in-re-metropcs-communications-inc-deutsche-telekom-t-mobile-usa-inc ( 2013 )

Writ of Mandamus Conditionally Granted; Opinion Filed January 8, 2013
in The
Itizirt tif Appirnts
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No. 05-12-01577-CV
IN RE METROPCS COMMUNICATIONS, INC.; DEUTSCHE TELEKOM;
I -MOBILE USA, INC, ROGER D LINQU1ST, W MICHAEL BARNES,
JACK F. CALLAHAN, JR.; C. KEVIN LANDRY; ARTHUR C. PATTERSON;
AND JAMES N. PERRY, JR., Relators
Original Proceeding from the County Court at Law No. 1
Dallas County, Texas
Trial Court Cause No. CC-12-06144-A
OPINION
Before Justices Bridges, Lang, and Fillmore
Opinion By Justice Lang
This mandamus proceeding arises from a “shareholder class and derivative action” brought
by real party in interest Adam Golovoy’ against relators
2 for alleged breaches of fiduciary duty
respecting a proposed “business combination” involving MetroPCS, DT, and T-Mobile. Golovoy
filed a motion for a temporary restraining order to enjoin several alleged “deal protection devices”
pertaining to the proposed business combination, including, inter alia, (1) the issuance of any
“Rights Certificates” to MetroPCS common stockholders pursuant to a MetroPCS “Rights
(lolovoy asserted in his petition that he is a shareholder of MetroPCS Communications, Inc. “MetroPCS”) and that the underlying action was
brought “derivatively on behalf of [MetroPCSj’ and “individually on behalf of the holders of MetroPCSi common stock.”
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Relators named as defendants in the underlying lawsuit were Deutsche Telekom (“DT”); T-Mobile USA, Inc. (“T-Mobile”); Roger D. Linquist;
W. Michael Barnes; Jack F. Callahan, Jr.; C. Kevin Landry; Arthur C. Patterson; and James N. Perry. Jr. The latter six were described in the petition
as members of MetroPCS’s board of directors. Relator MetroPCS was named in the petition as a “nominal party.”
Agreement” dated March 29, 2007, and (2) compliance with a voting provision contained in section
45(h) of the agreement governing the proposed business combination (the “Business Combination
Agreement”). Relators filed (1) a motion to dismiss in which they asserted that a “mandatory
exclusive forum selection provision” in MetroPCS’s bylaws requires that this case be brought only
in Delaware and (2) a motion to stay in which they requested the trial court to rule on their motion
to dismiss before considering Ciolovoy’s motion for a temporary restraining order. After holding a
hearing on Golovoy’s motion, the trial court signed a temporary restraining order dated November
16, 2012 (the “TRO”). The TRO enjoined MetroPCS and its board of directors from “causing or
allowing” the issuance of the “Rights Certificates” described above or complying with the voting
provision in section 4.5(h) of the Business Combination Agreement. Additionally, in the TRO, the
trial court set a November 29, 2012 hearing to determine whether the TRO “should be made a
Temporary Injunction pending a full trial on the merits.”
In their petition for writ of mandamus, relators request this Court to direct the trial court to
(I) vacate the TRO, including the setting for the temporary injunction hearing, (2) deny Golovoy’s
motion for a temporary restraining order, and (3) grant relators’ motion to stay the case until relators’
motion to dismiss is decided.
3 Because we conclude the trial court abused its discretion and relators
have no adequate remedy by appeal, we conditionally grant the writ of mandamus.
I. FACTUAL AND PROCEDURAL BACKGROUND
Golovoy contended in his petition that DT, T-Mobile, and the members ofMetroPCS ‘s board
ofdirectors (the “Board”) breached fiduciary duties or aided and abetted such breaches in connection
with DT and T-Mobile’s “proposed acquisition of [MetroPCS] at an unfair price via a
Additionally, relators requested expedited relief by separate motion filed along with their petition for writ of mandamus, Pursuant to that
motion. in a November 20. 2012 order, this Court stayed the temporary restraining order at issue and the temporary injunction hearing described
therein until further order of this Court.
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recapitalization”pursuant to the Business Combination Agreement According to Golovoy, the “per
share value ofthe Proposed Acquisition drasticallyundervalues [MetroPCS’s] worth and prospects.”
Further Golovoy asserted “the terms ofthe Proposed Acquisition were designed to ensure the sale
of [MetroPCS] to one buyer, and one buyer only” on terms preferential to DT, T-Mobile, and the
Board, “and to subvert the interests of plaintiff and the other public stockholders of [MetroPCS].”
