Professional Documents
Culture Documents
Brief ISO Motion To Expedite, For TRO, and For Preliminary Injunction
Brief ISO Motion To Expedite, For TRO, and For Preliminary Injunction
Transaction ID 62407804
Case No. 2018-0651-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
:
CHARLES F. DOLAN, HELEN A. :
DOLAN, JAMES L. DOLAN, :
PATRICK F. DOLAN, and :
COLLEEN McVEY, :
:
Plaintiffs, :
:
v. : C.A. No.
:
ALTICE USA, INC., and :
ALTICE EUROPE N.V., :
:
Defendants, :
:
and :
:
CABLEVISION SYSTEMS :
CORPORATION, :
:
Nominal Defendant. :
:
EAST\158545709.2
TABLE OF CONTENTS
PAGE
A. News 12 ........................................................................................................... 4
ARGUMENT ........................................................................................................... 14
CONCLUSION ........................................................................................................ 24
i
EAST\158545709.2
TABLE OF AUTHORITIES
CASES PAGE(S)
ii
EAST\158545709.2
PRELIMINARY STATEMENT
Dolan (together, the “Dolan Plaintiffs”) and Collen McVey (“McVey,” and
collectively with the Dolan Plaintiffs, the “Plaintiffs”) submit this brief in support
of their Motion for a Temporary Restraining Order and for Preliminary Injunction,
the main issue in this case is whether Defendants may terminate numerous “News
12” employees after Defendants explicitly stated in a binding $17.7 billion merger
agreement that they would not terminate News 12 employees through the year
2020.
The Court should enter an injunction to prevent Altice USA, Inc. and its
local television news channels based in Long Island, and other areas of New York,
Connecticut, and New Jersey. News 12 is the premier local news provider in these
day. For a local television provider, it is virtually unique in the depth and
EAST\158545709.2
Altice made a solemn and express promise to the Dolan Plaintiffs and to
News 12’s employees, including Plaintiff McVey, under the terms of a written
Agreement and Plan of Merger dated September 16, 2015 (the “Merger
plan (the “News 12 Business Plan”) through at least the end of the year 2020.
Agreement.
The Dolan Family originally did not want to sell News 12 to Altice along
with Cablevision’s other assets. It worried that Altice would skinny down News
12 to the point where it could no longer provide in-depth, high quality content to
its viewers. The Dolan Family resisted selling News 12 until Altice agreed to
strong contractual protections for News 12 and its employees. Only then did the
Dolan Family agree to the transfer of ownership. In this regard, Altice expressly
agreed to incur up to $60 million in losses to maintain News 12’s existing level of
462 employees. This agreement was unusual for a merger transaction of this type,
reflecting the importance that preserving News 12’s quality and legacy, and
2
EAST\158545709.2
Altice’s representations and promises, however, proved hollow. Altice has
laid off many of News 12’s employees—in direct violation of the News 12
Business Plan under the Merger Agreement. Now, Altice has informed Plaintiff
Patrick Dolan that it is on the verge of terminating still dozens more News 12
the local news content that News 12 creates, and to deprive yet more employees of
the specific protections that the Dolan Plaintiffs fought for in the Merger
Agreement. With respect to Ms. McVey, she is being deprived of the rights
guaranteed to her under the Merger Agreement, not for any economic reason, but
3
EAST\158545709.2
FACTUAL BACKGROUND
A. News 12
serving nearly 3 million households in New York, Connecticut, and New Jersey,
including two boroughs of New York City and most of Long Island. (Compl.
¶ 21.) News 12 provides news coverage 24 hours a day, and focuses on providing
Family,” who founded and ran Cablevision until it was sold to Altice in June 2016
family (including the Dolan Plaintiffs) (the “Dolan Family”) held a controlling
F. Dolan is the founder and former CEO of Cablevision; his son, Plaintiff James L.
Dolan, later assumed the role as CEO and was still in that position at the time of
the sale. (Id.) Plaintiff Patrick F. Dolan was the President of News 12, a wholly-
at News 12 for more than 30 years. (Compl. ¶ 23.) She appears on air at News
12’s premier network, News 12 Long Island, where she is one of its most
4
EAST\158545709.2
recognizable public faces. (Id.) In her 30 years at News 12, Ms. McVey has
covered some of Long Island’s most memorable and historic events. (Id.) She
anchored News 12’s live breaking news coverage of the Avianca Plane Crash in
Cove Neck in 1990, the Long Island Railroad massacre in 1993, the TWA Flight
800 disaster in 1996, the aftermath of the 9/11 terror attacks, Hurricane Irene, and
telecommunications services throughout the New York City area. (Compl. ¶ 24.)
