Opinion
Case No. 2:00CV936C.
December 15, 2000.
ORDER
This matter comes before the court on Plaintiff Salt Lake Tribune Publishing Company, LLC's ("SLTPC's") motion for preliminary injunctive relief prohibiting Defendant ATT Corporation/ATT Broadband, LLC ("ATT") from completing its sale of Kearns Tribune, LLC ("KTLLC") to Defendant MediaNews Group, Inc. ("MNG").
In support of its motion for a preliminary injunction, SLTPC argues that the proposed sale: (1) is a breach of the Option Agreement by ATT (2) is a violation of ATT's duty to act in good faith: (3) is a breach of a binding preliminary commitment by ATT (4) is an anticipatory breach and repudiation of the Option and Management Agreements by MNG; and (5) constitutes a claim of intentional interference with contract by MNG.
The court held an evidentiary hearing on this motion on December 11 and 12, 2000. Having fully considered the arguments of counsel, the submissions of the parties and applicable legal authority, the court now enters its findings of fact and conclusions of law.
SLTPC has also moved to strike the affidavit of Joseph J. Lodovic and the declaration of Steven Garfinkel on the ground that they contain legal conclusions, conclusory assertions made without foundation, hearsay, legal argument, and speculative statements. (St. Mein. in Supp. of Mot. to Strike Lodovic Aff. Garfinkel Decl. at 2.) While SLTPC may be correct that some of the statements are inadmissible, the argument is academic since the court refers to the Lodovic affidavit and Garfinkel declaration only to provide a factual background of the case, and not as a basis for this court's legal conclusions.
Findings of Fact
The Salt Lake Tribune and Deseret News are the two daily newspapers published in Salt Lake City, Utah. An understanding of the claims raised in this action requires a brief background of a series of mergers and acquisitions affecting the two newspapers.In 1952, Salt Lake Tribune Publishing, a West Virginia corporation, owned and published The Salt Lake Tribune, and the Deseret News Publishing Company ("DNPC") owned and published the Deseret News. (See Am. Compl. para. 9.) In August of 1952, Salt Lake Tribune Publishing and DNPC entered into the Joint Operating Agreement ("JOA"). Pursuant to the JOA, Salt Lake Tribune Publishing and DNPC each became 50% owners of the Newspaper Agency Corporation ("NAC"), which operates all the departments of the two papers (including printing, delivery, advertising, and billing) except the editorial and news departments. (See id. paras. 10-11; Garfinkel Decl. para. 7.)
In 1953, Salt Lake Tribune Publishing consolidated with the Kearns Corporation and the Telegram Publishing Company, forming the Kearns-Tribune Corporation ("KT"), a Utah corporation. (See Am. Compl. para. 12.) As a result of the 1953 consolidation, KT and DNPC each held 50% of the shares of NAC. In 1982, the JOA was renegotiated and the amended JOA currently defines the ownership and operation of NAC.
In 1997, KT owned a number of assets including "all of the assets used, held for use or usable in connection with the operation and publication of" The Salt Lake Tribune (`the Tribune Assets"). (Mem. in Supp. of Restated Mot. for Prelim. lnj. at 2 n. 1.) In August 1997, TeleCommunications, Inc. ("TCI") acquired KT through a tax-free, stock-for-stock merger. Before execution of the merger, KT management established SLTPC, which was meant to act as a managing group for The Salt Lake Tribune.
As part of the TCI-KT merger deal, SLTPC and KT entered into two agreements. The first agreement is the Option Agreement, which wanted SLTPC an option "to purchase all, but not less than all, of the [Tribune Assets]." (Option Agreement § 1, attached as Ex. B to Am. Compl.) The contract defines the "exercise period of option" as follows:
Unless sooner terminated pursuant to paragraph 7 hereof, the Option shall be exercisable at any time after the fifth anniversary of the date of this Agreement [that is, July 31, 2002], and shall remain exercisable thereafter for so long as the Management Agreement remains in effect and for a period often days thereafter.
(Id. § 3.) The Option Agreement sets the exercise price of the Tribune Assets as the assets' fair market value. (Id. § 2(a).)
In addition, the Option Agreement purported to limit the sale of the Tribune Assets: Agreement Not to Sell. Prior to the fifth anniversary of the date of this agreement, KT agrees not to sell or otherwise transfer the Tribune Assets to any other person or entity except (1) to an entity controlled by or under control with KT, provided such entity agrees to be bound by this Agreement and (2), for sales or transfers in the ordinary course of business or operating and publishing The Salt Lake Tribune.
(Id. § 6.)
The second agreement, the Management Agreement, provides for the continued management of the Tribune by its existing management, through SLTPC, for a five-year period:
KT hereby appoints [SLTPC] the Manager as the exclusive management agent to supervise and manage the publication and operation of the Newspapers and to render services related thereto, subject to the direction and authority of KT, pursuant to the terms of this Agreement, and the Manager hereby accepts such engagement.
(Management Agreement § 3.01(a), attached as Ex. A to Am. Compl.; see also id. § 2.01, "The term of this Agreement shall commence on the date hereof and shall continue for an initial period of five (5) years thereafter unless terminated sooner in accordance with Article VI.")
Subsequent to its merger with TCI, KT began selling some of its assets, until the Tribune Assets were the only assets remaining under KT's control. (See Garfinkel Decl. para. 13; Gallivan Dep. at 19-20, attached as Ex. A to MNG Mem. in Opp'n to Mot. for Prelim. Inj.)