Specifically, Golovoy contended
The Board breached its fiduciary duties by agreeing to preclusive deal protection
devices in connection with the [Business Combination Agreement] [MetroPCS]
entered into with T-Mobile [and DTJ. These provisions, which collectively preclude
any competing offers for [MetroPCS], include: (i) a no-solicitation provision that
precludes [MetroPCS] from providing confidential [MetroPCS] information to, or
even communicating with, potential competing bidders except under extremely
limited circumstances; (ii) a matching rights provision that allows T-Mobile [and
DT] to match any competing superior proposal; and (iii) a termination fee provision
which obligates [MeIr0PCS] to pay T -Mobile [and DT] a $150 million termination
fee in the event the Proposed Acquisition is terminated in fhvor of a superior
proposal.
Golovoy contended in part that unless enjoined by the trial court “defendants will
consummate the Proposed Acquisition, and plaintiff and the other [MetroPCS] shareholders will
forever lose their equity interest in [MetmPCS] for an inadequate price, all to the irreparable harm
of plaintiffand the other shareholders of[MeIr0PCS].” The reliefrequested in the petition included,
inter alia, awarding damages to MetroPCS; declaring the Business Combination Agreement
“unlawfhl and unenforceable”; rescinding, to the extent already implemented, the Business
Combination Agreement, “including the onerous and preclusive deal protection devices”; and
“[e]njoining defendants, their agents, counsel, employees and all persons acting in concertwith them
from consummating the Proposed Acquisition, unless and until defendants disclose all material
information to [MetroPCS’s] shareholders in advance of the shareholder vote on the Proposed
Acquisition necessary for [MetroPCS’s] shareholders to be able to make a fully informed decision
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on the Proposed Acquisition.” On the day after the petition was filed, Golovoy’s counsel of record,
Jamie McKey, filed a “Verification” in which she testified, “1 have read the Shareholder Derivative
and Class Action Petition for Breach of Fiduciary Duty. The facts stated in it are within my personal
knowledge and are true and correct.”
On November 5, 201 2, Golovoy filed a “Motion for a Temporary Restraining Order and an
Order Compelling Expedited Discovery.” In that motion, Golovoy asserted in part
[T]he Board has agreed to a number of unfair contractual terms in the merger
documents that are designed to take freedom of choice, and any hope for a better
deal, away from shareholders. Each day that passes with those unfair contractual
terms in place decreases the likelihood that a better offer will be made for the
Company, and increases the likelihood that shareholders will be disenfranchised and
otherwise irreparably harmed. Accordingly, time is of the essence, and the Proposed
Acquisition and the unfair contractual terms agreed to by defendants should be
restrained and enjoined so that a fair and open process can take place.
Golovoy restated the contentions in his petition respecting the undervaluation of MetroPCS
and the three alleged “preclusive deal protection devices” described therein. Further, in the motion,
Golovoy stated in part
On October 3, 2012, [MetroPCS] entered into an amendment to the its [sic] Rights
Agreement, dated as of March 29, 2007, by and between [MetroPCS] and American
Stock Transfer & Trust Company, LLC, as Rights Agent (the “Poison Pill”). The
amendment makes [MetroPCS’s] Poison Pill inapplicable to the Proposed
Acquisition, but keeps the Poison Pill in place as to all other potential acquirers of
[MetroPCS] (the “Poison Pill Lock-Up”). That means that if a potential acquirer
other than [DT and] T-Mobile attempts to launch a tender offer for more than 15%
of [MetroPCS’s] outstanding stock, or even announces an intention to do so, a
“flip-in” event, will occur that allows existing [MetroPCS] shareholders to buy more
[MetroPCS] shares at a discount, making [MetroPCS] prohibitively expensive for
any buyer.,. As such, the Poison Pill Lock-Up is an onerous and inappropriate deal
.
protection device that has the immediate and absolute effect ofdiscouraging potential
acquirers from making a competitive and superior bid for [MetroPCS] in the form of
a tender offer directly to [MetroPCS’s] shareholders.
In addition the Business Combination Agreement also contains a “force the
vote” provision. MetroPCS cannot terminate the Proposed Transaction even if a
competing bid is made unless [MetroPCS] holds its shareholder vote and
shareholders vote no. Rather than insisting on a “fiduciary out” that would permit the
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board to terminate the Proposed Acquisition in the event a higher otter came along,
the Board instead agreed to a “forced vote on the Proposed Acquisition regardless
ot any helter deals. See Briscoe Dccl.. Ex. A at 4.5(h). These lockups are simply
un1ur and should he restrained and enjoined.
