and regulations prescribed by the” SEC. Hayes v. Crown Cent.
Petroleum Corp., 78 F. App’x 857, 861 (4th Cir. 2003). “SEC Rule 14a–9 prohibits false or misleading

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Section 20(a) “imposes liability on each person who ‘controls any person liable under any provision of this
chapter.’” Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 192 (4th Cir. 2009) (quoting 15
U.S.C. § 78t(a)). A plaintiff must successfully allege a predicate violation of the Exchange Act to proceed under
section 20(a). See id. As explained below, Plaintiff fails to clearly show a likelihood of success on the merits of his
predicate section 14(a) claim, and therefore cannot clearly show a likelihood of success on the merits of a section
20(a) claim.

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“Section 27 of the Act specifically grants the appropriate district courts jurisdiction over all suits in equity
and actions at law brought to enforce any liability or duty created under the Act.” Parsons v. Jefferson-Pilot Corp.,
789 F. Supp. 697, 701 (M.D.N.C. 1992).

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statements with respect to material facts as well as the omission of material facts necessary to make the
statements therein not false or misleading.” Id. (citing 17 C.F.R. § 240.14a–9(a)). “A shareholder
establishes a violation of Rule 14a–9, which is promulgated under Section 14(a) of the Securities
Exchange Act[,] by establishing: (1) the proxy statement contains a material misrepresentation or
omission; (2) the defendants were negligent; and (3) the proxy was the essential link in completing the
transaction in question.” Parsons v. Jefferson-Pilot Corp., 789 F. Supp. 697, 701 (M.D.N.C. 1992).
“A misrepresentation or omission is material if there is a substantial likelihood that the disclosure of
the omitted fact would have been viewed by a reasonable investor as having significantly altered the
total mix of information made available.” Hayes, 78 F. App’x at 861 (4th Cir. 2003) (citing TSC Indus.,
426 U.S. at 449). This standard “does not require proof of a substantial likelihood that disclosure of
the omitted fact would have caused the reasonable investor to change his vote.” TSC Indus., 426 U.S.
at 449. “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.” Id.
Here, Plaintiff claims the Registration Statement fails to disclose and omits material information
concerning (1) HCSB’s and UCBI’s financial projections and (2) potential conflicts of interest affecting
Hovde.6 ECF No. 8-1 at 9, 14.
1.

Financial Projections

Plaintiff first claims the Registration Statement omits material information regarding HCSB’s
and UCBI’s financial projections. Id. at 9, 14. He alleges the Registration Statement “misleadingly

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As indicated above, Plaintiff’s counsel indicated at the hearing that HCSB’s response and evidence removed
any concern regarding a standstill provision in the NDA.

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fails to disclose or even include any information concerning” HCSB’s management projections. Id. at
14–15. Specifically, Plaintiff seeks disclosure of projected financial forecasts that include: dividends,
earnings, total assets, loans, total deposits, book value, total equity, return on average assets, return on
average equity, and cash flow and its constituent line items. Id. at 18 n.7. He asserts “[t]his material
omission is especially stark” because the individual defendants specifically considered the prospects
of HCSB, and because Hovde reviewed financial projections when rendering its fairness opinion. Id.
at 15. Plaintiff further maintains that based upon a review of the Registration Statement, “it is clear that
management’s financial forecasts played a significant role in the decision to approve the Merger
Agreement.” Id.
The Fourth Circuit has recognized “the SEC has not imposed a duty to disclose financial
projections in disclosure documents generally.” Walker v. Action Indus., Inc., 802 F.2d 703, 709 (4th
Cir. 1986). Instead, whether such a duty exists depends on “the circumstances of” the particular case.
See id.
Here, for purposes of this preliminary injunction motion, the Court finds Plaintiff has not
satisfied his burden of proof regarding his allegations of material omissions. Further, the Court finds
Plaintiff has not carried his burden of showing negligence or injury. See Parsons, 789 F. Supp. at 701.
As explained below, the Court finds the alleged financial projections sought by Plaintiff would not have
been viewed by the reasonable investor as having significantly altered the total mix of information made
available. See TSC Indus., 426 U.S. at 449; Hayes, 78 F. App’x at 861. The omission of this
information from the Registration Statement/Final Proxy does not appear to be material for the
following reasons.
The Registration Statement disclosed management’s net income projections for HCSB for the