In 1999, ATT merged with TCI and TCI was converted into ATT Broadband, LLC, which is wholly owned by ATT. (ATT and ATT Broadband, LLC are both referred to as "ATT" throughout this order). In connection with the TCI-ATT merger, the rights and obligations of KT passed to KTLLC. (See Garfinkel Decl. para. 14.) At the present time, then, KTLLC, owner of the Tribune Assets, is an entity owned and controlled by ATT.
Subsequent to the 1999 merger, ATT began to explore the possibility of a sale of KTLLC to either SLTPC or DNPC. (See id. a para. 19.) In a letter to SLTPC and DNPC, dated June 22, 2000, ATT announced that SLTPC and DNPC could submit independent bids to ATT, after which ATT would sell KTLLC to party with the best offer. (See Letter from Huseby to Welch, dated June 22, 2000, attached as Ex. I Am. Compl.)
Shortly after the letters were sent, SLTPC objected to ATT's proposed bidding process, and on September 29, 2000, ATT agreed to halt the bidding process. (See Letter from Garfinkel to Welch, dated Sept. 29, 2000, attached as Ex. L to Am. Compl., stating that "[W]e [ATT] hereby suspend the offering procedures with respect to ATT Broadband, LLC's interest in [KTLLC]. We will notify you if and when the offering procedures are reinstated.")
After ATT suspended the bidding process, SLTPC and ATT continued their negotiations in a series of phone calls and meetings. According to SLTPC, on November 17, 2000, ATT and SLTPC reached a verbal agreement on a price of $180,000,000 for the Tribune Assets, and agreed that the sale would close by the end of the year. (See Am. Compl. para. 65.) During the hearing on this motion, Randy Frisch, SLTPC's chief negotiator, stated that it was his "sense" that ATT had agreed to deal exclusively with SLTPC. A working copy of a Draft Acquisition Agreement between ATT and SLTPC shows that the parties had apparently reached agreement on some items. (See Draft Acquisition Agreement, attached as Ex. S to Garfinkel Decl.) According to Garfinkel, an attorney with ATT who has been personally involved in ATT's interest in KTLLC, however, the parties had not reached any resolution on four material terms: price, indemnification of ATT, financing concerns, and the ongoing operational disputes between SLTPC and Deseret News Publishing. (See. e.g., Garfinkel Decl. paras. 33-36.)
At approximately the same time that ATT was negotiating a sale of KTLLC to SLTPC, ATT was communicating with William Singleton, president of MNG. MNG, the seventh largest newspaper company in the United States and owner of 48 daily newspapers, as well as several non-daily publications, indicated that it was interested in purchasing KTLLC from ATT. (See Lodovic Aff. para. 3.)
MNG interpreted the JOA to require consent by the DNPC before any sale of KTLLC could be completed. (See id. paras. 13-15; 17.) According to SLTPC, Michael P. Huseby, a representative of ATT, told Singleton that he should contact someone from DNPC to discuss the possibility of MNG's purchase of KTLLC. Singleton contacted DNPC and eventually reached an agreement whereby DNPC consented to MNG's purchase of KTLLC and, in exchange, MNG promised to make certain changes to the JOA. (See id. para. 22.) A letter dated September 29, 2000, reflects these agreements and includes a "summary of proposed changes to the Deseret News/Salt Lake Tribune Joint Operating Agreement." (See Letter from Lodovic to Snarr, dated Sept. 29, 2000, attached as Ex. B to Supplemental Mem. in Supp. of Restated Mot. for Prelim. Inj.)
On December 1, 2000, Huseby told SLTPC that ATT had agreed to sell KTLLC to MNG. An Acquisition Agreement between ATT and MNG reflects this agreement. (See Acquisition Agreement, attached as Ex. T to Garfinkel Decl.) According to paragraph 2.1, the Acquisition Agreement contemplates that sale by ATT to MNG of ATT's "ownership of the LLC Interests, in exchange for $200,000,000 in cash." (Id.)
The Acquisition Agreement defines the "LLC Interests" as "all of the outstanding limited liability company interests of [KTLLC]." (Acquisition Agreement at 1.)
In regards to the Management Agreement, the Acquisition Agreement between ATT and MNG provides the following:
[MNG] understands, acknowledges and agrees that [KTLCC] is, and after the Closing Date will continue to be, a party to the Management Agreement and is, after the Closing Date will continue to be, bound by the terms thereof. Without limited the foregoing, [MNG] will cause [KTLLC] to honor the terms of the Management Agreement that ensure the independence of the Tribune's reporting and editorial functions.
(Id. para. 5.5(a).) The Acquisition Agreement includes the following section concerning the Option Agreement:
[MNG] understands, acknowledges and agrees that [KTLLC] is, and after the Closing Date will continue to be, a party to the Option Agreement and is, and after the Closing Date will continue to be bound by the terms thereof.
(Id. para. 5.5(b).) Finally, with respect to the JOA, the Acquisition Agreement provides:
Following the Closing, [MNG] will cause [KTLLC] to comply with its obligations under the [JOA], subject to all rights of [KTLLC] pursuant to the terms of the [JOA].
(Id. para. 5.5(c).)