Golovov’s counsel of record. Willie C. Briscoc. tiled an afhdavit dated November 5. 2012.
in support o (olovov S motion for a temporary restraimnu order and order compelling expedited
discovery, in that aflklavit, Briscoe testi hed as follows:
* . I make this declaration in support of Plaintiffs’ Motion fbr a Temporary
. .
Restraining Order and an Order Compelling Expedited Discovery. I have personal
knowledge of the matters stated herein and, if called upon, I could and would
competently testify thereto.
2. Attached is a true and correct copy of the following exhibit:
Exhibit A: [Business Combination Agreement] between Deutsche Telekorn AG,
I—Mobile USA. Inc. and MetroPCS Communications, Inc.. dated October 3, 2() 12.
I declare under penalty of perjury under the laws of’ the State of Texas that the
foregoing is true and correct.
Attached to Briscoe’s affidavit was a copy of the Business Combination Agreement.
On November 12, 2012, relators tiled a “Motion to Dismiss or Stay” (the “Motion to
l)ismiss”). In the Motion to Dismiss, relators asked the trial court to “dismiss or, in the alternative,
to stay this action in favor of parallel litigation in Delaware based on a mandatory forum selection
provision in MetroPCS’ bylaws and in the interests of comity.” Attached to relators’ Motion to
Dismiss was a document titled “Fourth Amended and Restated Bylaws of MetroPCS
Communications, Inc.,” which stated in part
[T]he Court of Chancery of the State of Delaware shall be the sole and exclusive
forum for (i) any derivative action or proceeding brought on behalf of the
Corporation, [or] (ii) any action asserting a claim of breach of a fiduciary duty owed
by any director, officer or other employee of the Corporation to the Corporation or
the Corporation’s stockholders. .
Additionally, on that same date, relators filed an “Opposition to Plaintiffs’ Motion for
lemporary Restraining Order and Expedited Discovery.” which included a “Motion to Stay” (the
“Motion to Stav” requesting the trial court to rule on relators’ Motion to Dismiss before considering
Golovov’s motion for a temporary restraining order and expedited discovery. In opposition to the
motion for a temporary restraining order. relators argued in part
Plaintiff’s Motion is not verified, and the only evidence tiled by Plaintiff is the
Affidavit of Plainti ft’s counsel—which does nothing more than authenticate the
Business Combination Agreement between MetroPCS, Dl and T-Mobile. Plaintiff
has not tiled any evidence of the prerequisites for obtaining injunctive relief under
the Texas Rules of Civil Procedure—4 1) a probable right to relief, (2) probable
injury, (3) imminent harm, (4) irreparable injury, and/or (5) an inadequate remedy at
law.
Further, in their Motion to Stay, relators objected to the trial court “ruling on Plaintiffs Motion
before first ruling on the MetroPCS Defendants’ Motions.”
A hearing on (lolovoy’s motion for a temporary restraining order and order compelling
expedited discovery was held on November 14, 2012. Counsel for Golovoy argued in part that DT,
T—Mobile, and the Board “colluded” to agree to the five “deal protection devices” described above,
which “are standing in the way of other buyers from coming forward.” Golovoy asked the trial court
to “restrain operation of two of these provisions”: (1) the “poison pill lockup” and (2) the “force the
vote provision.” Further, Golovoy requested an “accelerated preliminary injunction hearing” to
determine whether relators “should be permanently restrained from enacting and keeping in place
these deal protection devices.” As to the forum selection provision in question, Golovoy contended
in part that the provision was unenforceable because the Board had the power to “unilaterally”
change the bylaws and thus there was no “mutual bargaining power” or “mutuality of obligation”
respecting the provision. Additionally, counsel for Golovoy stated, “it’s clear that this—if the [trial
court] has any inclination to agree with their forum selection clause that’s robbing [the trial court]
of the ability to adjudicate the case, then there needs to be full briefing on it.” Finally, Golovoy (1)
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contended the rules o I civi procedure do not require a verified complaint in order to obtain a
temporary restraining order “unless you don’t give notice and (2) argued his complaint was verified
and he had “submitted all the evidence that is necessary for the [trial court] to riecide this issue
today.”
Counsel for relators asserted. jilter a/ia, their arguments described above. Further, relators
contended Golovoy had not met the verification requirements of Texas Rules of Civil Procedure 680
and 682 because “(here’s no verified or sworn evidence of any of the elements for a TRO or
injunctive relief” See TEX. R. Civ. P. 680, 682.