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years ending December 31, 2017 through 2022, which formed the basis for Hovde’s discounted cash
flow analyses that were performed and presented to HCSB in connection with Hovde’s fairness opinion.
See Registration Statement [ECF Nos. 8-2, 26-1, & 26-2]. The Court’s determination is further
supported by the four shareholder declarations provided by HCSB, which state that the disclosures in
the Final Proxy as written contain all information material to investors and that the additional details
requested by Plaintiff are not material information needed by the shareholders. See ECF No. 26-8.
Moreover, Ms. Hollar avers in her declaration that no shareholder other than Plaintiff has contacted
HCSB and suggested the proxy disclosures are misleading or inadequate, or that he or she needs more
information in order to decide how to vote on the proposed transaction. See ECF No. 26-5. Ms. Hollar
further states the holders of 83.86% of HCSB common stock have delivered their proxies, and that
99.96% of these shares have been voted in favor of the proposed merger, which is well in excess of the
two-thirds needed under South Carolina law. Id. Ms. Hollar also avers 100.0% of all holders of nonvoting common stock have delivered their proxies to be voted in favor of the proposed merger. Id.
Moreover, while Plaintiff speculates that UCBI provided internal projections to Hovde and that
these projections were omitted from the Registration Statement, in actuality UCBI did not provide any
financial projections to HCSB or Hovde in connection with the transaction, as indicated by Mr. Zych’s
declaration. See ECF No. 24-1. In fact, when UCBI does prepare any financial projections or forecasts,
it as a matter of course does not publicly disclose those because of their speculative nature. Id.
Finally, the Court notes Plaintiff has not submitted an affidavit or declaration from himself or
any other shareholder or from an expert addressing the materiality of the alleged omissions. The Court
finds Plaintiff has not clearly shown a likelihood of success on the merits regarding his allegation that
the Registration Statement omits material information about HCSB or UCBI’s financial projections.

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2.

Hovde’s Potential Conflicts of Interest

Next, Plaintiff claims the Registration Statement “is materially misleading in that it fails to
disclose both the amounts of Hovde’s ‘fairness opinion fee’ and ‘completion fee’ to be received in
connection with its engagement with HCSB, as well as the amount of compensation Hovde has received
for services it provided to HCSB and its affiliates in the last two years.” ECF No. 8-1 at 18. Plaintiff
alleges these issues “represent important, potential conflicts of interest that could significantly taint the
advice provided by the financial advisor to the Board.” Id.
Here, for purposes of this preliminary injunction motion, the Court finds Plaintiff has not
satisfied his burden of proof regarding his allegations of material omissions. Further, the Court finds
Plaintiff has not carried his burden of showing negligence or injury. See Parsons, 789 F. Supp. at 701.
As explained below, the Court finds the alleged omissions regarding Hovde would not have been
viewed by the reasonable investor as having significantly altered the total mix of information made
available. See TSC Indus., 426 U.S. at 449; Hayes, 78 F. App’x at 861. The omission of this
information from the Registration Statement does not appear to be material for the following reasons.
First, the Final Proxy discloses that Hovde has performed other services for HCSB for a fee over
the past two years and would receive both a completion fee and fairness opinion fee for the merger. See
Registration Statement [ECF Nos. 8-2, 26-1, & 26-2]. Furthermore, Ms. Hollar avers in her declaration
that no shareholder other than Plaintiff has contacted HCSB and suggested the proxy disclosures are
misleading or inadequate, or that he or she needs more information in order to decide how to vote on
the proposed transaction. See ECF No. 26-5. Moreover, Hovde states in its fairness opinion (included
in the Final Proxy) that it has not provided investment banking and financial advisory services to UCBI
in the past two years; and Mr. Zych avers the same in his declaration. See Registration Statement [ECF