Also on December 1, 2000, Singleton addressed certain Salt Lake Tribune employees. Greg Burton. a Salt Lake Tribune employee, tape-recorded Singleton's comments, and a transcript of the remarks was provided to the court. (See Tr. of Singleton Comments, attached as Ex. C to MNG Mem. in Opp'n to Restated Mot. for Prelim. Inj.) In its motion for a preliminary injunction, SLTPC claims that certain of Singleton's comments and his deposition testimony demonstrate an intent to breach the Management and Option Agreements as well as the JOA. (See Mem. in Supp. of Restated Mot. for Prelim. Inj. at 6-10.) MNG contends that SLTPC misinterprets Singleton's statements. (See Plaintiffs Memorandum v. Transcript, attached as Ex. D to MNG Mem. in Opp'n to Restated Mot. for Prelim. Inj.)
SLTPC filed this action on December 1, and now seeks a preliminary injunction to halt to pending sale of KTLLC from ATT to MNG:
Standards for Injunctive Relief
To obtain injunctive relief, a party must establish that: (1) it will likely prevail on the merits of the litigation; (2) it will suffer irreparable injury unless an injunction is issued; (3) its threatened injury outweighs any harm the proposed injunction may cause to the opposing party; and (4) an injunction, if issued, would not be adverse to the public interest. See Elam Const., Inc. v. Regional Transp. Dist. 129 F.3d 1343, 1346-47 (10th Cir. 1997).
When the movant prevails on the last three factors, the Tenth Circuit has held that a court should use a modified version of the "substantial success on the merits" test:
To justify a temporary injunction it is not necessary that the plaintiffs right to a final decision, after a trial, be absolutely certain, wholly without doubt; if the other elements are present . . . it will ordinarily be enough that the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation.Koerpel v. heckler, 797 F.2d 858, 866 (10th Cir. 1986) (internal citations omitted). SLTPC contends that this court should adopt the modified version of the success on the merits test. Since resolution of this motion is the same regardless of the test used, the court assumes arguendo that SLTPC is correct, and uses the modified version of the test.
Conclusions of Law
A. Success on the Merits 1. Breach of the Option Agreement by ATT
The Option Agreement signed by KT and SLTPC in 1997 bars KT from selling or otherwise transferring "the Tribune Assets" to an entity outside of KT's control. (Option Agreement § 6.) The Option Agreement is governed by Delaware law. (See id. § 15). Under Delaware law, the proper construction of any contract is purely a question of law. See Rhone-Poulenc Basic Chem. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992). If the meaning of a contract provision is unambiguous, the court must give effect to that clear meaning. See id. at 1196.
ATT claims that contracts entered into by a subsidiary are not binding on the parent corporation, and that it is therefore not bound by the Option Agreement. (See ATT Mem. in Opp. to Mot, for Prelim. Inj. at 19.) Because the court concludes that, even were ATT bound by the Option Agreement, SLTPC has failed to demonstrate a likelihood of success on this claim, the court does not reach this issue.
A contract is not rendered ambiguous simply because the parties do not agree upon its proper construction. Rather, a contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.
. . .
The true test is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.Id. Because the court concludes that Paragraph 6 of the Option Agreement is unambiguous, it will give effect to the clear meaning of the provision.
An option agreement will be strictly construed against its drafter. See. e.g., Haddox v. Walker, 522 So.2d 266, 269 (Ala. 1988); Novik v. Bartell Broadcasters, Inc., 323 N.Y.S.2d 108, 111 (N.Y.Sup.Ct. 1971). SLTPC submitted evidence during oral argument suggesting that the Option Agreement was drafted by TCI's attorneys, while ATT countered with evidence suggesting that the Option Agreement was drafted by SLTPC's attorneys. Because the evidence was not clear on this disputed issue, the court does not strictly construe the Option Agreement against either party.
The Acquisition Agreement between ATT and MNG distinctly states, and the parties agreed at the hearing, that the proposed sale will transfer the stock of KTLLC, and not the assets of The Salt Lake Tribune. See Acquisition Agreement § 2.1.) This sale of stock in KTLLC is thus not barred by the plain language of the Option Agreement, which prohibits only a sale of "the Tribune Assets." (Option Agreement § 6.) Nevertheless, SLTPC argues that the planned sale violates the Option Agreement because the sale of KTLLC stock is the functional equivalent of the sale of the Tribune Assets. For the reasons discussed below, the court finds that this is not the case, and that the sale of KTLLC stock is not prohibited by the Option Agreement.
Paragraph 6 of the Option Agreement states that KT may not sell the Tribune Assets "except (i) to an entity controlled by or under common control with KT. . . ." (Option Agreement § 6.) SLTPC spent a considerable amount of time at the hearing arguing that this exception could not be used because KT (as opposed to KTLLC) no longer exists as a legal entity. It appears to the court, however, that SLTPC has previously acknowledged that KTLLC represents the successor-in-interest to the rights and obligations previously held by KT. (See e.g., Draft Acquisition Agreement at 1, `Whereas, the Company [KTLLC] is the successor by mergers to Kearns-Tribune Corporation. a Utah corporation ("K-T Corp."). and, by virtue of such mergers, has succeeded to the ownership of the Salt Lake Tribune.") See also Universal Studios v. Viacom, Inc., 705 A.2d 579, 590 n. 68 (Del.Ch. 1997) ("If the agreement does not specifically state it is not applicable to successors and assigns, the policy of the law is so clear that survival should be taken as the normal course of events.").
It is, however, not necessary for the court to decide this issue. Because the court determines that the sale of KTLLC stock to MNG does not constitute a sale of "the Tribune Assets," the exceptions to the prohibition against an asset sale listed in Paragraph 6 are not relevant in this case.