On November 15, 2012, Golovoy filed a letter from Briscoe to the trial court “to clarify
which provisions of the [Business Combination Agreement] result in the Poison Pill Lockup’
discussed in plaintiffs’ TRO papers.” The letter stated “[t]here are two relevant provisions: (I)
section 3.3(v), which “carves out the merger between Meti-o PCS and [DT/T—Mobile] from
application of I MetroP(S’s] Rights Agreement, or Poison Pill”and (2) section 4.5(b)(iv). which
“precludes the Metro PCS modifying the Poison Pill to carving other potential competing proposal
from application of [MetroPCS’s] Poison Pill.” Further, the letter stated
Plaintiff’s TRO motion seeks to suspend operation of the Poison Pill in its entirety.
Doing so would not require any amendment to the [Business Combination
Agreement], it would just restrain the relevant parties, as described in the proposed
TRO order, from issuing the “Rights” connection with the “Rights Agreement,” and
thus restrain the triggering of the Poison Pill.
On that same date, relators filed(l ) a “postargument submission” in opposition to Golovoy’s
motion and (2) objections to Golovoy’s proposed order. Relators’ objections included, in part, the
following:
1. The proposed order does not contain a ruling on (i) Defendants’ objections and
Motion to Stay contained in the MetroPCS Defendants’ Opposition to Plaintiffs’
Motion for Temporary Restraining Order and Expedited Discovery (the
“Opposition”). The MetroPCS Defendants object to the Court’s failure and refusal
to rule on their objections and requests contained in the Opposition.
2. The proposed order is issued without a court determination that venue is proper or
that Plaintiffs have standing.
3. The proposed order contains’ actia findings without any evidentiary support. The
relief granted requires evidentiary support.
4. The proposed order seeks to enjoin the MetroPCS Defendants from taking action
under the Rights Agreement, which is not in evidence. The Business Combination
Agreement cannot serve as evidence of the Rights Agreement.
In response, Golovoy filed a letter from Briscoe to the trial court in which Briscoe stated in
part, “There is no reason why the [trial court] cannot rule on the TRO now and address the
stay/dismissal issues later.”
In the TRO, the trial court stated, in part, as follows:
The Court finds that harm is imminent to Plaintiffs and if the Court does not
issue the Temporary Restraining Order, Plaintiffs will be irreparably injured because
of the Individual Defendants’ implementation and maintenance of [MetroPCS’s]
shareholder rights plan (the “Poison Pill”) and the inclusion of the “force the vote”
provision in §4.5(h) of the Business Combination Agreement as deal protection
devices, in conjunction with other defensive measures, to eliminate potential
acquirers from making a competitive and superior bid for [MetroPCS], or any other
offer that would have been made absent the adoption and maintenance of the
defensive measures.
Additionally, the TRO stated, “This Order shall not be effective unless and until Plaintiffs execute
and file with the County Clerk a Bond in conformity with the law in the amount of $500,000.00.”
(emphasis original).
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This mandamus proceeding followed.
Ii. RELATORS’ REQUEST FOR MANDAMUS RELIEF
A. Applicable Law
Mandamus will issue if the relator establishes a clear abuse of discretion for which there is
The record does not show a bond has been filed,
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no adequate remedy by appeal. In re Odyssey Hen flhcare, Inc., 310 S.W.3d 419, 422 (Tex, 201 0)
tong procLeding) In te Deeie & Co 299 S W 3d 819 820 (fex 2009) (oiig proccLdlng) In re
Prudential Ins, Co. ofAm., 148 S.W.3d 124, 135—36 (Tex. 2004) (orig, proceeding). A trial court
abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and
prejudicial ermr of law or if it clearly fails to correctly analyze or apply the law. In re Cerberus
C’apitalMgmt., L.P.. 164 S,W.3d 379, 382 (Tex. 2005) (orig. proceeding); In re Tex. Am. Express,
Inc., 190 S,W.3d 720, 723 (Tex. App.—Dallas 2005, orig. proceeding); see In re Jorden, 249
S.W.3d 416, 424 (Tex. 200$) (orig. proceeding) (“[a] trial or appellate court has no discretion in
determining what the law is or in applying the law to the facts, even if the law is somewhat
unsettled.”). In determining whether appeal is an adequate remedy, we consider whether the benefits
outweigh the detriments of mandamus review. In re BP Prods. N.Am., Inc., 244 S.W.3d 840, 845
(Tex. 2008) (orig. proceeding); see also In re GulfExploration, 289 S.W.3d 836, 842 (Tex. 2009)
(orig proceeding) ( Fheu. is no definitive list of when an appeal will be ‘adequate, as it depends
on a careful balance of the casespecific benefits and detriments of delaying or interrupting a
particular proceeding.”).