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Nos. 8-2, 26-1, & 26-2]; ECF No. 24-1. Finally, the shareholder declarations provided by HCSB state
that the disclosures in the Final Proxy as written contain all information material to investors, and that
the additional details requested by Plaintiff are not material information needed by the shareholders.
See ECF No. 26-8. And again, the Court notes Plaintiff has not submitted an affidavit or declaration
from himself or any other shareholder or from an expert addressing the materiality of the alleged
omissions. The Court finds Plaintiff has not clearly shown a likelihood of success on the merits
regarding his allegation that the Registration Statement omits material information about Hovde’s
relationship with HCSB and UCBI.
In sum, the Court finds Plaintiff has not made a clear showing that he is likely to succeed on the
merits of his allegations that Defendants violated sections 14(a) or 20(a) of the Exchange Act.7
B.

Likelihood of Irreparable Harm

The second Winter factor requires Plaintiff to clearly show irreparable harm will occur absent
an injunction. See 555 U.S. at 20. Plaintiff claims he has identified material omissions that, if left
unremedied, render the Registration Statement materially incomplete and misleading and prevent
HCSB’s stockholders from casting a fully informed vote on the proposed transaction. ECF No. 8-1 at
23.
The Court finds Plaintiff has not made a clear showing of irreparable harm for multiple reasons.
First, Plaintiff has not submitted an affidavit or declaration from himself (or an expert) detailing how

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As noted above, because Plaintiff fails to clearly show he is likely to succeed on the merits of his section
14(a) claim— which is a predicate for a section 20(a) claim— he likewise fails to clearly show he is likely to succeed
on the merits of his section 20(a) claim.

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the omitted disclosures would inform his vote.8 Second, Plaintiff has failed to show why monetary
damages are not an adequate remedy; specifically, he appears to have an adequate remedy at law
because he could be compensated with money damages for his current $14 holding, and therefore
extraordinary injunctive relief is not appropriate.9 Finally, and perhaps most obviously, Plaintiff owns
a minuscule share of HCSB stock and is the only stockholder claiming irreparable injury.10 This case
has not been certified as a class action; Plaintiff has not moved for class certification; and Plaintiff has
not identified any other stockholders claiming they need the same disclosures he seeks. See, e.g., Malon
v. Franklin Fin. Corp., 2014 WL 6791611, at *3 (E.D. Va. Dec. 2, 2014) (acknowledging “it is true
stockholders theoretically face irreparable harm when they are required to make important voting
decisions on the basis of inadequate proxy disclosures,” but finding “a single disgruntled stockholder
with a de minimis ownership interest” does not face irreparable harm). Accordingly, the Court finds
Plaintiff has not clearly shown irreparable injury will result absent a preliminary injunction.
C.

Balance of Equities

The third Winter factor requires Plaintiff to show the balance of the equities tips in his favor.
See Winter, 555 U.S. at 20. First, while not dispositive, the Court notes Plaintiff filed his motion just

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See, e.g., Gottlieb v. Willis, 2012 W L 5439274, at *7 (D. Minn. Nov. 7, 2012) (“Gottlieb has not submitted
so much as a declaration averring that the information she seeks would be material to her vote, much less an expert
affidavit stating that a reasonable investor would likely find the omitted information material.”).

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See, e.g., Calleros v. FSI Int’l, Inc., 892 F. Supp. 2d 1163, 1174 (D. Minn. 2012) (finding no irreparable
harm in part because “monetary damages are regularly used to satisfy claims alleging violations of the securities
laws”); Iavarone v. Raymond Keyes Assocs., Inc., 733 F. Supp. 727, 732 (S.D.N.Y. 1990) (finding “equitable relief
is not appropriate, as money damages will fully compensate plaintiff” for his allegations that the defendants violated
the Exchange Act “by making false statements of material facts and omitting to state material facts”).