Due to News 12’s inherent value to the communities it serves, it was of particular
importance to the Dolan Family, regardless of the fact that it historically operated
immense pride in the public service News 12 provides to the community. (Id.) So
much so, that the Dolan Family (and other stockholders) at first refused to sell
News 12. (Id.) In light of the significant value of News 12 to the community and
news industry, during negotiations with Altice leading up to the 2016 Merger, the
Dolan Family insisted that the News 12 asset be spun off and not controlled by
Altice. (Id.) Ownership of News 12 became a sticking point for the parties, as
Altice wanted to capture the revered organization’s inherent brand value. (Id.)
The Dolan Family ultimately agreed to convey the News 12 asset together with
5
EAST\158545709.2
Cablevision, but only if Altice would agree to provide specific written assurances
regarding the continued operation of News 12 consistent with its rich legacy. (Id.)
That is, they only capitulated when Altice offered, negotiated, and expressly
and their salaries, so the staff could continue providing the News 12 community
with high quality, local news coverage that would not otherwise exist. (Id.)
On September 16, 2015, Cablevision, Altice N.V., and Neptune Merger Sub
Corp. entered into the Merger Agreement. (Compl. ¶ 25.) Altice Europe and
Altice USA are both successors-in-interest to Altice N.V.’s interest, rights, duties,
Under the Merger Agreement, the Dolan Family negotiated very significant
$17.7 billion in cash payments from Altice. (Compl. ¶ 26.) The stockholders
received the cash payments for their shares directly from funds placed in trust for
this purpose by Altice. (Id., Ex. A §§ 4.1(a), 4.2(a).) At closing, all Cablevision
shares were automatically converted into a right to receive the full consideration
6
EAST\158545709.2
In addition to the cash payment for Cablevision’s shares, the enduring
legacy and continued independence of News 12 and its employees, and News 12’s
ability to provide the same high quality, hyper-local news content, was just as
stockholders in Cablevision, the Dolan Family’s approval was both legally and
The Dolan Family negotiated comprehensive protections for News 12 and its
employees. (Compl. ¶ 28.) These provisions were clear and specific, unusual in
such a transaction, negotiated with the intent to maintain the quality of the local
news content produced by News 12, and designed to protect News 12 employees
7
EAST\158545709.2
(Compl. ¶ 29.) “Parent,” as used in Section 6.4(f), refers to Altice N.V. (Id.)
with the News 12 Business Plan through at least the end of 2020. (Id.)
The News 12 Business Plan, which was incorporated into the Merger
headcount of exactly 462 employees in each of years 2016, 2017, 2018, 2019, and
2020. (Compl. ¶ 30 & Ex. B.) In doing so, Altice expressly recognized and
employee compensation necessary to maintain the quality and legacy of News 12.
(Id.) The headline summary of the News 12 Business Plan is set forth below:
8
EAST\158545709.2
As noted, Section 6.4(f) of the Merger Agreement incorporates Schedule
Thus, Altice agreed to continue to employ 462 full-time employees at News 12,
even if it incurred cumulative losses of $60 million, which loss threshold has never
including the Dolan Family. (Compl. ¶ 32.) The Dolan Family deliberately and
methodically built News 12 as the foremost hyper-local news source for the
edification of the Long Island, Bronx, and Brooklyn communities. (Id.) Due to
9
EAST\158545709.2
support, the amazing employees of News 12 were able to pursue important stories
coverage area. (Id.) No news station would have otherwise enjoyed the resources
to uncover and report these vital stories. (Id.) News 12 was and is of singular
importance to the Dolan Family and the viewers within News 12’s coverage
community. (Id.)
News 12’s employees and the public at large, including Ms. McVey, that it had
negotiated this provision to protect News 12 and its employees after Closing.