It is a well-established principle of corporate law that the sale of a company's stock is not equivalent to the sale of that company's assets.
[A] sale of shares works no change or modification in the title to the corporate property, and does not reduce or impair the corporate assets; the purchaser of the shares does not purchase or acquire title to any portion of the corporate assets. A sale of all of the shares of a corporation, or of a controlling interest, is not a sale of the physical properties or assets of the corporation. . . .
11 Fletcher Cyclopedia Corporations § 5100 at 93 (Perm. ed. 1995); see also id. § 5771 at 88 ("[A] corporation owning all the stock of another company does not own the property of the latter corporation.") This principle has long been recognized in the Delaware courts. See. e.g., DuPont v. DuPont, 208 A.2d 509, 512 (Del. 1965) ("The shareholder has essential rights to share in the profits and in the distribution of assets on liquidation, but no specific interest in the corporate assets."); Orzeck v. Englehart, 195 A.2d 375, 377 (Del. 1963) (sale of stock does not equal sale of assets); Field v. Allyn, 457 A.2d 1089, 1097-98 (Del.Ch. 1983) (citing Orzeck); National Union Fire Insurance Co. v. Stauffer Chemical Co., No. C.A.87C-SE-11, 1991 WL 138431, at *2 (Del.Super.Ct. July 15, 1991) (same).
In Orzeck v. Englehart, 195 A.2d 375 (Del. 1963), for example, one corporation bought all of the stock of seven other corporations. The Delaware Supreme Court determined that the sale of stock was not equivalent to a sale of assets:
Once the acquisition has been made the purchasing corporation thereafter has the status of a stockholder of the corporation whose shares it has purchased and nothing more. In other words, the purchasing corporation is not the owner of the assets of the other corporation, but is merely a stockholder with all the incidents of such.Id. at 377.
Accord Owens v. Commissioner of Internal Revenue, 568 F.2d 1233, 1239 (6th Cir. 1977) ("When a stockholder sells his stock, he is selling his proprietary interest in a going concern and not an interest in the corporate assets."); Power Test Petroleum Distrib., Inc. v. Baker-Tripi Realty Corp., 190 A.D.2d 845, 847 (N.Y. A.D. 1993) ("ownership of capital stock is by no means identical with or equivalent to ownership of corporate property") (citations omitted); Union Bank v. Anderson, 232 Cal.App.3d 941, 949 (Cal.Ct.App. 1991) ("When shareholders purchase stock in a corporation and the corporation includes certain holdings in real property, the shareholders do not acquire an ownership interest in the real property. The shareholders of a corporation do not have legal title to the assets or capital of the corporation. . . .") (citations omitted); Cruising World, Inc. v. Westermeyer, 351 So.2d 371, 373 (Fla.Dist.Ct.App. 1977) ("a share of stock . . . does not vest the owner thereof with any legal right or title to any of the [corporate] property");McClory v. Schneider, 51 S.W.2d 738, 741 (Tex.Civ.App. 1932) ("A transfer of stock of a corporation . . . is held not to be a transfer of the property and assets of the corporation itself").
SLTPC cites several cases in which courts departed from this general rule to hold that the transfer of stock should be treated as a transfer of assets. These cases are distinguishable, however, as they all illustrate limited exceptions, which are inapplicable to this case, to the general rule. In most of the cases cited by SLTPC, the seller of a corporation agreed to pay a broker a commission upon sale of a business, but then structured the sale as a sale of stock rather than a sale of assets merely to avoid payment of this agreed-upon commission. The courts thus held that the sale of stock should be deemed equivalent to the sale of assets so that the broker would receive the commission to which he or she was entitled. See Klebanoff. Ponsell, 290 A.2d 668. 669 (Del.Super.Ct. 1972); Morad v. Haddad, 110 N.E.2d 364, 367 (Mass. 1953); Shortt v. Knob City Inv. Co., 292 S.E.2d 737, 740 (N.C.Ct.App. 1982); Kingston Dev. Co., Inc. v. Kenerly, 208 S.E.2d 118, 121-22 (Ga.Ct.App. 1974); J.L. Kislak. Inc. v. Carol Management Corp., 184 N.Y.S.2d 315 (N.Y. A.D. 1959). This case involves no such previously agreed-upon commission.
SLTPC also relies on Christacos v. Blackie's House of Beef, Inc., 583 A.2d 191 (D.C. 1990), in which the parties agreed that Christacos, who had bought a restaurant from Blackie's, would have to pay Blackie's an additional $50,000 fee if Christacos subsequently sold the "business" within three years. Id. at 196. Christacos tried to avoid this fee by selling stock in a holding company rather than the restaurant's assets directly. The court determined that the parties had intended the word "business" to mean sale of stock as well as sale of assets. See id. at 194-95. Here, however, the Option Agreement unambiguously refers to the sale of "assets," which Delaware law views as different from the sale of stock. See Orzeck, 195 A.2d at 377. The Christacos court, moreover, recognized explicitly that it was making a limited exception to "this general rule divorcing ownership of stock from ownership of the corporate assets. . . ." 583 A.2d at 195; see also id. at 192 (affirming "the principle that ownership of stock in a corporation is not ownership of an interest in the corporate assets").