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In fact, under the terms of the merger agreement, Plaintiff would receive 0.005 shares of UCBI common
stock for each share of HCSB stock he owns, which would equate to 0.50 shares of UCBI common stock. See ECF
No. 26 at 13. Because Plaintiff would own less than one share of UCBI common stock after consummation of the
merger, Plaintiff would receive cash instead of a fractional share pursuant to the terms of the merger agreement. Id.

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thirteen days before the scheduled stockholder vote.11 Other courts addressing similar scenarios have
recognized the harm that defendants will likely suffer when a single shareholder plaintiff seeks to enjoin
a shareholder vote at the eleventh hour. See, e.g., Orlando v. CFS Bancorp, Inc., 2013 WL 5797624,
at *6 (N.D. Ind. Oct. 28, 2013); Gottlieb v. Willis, 2012 WL 5439274, at *7 (D. Minn. Nov. 7, 2012);
Galaton v. Johnson, 2011 WL 9688271, at *2 (E.D.N.C. Aug. 17, 2011). Second, Plaintiff is the only
HCSB shareholder to raise any objection to the transaction. Third, Plaintiff owns 0.00002% of the
outstanding shares of HCSB, which is equivalent to approximately $14; in comparison, the merger of
HCSB and UCBI is valued at approximately $66 million. In fact, if the merger is consummated,
Plaintiff owns such a small percentage that he will receive cash instead of a fractional share of UCBI
common stock. See ECF No. 26 at 13. Fourth, other stockholders who own millions of shares of HCSB
common stock have submitted declarations stating they are in favor of the merger and need no further
disclosures; and HCSB shareholders overwhelmingly support the merger with UCBI, as 83.86% of
voting shareholders and 100.0% of non-voting shareholders have voted to approve the merger. Finally,
while Plaintiff claims the “outer termination date” for the merger “is still more than 2.5 months away”
and would “still leav[e] ample time” for consummation of the transaction, he fails to comprehend the
immediate financial consequences to HCSB. Ms. Hollar avers in her declaration that “a 30-day delay
in vote would likely cost HCSB more than $420,000 that would otherwise not be incurred if the vote
proceeded as scheduled,” and that if the delay is longer than thirty days, “the cost will be even higher.”
ECF No. 26-5 at ¶ 11. Ms. Hollar also avers a delay in vote could jeopardize the merger itself, impose

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The Court acknowledges Plaintiff’s representation that— after filing his complaint on June 16, 2017— he
unsuccessfully engaged with Defendants to resolve the alleged deficiencies in the Registration Statement. ECF No.
8-1 at 9. The Court is focusing on the short timeframe between Plaintiff’s filing his motion and the stockholder vote
simply to address the practical harms that could result to Defendants from delaying a stockholder vote on such short
notice.

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significant logistical problems and expenses upon HCSB and its employees, result in a reduction in
share value of the stock of either HCSB or UCBI, and potentially cause HCSB to lose employees if the
merger is delayed. Id. at ¶¶ 12–16. Significantly, Ms. Hollar points out HCSB has already incurred
substantial expenses related to the proposed merger, most of which would not be recoverable if this
merger opportunity is lost. Id. at ¶ 17. In light of these considerations, the Court finds Plaintiff has not
carried his burden to show the equities tip in his favor.
D.

Public Interest

The final Winter factor requires Plaintiff to show preliminary injunctive relief is in the public
interest. See Winter, 555 U.S. at 20. Here, the Court finds enjoining a stockholder vote on a $66
million dollar bank merger scheduled for this Thursday has the potential to be enormously disruptive
and create public uncertainty regarding the entities involved. Accordingly, the Court finds Plaintiff has
not met his burden to show a preliminary injunction is in the public interest.
Conclusion
The Court finds Plaintiff has failed to meet his burden on all four Winter factors. Accordingly,
the Court DENIES Plaintiff’s Emergency Motion for Preliminary Injunction [ECF No. 8].
IT IS SO ORDERED.

Florence, South Carolina
July 24, 2017

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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