B. Analysis
1. Abuse of Discretion
In four issues, relators contend the trial court abused its discretion by (1) “granting [the TRO]
and ordering a temporary injunction hearing despite a pending motion to dismiss based on a
mandatory exclusive forum selection clause in [MetroPCS ‘s] bylaws requiring that this case be heard
only in the Delaware Court of Chancery”; (2) “refusing to rule on Relators’ Motion to Stay the case
until after a ruling on the Motion to Dismiss raising the issue of the mandatory exclusive forum
selection provision”; (3) “granting a temporary restraining order without any verified facts, affidavits
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or other evidence supporting the findings in the lR( ) ( )rder or establishing a valid claim, probable
ri2ht of recovery, or any imminent irreparable harm, in violation oil LX, R. CiV. P. 6 2’’ and (4)
“enjoining contractual provisions that are expressly permitted by controlling Delaware law,” We
consider these issues in turn.
a. Satisfaction of Requirements For lemporary Restraining Order
First, we address relators’ third issue. in which they contend the TRO was granted in
violation of Texas Rule of Civil Procedure 682. (iolovoy responds “[t]he trial Court correctly
concluded that because Texas Rule of Civil Procedure 680 and not Rule 682 addresses temporary
restraining orders, and because notice was given, no verified petition or evidence was necessary”
Further. Golovoy asserts that “even if a verified petition and/or evidence were a necessary
prerequisite fbr issuance of a TRO, both were present here.” Specifically, Golovoy argues he
submitted “a verification for his petition through his attorneys” and “also submitted evidence at the
hearing, in the form ofthe Business Combination Agreement that set forth the relevant provision that
Plaintiff was seeking to enjoin, the Poison Pill Lock—Up and the force the vote provision.’
Section five of the Texas Rules of Civil Procedure is titled “Injunctions” and contains rules
680 through 693a. See TEx. R. Civ. P. 680--693a. Rule 682, titled “Sworn Petition,” provides “[n]o
writ of injunction shall be granted unless the applicant therefor shall present his petition to thejudge
verified by his affidavit and containing a plain and intelligible statement of the grounds for such
relief” TEx. R. Civ. P. 682.” Verified by his affidavit” means “proved to be true or correct.” City
ofArlington v. Dallas-Fort Worth Saftv Coach Co., 270 S.W. 1094, 1095 (Tex. Civ. App.—Fort
Worth 1925, no writ). “It has been held that the verification must be direct and in such positive
terms as would sustain a charge of perjury or false swearing, if the verification should prove to be
false, and the affidavit must show to have been made on the personal knowledge of the affiant as to
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the truth of the allegations verified” Id. Rule 680, titled “Temporary Restraining Order,” provides
in part that “[n]o temporary restraining order shall be granted without notice to the adverse party
unless it clearly appears from specific facts shown by affidavit or by the verified complaint that
immediate and irreparable injury, loss, or damage will result to the applicant before notice can be
served and a hearing had thereon.” Tgx. R. Civ, P. 680.
According to Golovoy, (1) rule 682 “addresses writs of injunctions, not temporary restraining
orders” and (2> rule 680 “provides that a TRO may issue without a verified petition or an evidentiary
showing of irreparable harm as long as notice of the TRO is provided to the adverse party.”
l-lowever, while rule 680 provides specific requirements pertaining to granting a temporary
restraining order without notice, that rule does not mention or specifically address situations in which
notice respecting a temporary restraining order has been provided to an adverse party. TEx. R. Civ.
P. 680. Further, “[a] temporary restraining order is basically a writ of injunction within the meaning
of TEX, R. CIV. P.682.” Williams v. Bagley, $75 S.W.2d 808, 810 (Tex. App.—Beaumont 1994,
no writ); see Spakes v. Weher, No. l0-08-00313-CV, 2010 WL 139955, at *3 (Tex. App.—Waco
Jan. 13, 2010, pet. denied) (mem. op.) (“A temporary restraining order is one of three forms of
injunctions which may be issued by a court.”). Additionally, rule 687, which sets forth the requisites
for a “writ of injunction,” provides specific requirements in the event such “writ of injunction” is
a “temporary restraining order.” TEx. R. Civ. P. 687(e). Accordingly, we cannot agree with Golovoy
that a temporary restraining order is not a “writ of injunction” subject to the requirements of rule
682.’
Further, on this record, we cannot conclude Golovoy met the requirements of rule 682. Even
In support ofhis position, Golovoy cites Town of Palm Valley V. .Johnson, 17 S.W.3d 281, 288 (Tex. App.—Cous Christi 2000, pet. denied)
for the proposition that ‘[al verified petition for injunctive relief is not required
... when a full evidentiary hearing on evidence independent of the
petition has been [heIdi.” However, the record supplied to us shows no such “full evidentiary hearing” was held in the case before us, and Johnson
is therefore inapposite, See Id.