Indeed, the negotiated News 12 protection was part of the disclosures that
Statement. (Compl. ¶ 33 & Ex. C (“Altice has agreed that it will operate News 12
business plan [] through at least the end of the plan year 2020.”).)
C. Altice Refuses to Keep Its Promise, Harming News 12, its Employees,
and the Public
September 16, 2015, through its closing on June 21, 2016 (the “Closing”), the
Dolan Family (including the Dolan Plaintiffs) performed their side of the bargain
with Alticei.e., they honored the obligations in Section 6.4(f) of the Merger
10
EAST\158545709.2
Agreement to operate News 12 according to the agreed upon News 12 Business
its rights with respect to Cablevision to Altice USA. (Compl. ¶ 35.) In June 2017,
Altice USA went public, and its shares now trade on the New York Stock
independent company. (Id.) As a part of that separation, Altice N.V. was renamed
On June 21, 2016, Altice began to operate News 12 and was required by a
operating News 12 in accordance with the News 12 Business Plan. (Compl. ¶ 36.)
News 12 according to the News 12 Business Plan. (Id. ¶ 37.) As evidence of such
11
EAST\158545709.2
approximately $5 million more in reduced staff positions than Section 6.4(f) of the
12’s quality suffered, employees’ jobs that should have been protected by the
Merger Agreement were lost, and the Dolan Family reputation was tarnished. (Id.)
informed Plaintiff Patrick Dolan that it intends to conduct further layoffs and place
still more News 12 employees on the chopping block, starting September 6, 2018.
imminent layoffs to Plaintiff Patrick Dolan in writing on August 21, 2018, over
Mr. Dolan’s strong protest. (Id.) Since News 12 is and has been making a profit
for Altice, it is impossible for Altice to justify these layoffs under the Merger
Agreement. (Id.)
Section 6.4(f). (Compl. ¶ 40.) Moreover, the planned layoffs will only further
decrease News 12’s ability to provide the same intensive local news coverage that
the viewing community has come to expect from News 12. (Id.)
12
EAST\158545709.2
One of the News 12 employees that Altice plans to imminently terminate is
with ending Ms. McVey’s employment. (Id.) In fact, she is one of News 12 Long
Island’s most renowned news anchors, having faithfully worked there for over 30
years. (Id.) Further, she scores well above average in tests among members of
News 12’s primary demographics. (Id.) Rather, the sole stated reason for her
News, is that Altice wants a “fresh look.” (Id.) Thus, Altice has given up any
“look” over her obvious talent and popularity with viewers. (Id.)
For the sake of News 12 employees and the viewing public—both of whom
Altice agreed to protect for five years—Altice must be required to adhere to its
stockholders entitled to receive the full consideration they bargained for, and as an
employee entitled to benefit from the protective covenants the Dolan Family
obtained for their benefit, the Dolan Plaintiffs and Ms. McVey bring this action to
enforce the express representations that Altice has made and forsaken. (Id.)
13
EAST\158545709.2
ARGUMENT
I. APPLICABLE STANDARDS
The purpose of a temporary restraining order is “to protect the status quo and
Storm, 2014 WL 1266827, at *4 (Del. Ch. Mar. 27, 2014). Under Delaware law, a
court may issue a TRO if a plaintiff demonstrates: “(i) the existence of a colorable
claim, (ii) the irreparable harm that will be suffered if relief is not granted, and (iii)
a balancing of hardships favoring the moving party.” Arkema Inc. v. Dow Chem.
Co., 2010 WL 2334386, at *3 (Del. Ch. May 25, 2010). Because the purpose is
merely to preserve the status quo pending a preliminary injunction hearing or final
resolution, the plaintiff is required to show only that “a colorable claim has been
made out if the facts alleged are [treated as] true.” Mitsubishi Power Sys. Ams.,
Inc. v. Babcock & Brown Infrastructure Group US, LLC, 2009 WL 1199588, at *3
(Del. Ch. Apr. 24, 2009) (citing UIS, Inc. v. Walbro Corp., 1987 WL 18108, at *1
(Del. Ch. Oct. 6, 1987)). A plaintiff’s required showing on the merits is “less
exacting” at the TRO stage than at the preliminary injunction stage because of the
absence of expedited discovery and the limited time the Court has to address the
14
EAST\158545709.2
issues. Arkema Inc., 2010 WL 2334386, at *3. Rather, the “chief focus” when
reviewing a TRO motion is “the nature and imminence of the allegedly impending
reasonable probability of success on the merits at trial, (2) that a failure to issue the
injunction will result in immediate and irreparable harm, and (3) that the balance of
equity favors granting injunctive relief. Kaiser Aluminum Corp. v. Matheson, 681
A.2d 392, 394 (Del. 1996). While each element must be shown, a “strong
of another.” Brown v. T-Ink, LLC, 2007 WL 4302594, at *13 (Del. Ch. Dec. 4,
2007).