Oregon RSA No. 6. Inc., v. Castle Rock Cellular, 840 F. Supp. 770 (D. Or. 1993), a case cited by SLTPC, does not support SLTPC's position. In that case, the defendants had created a shell company solely for the purpose of avoiding a right-of-first-refusal clause, which barred a sale of corporate stock. See id. at 773. In this case, however, the Option Agreement only bars the sale of corporate assets. The Castle Rock court thus did not even discuss the principle at issue here — whether sale of a company's stock should be deemed equivalent to sale of its assets — because it was not at issue in that case.
Finally, in Prince v. Elm Inv. Co., 649 P.2d 820 (Utah 1982), a lessor transferred a piece of property to a partnership in which he was the majority owner, thus avoiding a right-of-first-refusal clause which applied only in the event of "sale" of the property. The court thus focused not on the issue presented here, but on the issue of whether transfer to a partnership constitutes a "sale." See id. at 822. This case actually weighs against SLTPC's position, as the court specifically affirmed that "[a] sale of stock should not, therefore, be equated with the sale of a corporate asset." id. at 823.
Because the sale of a corporation's stock is not the same as the sale of a corporation's assets, the sale of KTLLC's stock is not barred by the Option Agreement, which prohibits only a sale of "the Tribune Assets." (Option Agreement § 6.) SLTPC presented no case law that counsels against this well-accepted principle of corporate law. Accordingly, the court finds that SLTPC has not raised "questions going to the merits so serious, substantial, difficult and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation" on its breach of contract claim against ATT. Koerpel, 797 F.2d at 866.
2. Violation of ATT's Duty to Act in Good Faith
Under Delaware law, "an implied covenant of good faith and fair dealing is engrafted upon every contract.`Wilgus v. Salt Pond Inv. Co., 498 A.2d 151, 159 (Del.Ch. 1985). The implied covenant of good faith and fair dealing `requires a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving the fruits of the contract."Id. SLTPC claims that ATT has violated the implied covenant of good faith and fair dealing adhering to the Option and Management Agreements in two ways.
Delaware laws governs both the Option and Management Agreements. (See Option Agreement § 15; Management Agreement § 8.11.)
It is unclear whether SLTPC meant to argue that ATT had breached an implied covenant of good faith and fair dealing by communicating with MNG after allegedly promising SLTPC that it would not negotiate with any other party. As discussed below, however, there is little evidence that there was any binding commitment between ATT and SLTPC. (See discussion infra § A(3).) Because "[t]he covenant of good faith and fair dealing cannot be construed to establish new, independent rights or duties not agreed upon by the parties," Andalex Res. Inc. v. Meyers, 871 P.2d 1041, 1048 (Utah Ct.App. 1994), it appears that ATT was not bound to any implied covenant of good faith and fair dealing in its negotiations with SLTPC, For purposes of this section, the court assumes that ATT is bound by the Option and Management Agreements. (See discussion supra at 9 n. 3.)
First, SLTPC argues that by selling the stock of KTLLC to a company which has allegedly indicated its intent not to abide the Option and Management agreements, ATT has prevented SLTPC from receiving the benefits of those two agreements. As discussed more filly below, however, MNG has not clearly indicated an intent to violate either the Option or the Management Agreement. (See discussion infra § A(4).) Because MNG is contractually-bound to abide by its obligations in the Option and Management Agreements, SLTPC has failed to demonstrate that it has any likelihood of success on its claim of breach of the implied covenant of good faith and fair dealing.
Second, SLTPC alleges that ATT plans to sell stock in KTLLC rather than the assets of The Salt Lake Tribune as a means of avoiding Paragraph 6 of the Option Agreement, in violation of the implied covenant of good faith and fair dealing. In support, SLTPC cites Oregon RSA No. 6. Inc. v. Castle Rock Cellular, 840 F. Supp. 770 (D. Or. 1993), in which defendants created a shell company as a repository for a partnership interest solely to avoid a right-of first-refusal clause. The court held that this "blatant subterfuge" violated the implied covenant of good faith and fair dealing. 1st at 774. The facts in this case are quite different. While the shell company in Castle Rock was created immediately before the stock sale for the sole purpose of avoiding contractual obligations. SLTPC has made no allegation that, at the time it was created in 1997, KT (the predecessor of KTLLC) was created to avoid the Option Agreement. Indeed, KT was not created as a shell company; it originally held substantial assets in the form of other newspapers, property, TCI stock, and oil, gas, and mining interests. (See Garfinkel Decl. para. 6.) While it is true that The Salt Lake Tribune is KTLLC's sole remaining asset, there is no evidence that the other assets were stripped away by ATT in order to circumvent the Option Agreement; rather, many of the other assets were bought by former owners of SLTPC. (See id. para. 13.) SLTPC has presented no evidence that the creation of KT or KTLLC was designed as a "blatant subterfuge" or a means to avoid SLTPC's rights under the Option Agreement.
Furthermore, the holding in Castle Rock was premised on the finding that the defendants' creation of the shell company was "an artifice intended to thwart plaintiffs legitimate contractual expectations." Castle Rock, 840 F. Supp. at 776. Here, however, SLTPC knew at the time that the Option Agreement was drafted that KT (or its successors) would control the Tribune Assets. Nonetheless, SLTPC agreed to Paragraph 6 of the Option Agreement, which protects SLTPC only against asset sales, and not against sales of the holding company's stock.
Accordingly, the court finds that SLTPC has not raised "questions going to the merits so serious, substantial, difficult and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation" on its breach of contract claim against ATT. Koerpel, 797 F.2d at 866.