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assuming without deciding that his petition was properly verified, the petition did not address or
mention the “poison pill lockup or the “force the vote provision’— the two “deal protection
devices (iolovov sought to restrain via his motion for a temporary restraining orde r—---nor did the
petition request the injunctive relief that was the subject of his motion. Therefore. Golovoy’s
petition did not contain “a plain and intelligible statement of the grounds’ for his requeste(l
temporary restraining order. See TEx. R. (‘iv. P. 62. In an affidavit pertaining to Golovoy’s motion
for a temporary restraining order and order compelling expedited discovery, Briscoe stated in part,
“I have personal knowledge of the matters stated herein and, if called upon, I could and would
competently testify thereto.” Additionally, Briscoe (1) stated that “a true and correct copy” of the
Business Combination Agreementwas attached and (2) declared “under penalty of perjury” that “the
fhregoing is true and correct.’ Briscoc’s affidavit, at most, authenticated the Business Combination
Agreement. See Dallas—Port Worth Sa/tr (ac’/i Co., 270 S.W. at 1095.
Golovoy asserts in his response in this Court that “[e]vidence of the Poison Pill
Lockup—--what Relators prefer to call the “Rights Agreement”—-was in the record.” Further,
according to Golovoy, “[t]he trial court concluded that the collective effect of the provisions were
operating to preclude competing bidders from emerging, and depriving shareholders of receiving a
premium for their shares” and “[t]hat is sufficient under the law to support a conclusion of
irreparable harm.” In support of his position, (iolovoy cites (1) argument by his counsel during the
hearing on his motion and (2) a Delaware case, Police & Fire Ret. Svs. v. Bernal, No. 4663-CC, 2009
WL 1873144, at *2 (Del. Ch. June 26, 2009). Golovy does not explain, and the record does not
show, how argument by his counsel at the hearing constitutes “evidence.” Further, unlike the case
before us, Bernal involved a motion to expedite proceedings pertaining to a request for injunctive
relief. Jd. at *
1. The court in Bernal did not address the requirements for granting a temporary
restraining order, See id. Consequently., we do not find Bernal persuasive.
While the authenticated Business Combination Agreement attached to Briscoe’s affidavit
shows the terms of the proposed business combination, it does not show the effect of such terms or
demonstrate that any other potential bidders have been deterred, as argued by Golovoy. Further, the
l3usiness Combination Agreement does not contain the MetroPCS “Rights Agreement, dated as of
March 29, 2007,” which Golovoy described in his motion as the “Poison Pill” and sought to suspend
in its entirety. The record shows no verified facts or evidence other than the Business Combination
Agreement to support the TRO. Therefore, we conclude the trial court abused its discretion by
granting the TRO. See Tux. R. Civ, P. 682: see also Operation I?escue-Nat 7. v. Planned Parenthood
of Houston & Se. Tex., 975 S.W.2d 546, 560 (Tex. 199$) (“a trial court has no discretion to grant
injunctive relief.., without supporting evidence.”).
We decide in favor of relators on their third issue. In light of our disposition of relators’ third
issue, we need not address relators’ fourth issue.
b. Priority as to Relators’ Motion to Dismiss
Next, we consider together relators’ first and second issues, in which they assert the trial
court abused its discretion by (1) not staying Golovoy’ s motion for a temporary restraining order and
order compelling expedited discovery until after deciding relators’ Motion to Dismiss pursuant to
the “mandatory exclusive forum selection provision” and (2) refusing to rule on relators’ Motion to
Stay.
Golovoy responds in part that “no abuse of discretion can be attributed to the trial court for
deferring a ruling on an unsettled, non-jurisdictional legal issue that was not even before the trial
court, to address the more immediate concerns of irreparable harm raised by Plaintiff’s TRO, which
was the only issue set for hearing that day.”