The “colorable claim” requirement for a TRO requires that a plaintiff show
(citation omitted); see also Reserves Dev. Corp. v. Wilm. Trust Co., 2008 WL
15
EAST\158545709.2
4951057, at *2 (Del. Ch. Nov. 7, 2008) (describing the “lenient standard” plaintiff
faces).
they have alleged claims for breach of contract and breach of the implied duty of
good faith and fair dealing (and have requested the remedy of specific
Plaintiffs specifically obtained express protections for News 12 from Altice. The
News 12 Business Plan, which specifically provides for a headcount of 462 full-
time equivalent employees in the years 2016, 2017, 2018, 2019, and 2020.
(Compl. ¶¶ 29-30.) The Dolan Plaintiffs obtained this not only as part of the
Altice has previously cut 70 positions at News 12, resulting in the layoffs of
constitutes a breach of the implied covenant of good faith and fair dealing because
16
EAST\158545709.2
Altice has attempted to unreasonably use its control of Cablevision to thwart
Altice’s has no valid justification for breaching its promise not to terminate
newscaster at News 12 who tests well above average in News 12’s target
Michael Schreiber, the reason for her impending dismissal, in violation of Altice
USA’s written representations, is that Altice wants a “fresh look.” (Id.) Her
based on cost reduction, but rather personal appearance and prejudicial attitudes
representations to the Dolan Plaintiffs that Altice would retain the historical level
of employees, who had created News 12’s high quality news programming, even if
it caused significant losses. (Compl. ¶¶ 39-41.) Without such content, the people
of Long Island, the Bronx, Brooklyn, and areas of New Jersey and Connecticut
and were made carelessly and without regard to any real commitment to the
obligations it undertook with respect to News 12 in the Merger Agreement, and its
17
EAST\158545709.2
failure to disclose those facts to Cablevision’s shareholders, including the Dolan
77.) Indeed, the Dolan Family would not have voted for the Merger except for
News 12 according to the News 12 Business Plan through at least 2020. (Id. ¶¶ 49,
51-52.)
Irreparable harm means “harm for which there can be no remedy at law,
which is typically taken to mean that an award of compensatory damages will not
suffice.” AM Gen. Hldgs. LLC v. Renco Gp., Inc., 2012 WL 6681994, at *4 (Del.
Ch. Dec. 21, 2012) (quotation omitted). However, “‘[i]t is not necessary that the
such a nature that no fair and reasonable redress may be had in a court of law and
that to refuse the injunction would be a denial of justice.’” Id. (quoting State v.
Delaware State Educ. Ass’n, 326 A.2d 868, 875 (Del. Ch. 1974)).
irreparable harm alone suffice to establish that element for the purpose of issuing
preliminary injunctive relief.” Cirrus Hldg. Co. v. Cirrus Indus., Inc., 794 A.2d
18
EAST\158545709.2
1191, 1209 (Del. Ch. 2001) (citing True North Commc’ns Inc. v. Publicis S.A., 711
A.2d 34 (Del. Ch. 1997); Vitalink Pharmacy Services, Inc. v. Grancare, Inc., 1997
WL 458494 (Del. Ch. Aug. 7, 1997)); see also AM Gen., 2012 WL 6681994, at *4
alone suffice to establish that element for the purpose of issuing preliminary
injunctive relief.”).
Here, irreparable harm will result unless the Court issues an injunction. It is
no secret that local news in the United States is rapidly disappearing in favor of
information for Long Island, the Bronx, Brooklyn, and certain other
local news coverage if News 12 can no longer provide it. (Compl. ¶¶ 39-41.)
par with the quality and professionalism of mainstream network news channels
such as CNN, but for a hyper-local audience in Long Island and surrounding areas.