3. Breach of a Binding Preliminary Commitment by ATT
After ATT suspended its proposal to elicit bids from SLTPC and DNPC for the sale of KTLLC, SLTPC and ATT continued negotiating a possible sale. Representatives from both parties met and discussed a possible sale several times, and, according to SLTPC, reached verbal agreements on several major issues. A working Draft Acquisition Agreement between ATT and SLTPC and comments by various representatives demonstrate that the parties were nearing a final deal. (See Draft Acquisition Agreement; see also Huseby Dep. at 106, Ins. 18-23, attached as Ex. E to Supplemental Mem. in Supp. of Restated Mot. for Prelim. Inj., acknowledging that it was ATT's expectation that a deal could be worked out by the end of 2000.)
SLTPC contends that, through its continued negotiations, ATT obligated itself to either deal exclusively with SLTPC, act in good faith, or sell KTLLC to SLTPC, ATT responds that the two parties were engaged in ongoing negotiations that did not result in a final, binding agreement. As a preliminary matter, the parties disagree over which law should control the court's consideration of this issue. SLTPC argues that New York law controls, while ATT argues that Utah law controls. The court need not decide which law actually applies because, under both state's laws, the parties did not enter into a binding agreement or commitment of any kind.
a. Analysis under Utah Law
Under Utah law, the party claiming that there is a contract has the burden to prove that "there has been mutual assent by the parties manifesting their intention to be bound by its terms. Furthermore, a contract can be enforced by the courts only if the obligations of the parties are set forth with sufficient definiteness that it can be performed." Bunnell v. Bills, 368 P.2d 597, 600 (Utah 1962), overruled in part on other grounds by Leigh Furniture Carpet Co. v. Isom, 657 P.2d 293, 302-04 (Utah 1982). In this case, a final, written and signed document was contemplated, but never memorialized, by the parties. It is difficult to imagine that the sale of KTLLC to SLTPC, which involved lengthy and complicated negotiations, would not have been resolved to a final, written document. Indeed, the Draft Acquisition Agreement points to a conclusion that negotiations between ATT and SLTPC were ongoing. See Engineering Assocs., Inc. v. Irving Place Assoc., Inc., 622 P.2d 784, 787 (Utah 1980) ("if the parties make it clear that they do not intend that there should be legal consequences unless and until a formal writing is executed, there is no contract until that time"); accord Triax Pacific. Inc. v. American Ins. Co., Civ. No. 94-4091, 1995 WL 643156, at *5 (10th Cir. 1995).
In addition, the evidence shows that several important issues (including price, indemnification, financing, and ongoing disputes between SLTPC and DNPC) were unresolved. (See e.g., Garfinkel Decl. paras. 33-36.) Finally, Garfinkel's declaration and testimony indicated that any deal with SLTPC for the sale of KTLLC would require ATT Board approval. (See id. para. 27.) SLTPC did not deny the ATT Board approval requirement, but insisted (without presenting any evidence other than the sincere belief of Frisch) that Board approval was a foregone conclusion and a mere technicality.
SLTPC has not shown that ATT and SLTPC agreed to all the material terms and conditions for the sale of KTLLC or that it was the parties' intent to be bound by any contract, oral or otherwise. Under Utah law, then, SLTPC fails to show that any enforceable contract existed between ATT and SLTPC.
b. Analysis under New York Law
Even assuming New York law applies, SLTPC fails to show that it has a substantial likelihood of success on this claim. New York recognizes two types of preliminary agreements: binding preliminary agreements and binding preliminary commitments. See Gorodensky v. Mitsubishi Pulp Sales. Inc., 92 F. Supp.2d 249, 254 (S.D.N.Y. 2000); Kimball Assoc. v. Homer Central School Dist., Civ. No. 00-CV-897, 2000 WL 1720751, at *6 (N.D.N.Y. Nov. 9, 2000). During oral argument, counsel for SLTPC indicated that he meant only to argue the existence of a binding preliminary commitment.
According to the Second Circuit, pre-contractual agreements normally do not create binding obligations, except in rare circumstances where the agreement clearly manifests the parties' intention to be bound. See Shann v. Dunk, 84 F.3d 73, 77 (2d Cir. 1996); see also Kimball Assoc., 2000 WL 1720751, at *6 ("preliminary agreements are not normally binding and the court must avoid trapping parties into unintended contractual obligations"). "[I]f the preliminary writing was not intended to be binding on the parties at all, the writing is a mere proposal, and neither party has an obligation to negotiate further."Adjustrite v. GAB Bus. Servs., Inc., 145 F.3d 543, 548 (2d Cir. 1998).
A binding preliminary commitment is created "when the parties agree on certain major terms, but leave other terms open for further negotiation." Id. A preliminary commitment is basically an "agreement to agree," and requires that the parties negotiate and act in good faith in their attempts to reach a final agreement. See id.; P.A. Bergner Co. v. Martinez, 823 F. Supp. 151, 156 (S.D.N.Y. 1993). While a party who enters into a binding preliminary commitment must act in good faith, the party "has no right to demand performance of the transaction." Adjustrite, 145 F.3d at 548.
In determining whether parties meant to enter into a binding preliminary commitment, a court must look at (1) the language of the agreement; (2) the existence of open terms; (3) whether there has been partial performance; (4) the necessity of putting the agreement in final form as indicated by the customary form of such transactions; and (5) the context of the negotiations resulting in the preliminary commitment. See Gorodensky, 92 F. Supp.2d at 254-55; Kimball Assoc., 2000 WL 1720751, at *6.