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The Texas Supreme Court has consistently granted petitions for writ ofmandamus to enforce
forum selection clauses because a trial court that improperly refuses to enforce such a clause has
clearly abused its discretion. hi reALMS hivestor Servs.. Inc.. 304 S.W.3d 371, 374 (Tex. 2010)
(orig. proceeding) (citing In re AIU Ins. Co., 148 S.W.3d 109, 114—15 (Tex. 2004) (orig.
proceeding)); see In reLisa Laser USA, Inc., 310 S.W.3d 880, 883 (Tex. 2010) (orig. proceeding)
(“A trial court abuses its discretion when it fails to properly interpret or apply a forum-selection
clause.”) (citing hi re Laibe Coip.. 307 S.W.3d 314 (Tex. 2010) (orig. proceeding)); accord hi re
AutoNation, 228 S.W.3d 663,667—70 (Tex. 2007) (orig. proceeding).
hi re AuloNation involved a suit filed in Florida by relator AutoNation, Inc. against Garrick
Hatfield to enforce a covenant not to compete. See 228 S.W.3d at 664. In the employment contract
containing the covenant, AutoNation and Hatfield had agreed to litigate any disputes arising under
the contract in Florida under Florida law. Id. Hatfield later sued AutoNation in Texas under the
contract. Id. The Texas trial court declined to dismiss or stay the Texas action and enjoined
AutoNation from pursuing its Florida lawsuit Id. AutoNation filed a notice ofaccelerated appeal
ofthe trial court’s injunction order, and the following week it filed a petition for writ of mandamus
in the court of appeals. Id. at 666. The court ofappeals denied mandamus reliefon grounds that an
adequate remedy at law was available to AutoNation, namely its earlier-filed interlocutory appeal.
Id. AutoNation filed a petition for writ of mandamus in the Texas Supreme Court, seeking relief
from the anti-suit injunction and dismissal or abatement ofthe entire case pursuant to the mandatory
forum selection clause. IS The court of appeals proceeded to decide and issue an opinion in the
interlocutory appeal of the injunction order, concluding “[blecause the Texas Supreme Court has
held that flmdamental Texas public policy requires application of Texas law to the question of
enforceability of a non-compete agreement, we are unable to hold that the trial court abused its
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discretion in issuing an injunction to halt the Florida proceeding and allow the Texas case to proceed
to triaL” Id, at 667.
The supreme court conditionally granted AutoNation’s petition for writ of mandamus. Id.
The supreme court observed that “‘[s]ubjecting a party to trial in a forum other than that agreed upon
and requiring an appeal to vindicate the rights granted in a forum-selection clause is clear
harassment’—harassment that injures not just the non-breaching party but the broader judicial
system, injecting inefficiency by enabling forum-shopping, wasting judicial resources, delaying
adjudication on the merits, and skewing settlement dynamics contrary to the parties! contracted-for
expectations.” Id. at 667—68. Further, the supreme court stated that its decisions regarding the
propriety of mandamus relief in forum-selection cases comport with the principle that parties
generally have the freedom to negotiate agreements as they see fit. Id. at 66$. The court concluded
that under controlling precedents on forum-selection clauses, the parties’ bargained-for agreement
merits judicial respect, and the dispute should be heard in the Florida action as the parties contracted.
Id. at 669 (citing In re Automated Collection Tech., Inc., 156 S.W.3d 557 (Tex. 2004) (orig.
proceeding); in reAIUJns. Co., 148 S.W.3d at 109).
in the case before us, relators’ Motion to Dismiss and Motion to Stay were filed prior to the
hearing on Golovoy’s motion for a temporary restraining order and order compelling expedited
discovery. Further, the forum selection provision in question was addressed by both Golovoy and
relators during the hearing and in the parties’ post-hearing filings, which included an objection by
relators to the trial court’s failure to rule on their objections and Motion to Stay. The record does
not show the trial court ruled on the Motion to Dismiss or the Motion to Stay before signing the
TRO. On this record, we conclude the trial court abused its discretion by granting injunctive relief
without first ruling on relators’ motions respecting the forum selection clause in question. See id.
—15—
at 668—70: see a/so In re Boehme. 256 S.W.3d 87%. 880 (Tex. App.—Houston [14th Dist.] 2008,
orig. proceeding) (mandamus relief granted to overturn temporary injunction order and dismiss case
based on forum selection clause).
We decide in favor of relators on their first and second issues.
6
2. Adequate Remedy
Finally, we address relators’ assertion that they lack an adequate remedy by appeal. Relators
argue “[a]llowing the TRO Order to stand, and allowing the temporary injunction hearing to proceed
as ordered, deprives Relators of the benefits of the forum selection clause, violates the requirement
that injunctive relief be supported by prooi maintains a clear and prejudicial error of law, and
interferes with a multi-billion dollar transaction and itself could cause irreparable harni to the many
MetroPCS stockholders who have not complained and those who honored the Bylaws’ provision for
any litigation to occur in Delaware.” Thus, relators contend, the benefits of mandamus review
outweigh any detriments.