(Compl. ¶¶ 21, 39-41.) This level of quality is one-of-a-kind and virtually unheard
would have few, if any, outlets, let alone to the high standard attained by News 12.
(See id.)
19
EAST\158545709.2
Additionally, News 12 owes its unparalleled quality to the journalists and
other staff it employs. (See Compl. ¶¶ 32-33.) Without those individuals, the
Altice seeks to terminate those very individuals. (See id.) In particular, Altice has
indicated that it will terminate Ms. McVey, among numerous others, who tests well
above average in News 12’s target demographic. (Id. ¶ 41.) Ms. McVey’s
termination is not even an attempt to cut costs. (Id.) In fact, Michael Schreiber,
the President of Altice USA News, has stated that he only intends to terminate her
because Altice wants a “fresh look.” (Id.) This inappropriate motive is not
sufficient reason to terminate Ms. McVey in violation of the terms of the Merger
On the other hand, she has worked at News 12 for more than 30 years, having
developed skills and connections in the local community that cannot be replaced.
(Id.)
Altice’s plan is to terminate Ms. McVey and others like her as part of its
plan to wantonly flout its contractual representations. News 12’s ability to provide
result of Altice’s prior layoffs at News 12, and they will continue to do so if the
20
EAST\158545709.2
In any event, Altice itself agreed that violations of the Merger Agreement
prevent breaches of the Agreement and to enforce its terms and provisions:
establishes that any failure to comply with the terms of Section 6.4(f) would be
irreparable and the necessity of injunctive relief. As noted above, such agreement
6681994, at *4.
from Altice’s actions. The Dolan Family were not just controlling shareholders in
behalf of the communities it serves. (Compl. ¶¶ 38, 55, 69.) It was important to
21
EAST\158545709.2
the Dolan Family to negotiate continued protection for News 12 and its employees.
For these reasons, Plaintiffs will suffer irreparable injury unless the Court
suffered from Altice’s failure to comply with its express promises and
regardless of how much money Altice is required to pay. Further, back wages
alone would be insufficient to compensate employees for the loss of their jobs,
which would have substantial impacts beyond the loss of income, including stress,
Thus, Plaintiffs and News 12 face an imminent threat of irreparable harm to News
Lastly, the balance of the equities clearly weighs in favor of Plaintiffs. See
Stirling Inv. Hldgs., Inc. v. Glenoit Universal, Ltd., 1997 WL 74659, at *3 (Del.
Ch. Feb. 12, 1997) (balance of equities, requiring defendant to abide by terms of
agreement, favored plaintiff, even though defendant would suffer some risk of
harm).
22
EAST\158545709.2
Plaintiffs face the threat of irreparable harm. News 12 simply cannot put
back together what is destroyed if Altice is allowed to move forward with its
planned layoffs. (Compl. ¶¶ 55-56, 59.) For instance, News 12 cannot simply hire
back or replace experienced reporters and staff with their sweat-earned connections
and sources in the communities. (See id.) Once Altice’s plan is accomplished,
operate it according to the News 12 Business Plan through at least the end of 2020.
agreements. Altice went into that agreement open-eyed, with full knowledge that it
might incur future losses in an amount equal up to $60 million. (See id.) It also
knew from negotiations with the Dolan Family with respect to Section 6.4(f) of the
On the other hand, Altice faces little or no harm from an injunction. All an
injunction will prevent Altice from doing is violating its express written promises.
agreed to do.
23
EAST\158545709.2
CONCLUSION
For these reasons, Plaintiffs respectfully request that the Court grant its
Motion and issue a TRO and, upon hearing, a preliminary injunction enjoining
Altice and its officers, agents, servants, employees, attorneys, and all others acting
Taking any action that would, in any way, violate or breach Section
6.4(f) of the Merger Agreement (including Schedule 6.4(f) to the
Company Disclosure Letter and any other document included by
reference in Section 6.4(f)).
Agreement Section 6.4(f), Plaintiffs request that the Court expedite these
proceedings and set a preliminary injunction hearing for the earliest available date.
24
EAST\158545709.2
DATED: September 4, 2018 DLA PIPER LLP (US)
Words: 4,879
25
EAST\158545709.2