The Second Circuit has stated that the first factor, the language of the agreement, is "the most important." Arcadian Phospates, Inc. v. Areadian Corp., 884 F.2d 69, 72 (2d Cir. 1989). In this case, SLTPC has not shown the court any written agreement that evidences any agreement to agree between the two parties. The Draft Acquisition Agreement between SLTPC and ATT, for example. is an unsigned, unfinished agreement that appears to be in the middle of a lengthy editing process. (See Draft Acquisition Agreement.) It is strong evidence of ongoing negotiations, but weak evidence of an intent between the parties to continue negotiations in good faith.
During oral argument on this issue, SLTPC counsel referred to several statements made by Huseby during his deposition as evidence of a binding preliminary commitment. First, when commenting about his expectations of a possible deal between ATT and SLTPC, Huseby commented: "Quite frankly, at that time I thought we — I was hopeful we would reach a deal with Tribune management, that the issues would get — we'd get more comfortable." (Huseby Dep. at 127, Ins. 21-24.) Second, in responding to a question about another individual's expectation that the deal would be closed by the end of the year, Huseby responded, "I recall and my understanding is where he said it should be very possible to close the deal by the end of the year, not that it definitely would be. Because I don't recall that being the case. He knows it was my objective, and he was trying to give me assurance that it was very possible we could close by the end of the year, very doable." (Id. at 105, Ins. 20-25, 106, ln. 1.) Third, when asked "DO you recall saying at the beginning of this subsequent call that you wanted to get the details of the deal worked out as quickly as possible," Huseby responded, "I don't recall that, but that was my hope." (Id. at 101, Ins. 13-17.) Finally, when asked "Did you have a reasonable expectation that you could complete a deal with the Tribune by the end of the year [following the November 17 call]," Huseby stated "Yes." (Id. at 106, Ins. 18-23.)
The identify of this unnamed person is unclear from the portion of the deposition provided to the court.
The evidence put forward by SLTPC demonstrates that SLTPC and ATT were engaged in negotiations. As shown in the quoted passages above, ATT apparently believed and hoped that an agreement could be reached by the end of the year. A final agreement. however, did not happen, and ATT's hope that a conclusion would be reached did not create a contractual relationship between the parties. Although SLTPC has shown evidence of ongoing negotiations, they have not pointed to a writing or oral statements which would indicate the parties' intent to be bound to a preliminary commitment under New York law. See. e.g., Gorodensky, 92 F. Supp.2d at 255 (holding that even a letter stating that party is "prepared to enter into a commercial agreement" does not show a binding commitment); Cf. Teachers Ins. Annuity Assoc. of Am. v. Tribune Co., 670 F. Supp. 491, 499 (S.D.N.Y. 1987) (holding that parties entered into binding preliminary commitment by signing letter that stated "our agreement to purchase from you and your agreement to issue, sell and deliver to us . . . the captioned securities shall become a binding agreement between us").
The second factor is whether there were still open terms. It is clear from the evidence that the parties were still negotiating price, indemnification issues, financing concerns, and ongoing operational disputes between SLTPC and Deseret News Publishing. (See, e.g., Garfinkel Dep. paras. 33-36.) SLTPC acknowledges that these factors were unsettled, but argues that they were "nits," minor problems that could be easily fixed later. Even assuming SLTPC was correct, the existence of open terms weighs against a conclusion that a binding agreement or commitment was intended by the parties. See Gorodensky, 92 F. Supp.2d at 255 (concluding that there was no binding agreement (in part) because there were "a number of open terms remaining to be negotiated."); but see Teachers Ins., 670 F. Supp. at 501 ("The fact that countless pages of relatively conventional minor clauses remained to be negotiated does not render the agreement unenforceable.")
The third factor is whether there has been partial performance. This was clearly never done, and therefore this factor weighs against a finding of a binding commitment. See Gorodensky, 92 F. Supp.2d at 256.
The fourth factor is whether an agreement like the one at issue would normally be resolved in some final form. As evidenced by the complexity of the issues facing the court in the present hearing, consummation of the deal between ATT and SLTPC would have involved considerable legal drafting in order to comply with several contractual obligations. It is highly unlikely (and SLTPC presented no evidence of the possibility) that even a binding preliminary commitment would not have been written down. Cf. Teachers Ins., 670 F. Supp. at 503 (finding binding preliminary commitment because there was an express writing and expert witness evidence showed that it is within the recognized practices of the financial community at issue to accept that preliminary commitments can be binding).
Finally, the existence of a binding preliminary commitment under New York law is influenced by the context of the negotiations resulting in the commitment. Based on the evidence presented by both sides, the discussions, meetings, and Draft Acquisition Agreement between SLTPC and ATT are best viewed as indications of ongoing negotiations. Although SLTPC's representatives apparently felt that ATT was about to accept SLTPC's offer, there is scant evidence that the parties ever "clearly indicated the commitment to negotiate in good faith to reach a final agreement." Kimball Assoc., 2000 WL 1720751, at *7
As noted above, New York law is clear that preliminary agreements and commitments are "not normally binding" and generally "do not create binding obligations." Id. at *6, 7. Based on the evidence presented, SLTPC has failed to show that this is one of the "rare circumstances where the agreement clearly manifests the intention [of the parties] to be bound."Id. at *6.
