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District Court Grants Motion to Dismiss Proceeding for Preliminary Injunction

Posted In Injunctions
Bally Total Fitness Holding Corp. v. Liberation Investments, L.P., Liberation Investments, Ltd., Liberation Investment Group, LLC and Emanuel R. Pearlman, 2005 WL 3525679 (D.Del., December 22, 2005). The District Court for the District of Delaware granted Defendants' Motion to Dismiss Plaintiff's Preliminary Injunction application. At issue were SEC mandated disclosures in advance of the annual shareholders' meeting. Plaintiff brought a Motion for Expedited Discovery, which the Court considered at the same time as Defendants' Motion to Dismiss. At issue were the disclosure documents filed by Defendants for an upcoming shareholder meeting and proxy solicitation campaign. In its complaint, Plaintiff alleged that the disclosure documents contained materially false and misleading statements and failed to disclosure material facts. Plaintiff subsequently filed a motion for a Temporary Restraining Order ("TRO Motion"), seeking an order requiring Defendants to issue supplemental and corrective disclosures. On the anticipated date of the hearing on the TRO Motion, Plaintiff advised the Court that it would withdraw its TRO Motion in favor of a later-filed Motion for Preliminary Injunction. Plaintiff simultaneously moved for expedited discovery. Following the hearing, the Court ordered plaintiff to send to Defendants a letter setting forth the specific deficiencies Plaintiff alleged existed in the disclosure statement. After receiving that letter, Defendants submitted a Revised Preliminary Proxy Statement, setting forth verbatim all of the disclosures Plaintiff identified. Defendants argued that the revised proxy statement mooted the motion for preliminary injunction. The Court agreed, finding that Plaintiff would no longer be able to make a showing of irreparable harm. The Court thus granted Defendants' Motion to Dismiss, and denied Plaintiff's Motion for Expedited Discovery. Share
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