Golovoy argues “[t]here arc no urgent circumstances present here justifying the extraordinary
remedy of a writ of mandamus.” Specifically, according to Golovoy, because he has not yet
executed and filed a bond as required by the TRO, “the TRO Order is not ripe for judicial review by
this Court.” Additionally, Golovoy asserts “because it is unknown how the trial court will rule on
defendants’ Motion to Dismiss or Stay, Relators’ application for mandamus is premature.”
In support of his argument that the TRO is “not ripe,” Golovoy cites to a “concurring
statement” involving a criminal case. See Lizcano v. C’hatharn, No. WR-68,348-02, 2011 WL
4596044, at *1_2 (Tex. Crim. App. Oct. 5, 2011) (orig. proceeding). However, unlike the case
6
To the extent relstors’ first issue is construed to raise the merits of the arguments asseed in their Motion to Dismiss respecting the validity
of the forum selection provision in question, we conclude mandamus relief respecting that portion of relators’ first issue is not available because the
trial court has not yet had a hearing orruled on the Motion to Dismiss. See In re Sierra Club, No. 08—I 2 00236-—C V. 2012 WL 5942912, at *4 (Tex.
-hi Paso Nov. 28. 0 2, orig. proceeding).
--16—
before us, Lin.uno involved a discovery order the court concluded was “vague.” See Id. Because
Lizcano is distinguishable on its facts, we do not find it persuasive. In the case before us, the record
shows the trial court has signed the TRO. Golovoy cites no authority, and we have found none.
supporting the position that, on these fads, the TRO is “not ripe.” Further, while the record does not
show a ruling on relators’ Motion to Dismiss or Motion to Stay, the relief requested by relators in
this Court pertains to obtaining a ruling on those motions before moving forward with other matters
in the case. ‘[bus, we cannot agree with Golovoy that the fact that it is unknown how the trial court
will ultimately rule on relators’ motions renders their petition for writ of mandamus “premature.”
Generally. “an appellate remedy is inadequate when a trial court improperly refuses to
enforce a forum-selection clause because allowing the thai to go forward will ‘vitiate and render
illusory the subject matter of an appeal’—i.e., trial in the proper forum.” In re Lisa Lacer, 310
S.W.3d at 883 (citing In reAlU Ins. Co., 148 S.W.3d at 115); see In reAuto Nation, 228 S.W.3d at
668 (failure to enforce contractual forum selection clause “constitutes a clear abuse ofdiscretion for
which there is no adequate remedy by appeal”) (citing In re Automated Collection Tech., Inc.. 156
S.W.3d at 558). Further, the Texas Supreme Court has stated that because temporary restraining
orders are not appealable, a party agiinst whom a temporary restraining order has been granted has
“no remedy by appeal.” In re Office ofAttorney Gen., 257 S.W.3d 695,697—98 (rex. 2008) (orig.
proceeding); see Hamilton Guar. Capital, LLCv. Orphan House Prods., LLC,No. 05-I 1-01401-CV.
2012 WL 2359881, at *1 (Ta. App.—Dallas June 21, 2012, no pet.) (mem. op.).
In the case before us, the record shows the trial court granted Golovoy’s motion for a
temporary restraining order and set a temporary injunction hearing without deciding relators’
pending motions respecting enforcement ofthe forum selection provision in question. Accordingly,
on this record, we conclude relators lack an adequate remedy by appeal. See In re Lisa Lacer, 310
—17—
S.W.3d at 883; hi re Q/Jice ofAtiornev (len.. 257 S.W.3d at 697—98; hi re AntoNotlo,,, 228 S.W.3d
at 668; hi ri’ Auiwnaiecl C’olkction Tech., Inc. 156 S.W.3d at 558; hi re AIU Ins. C’o., 148 S.W.3d
at 115; Lf In re Team Rocket, L.P.. 256 S.W.3d 257.262 (Tex. 2008) (orig. proceeding) (mandamus
relief proper where trial court “subjects taxpayers, defendants, and. . . the state’s district courts to
meaningless proceedings and trials” by “ma[king] no effort to follow” venue nile).
Ill. CONCLUSION
We decide in favor of relators on their first, second, and third issues. We need not address
relators’ fourth issue.
Because we conclude relators have shown the trial court abused its discretion and they have
no adequate remedy by appeal, we conditionally grant relators’ petition for writ of mandamus. A
writ will issue only in the event the trial court fails to (1) vacate the November 16, 2012 TRO,
including, the setting for the temporary injunction hearing on November 29, 2012; (2) deny
Golovoy’s motion for a temporary restraining order; and (3) grant relators’ motion to stay the case
until relators’ Motion to Dismiss is decided.
DOUGLA .LANG
121577F.P05
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