Even if New York law applies, then, SLTPC has not raised questions which are "serious, substantial, difficult, and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation." Koerpel, 797 F.2d at 866. Therefore, SLTPC has not shown that this claim entitles it to injunctive relief
4. Anticipatory Breach and Repudiation of Option and Management Agreements by MNG
SLTPC claims that MNG has indicated its intention to disregard the Option Agreement and the Management Agreement once it acquires ownership of KT, and that this repudiation constitutes an anticipatory breach of those agreements. An anticipatory breach occurs when a party to a contract manifests "a positive and unequivocal intent not to render its promised performance."Cobabe v. Stanger, 844 P.2d 298, 303 (Utah 1992).
Since MNG is not yet a party to either the Option or Management Agreements it may not be liable, as a technical mailer, for anticipatory breach. See id. (holding that an action for anticipatory breach may be brought against "one of the panics to the contract"). MNG will likely become a party to those agreements within a matter of days, however, once its acquisition of KTLLC is complete. The court does not reach the issue of whether a party in MNG's position is potentially liable for anticipatory breach, as it finds that, even were MNG potentially liable, SLTPC has raised insufficient evidence to demonstrate a likelihood of success on this claim.
SLTPC first contends that MNG is liable for anticipatory breach of the Option Agreement. In support, SLTPC points to Singleton's deposition testimony, in which he stated that he believes SLTPC's exercise of its option might encounter a "big problem" because the Option Agreement fails to address the role of the Deseret News. (See Singleton Dep. at 23, Ins. 22-25, attached as Ex. C to Supplemental Mem. in Supp. of Restated Mot. for Prelim. Inj.) SLTPC also referred to Singleton's December 1 comments in which he was asked about the viability of' the Option Agreement after KTLLC's sale to MNG. In the transcript provided to the court, Singleton acknowledged that SLTPC has the same rights under MNG ownership as it had under ATT, but declined to expressly validate STLPC's rights. See Tr. of Singleton's Comments at 8-9,)
Taken as a whole, SLTPC's evidence fails to show any intent by MNG or Singleton to violate the Option Agreement. Indeed, there is substantial evidence that MNG will honor its obligations under the agreement. Singleton testified during oral argument that MNG acknowledges the Option Agreement and expects to honor it. In addition, MNG has committed in its Acquisition Agreement with ATT to be bound by the terms of the Option Agreement. (See Acquisition Agreement § 5.5(b).) Given MNG's repeated statements that it does not plan to violate the Option Agreement, SLTPC fails to make a "serious or substantial" claim of anticipatory repudiation of the Option Agreement by MNG. Koerpel, 797 F.2d at 866.
SLTPC next contends that MNG has anticipatorily breached the Management Agreement. First, SLTPC claims that MNG intends to violate the Management Agreement by taking over the editorial functions of The Salt Lake Tribune after MNG purchases KTLLC. According to SLTPC, this would violate the Management Agreement, which states that SLTPC "shall have sole authority and discretion with respect to the news and editorial policies." (Management Agreement § 3.02.) As evidence of MNG's plan to take over editorial control, SLTPC points to Singleton's statements during his meeting with Salt Lake Tribune employees that he may or may not choose to hire new managerial staff for The Salt Lake Tribune and that MNG newspapers maintain a philosophy of a "kick ass kind of journalism." (Tr. of Singleton Comments at 15, 18.)
Additionally, in its summary of proposed changes to the JOA, MNG states that "[u]pon expiration of the current term of the Management Agreement, MediaNews will be obligated to edit the Tribune directly. . . ." (Letter from Lodovic to Snarr, dated Sept. 29, 2000, at Enclosure 2. para. 4.) As this contemplates editorial control only after the expiration of the Management Agreement, however, it cannot constitute a breach of the Management Agreement.
In its Acquisition Agreement with ATT, however, MNG has promised to "honor the terms of the Management Agreement that ensure the independence of the Tribune's reporting and editorial functions." (Acquisition Agreement § 5.5(a).) MNG has committed to make reasonable efforts to retain all current newsroom staff at their current salaries and benefits. (See id. § 5.6.) Moreover, in his meeting with Salt Lake Tribune employees, Singleton stated that "[i]f we own the Tribune, our coverage will be very, very independent, locally directed and I don't get involved in the day to day coverage of any of our newspapers . . ." and that "When you buy a Salt Lake newspaper that is doing well and if it ain't broke, you don't fix it. I don't view this newspaper as broke, no. I don't see a lot of changes that are needed from the outside." (Tr. of Singleton Comments at 15, 18.) SLTPC has thus failed to demonstrate a positive and unequivocal intent by MNG to take editorial functions away from SLTPC.
Second, SLTPC claims that MNG intends to violate the Management Agreement by adopting certain amendments to the JOA. In support, SLTPC points to a letter of agreement between MNG and DNPC, which lists several proposed changes to the JOA. (Letter from Lodovic to Snarr, dated Sept. 29, 2000.) According to SLTPC, Section 3.02 (ii) of the Management Agreement gives SLTPC the exclusive right to amend the JOA. (See id., "The Manager shall have the authority to act on behalf of KT with respect to all action required or permitted to be taken by KT under the Joint Operating Agreement.") It may be, however, that this provision merely grants SLTPC permission to act on behalf of KT, rather than exclusive authority to do so. (Compare id. § 3.02 (ii), granting SLTPC "the authority to act on behalf of KT," with id. § 3.02(i), (iii)-(vi). (vii)-(xii), stating that SLTPC "shall" perform other duties,)
In addition, the Management Agreement does not allow SLTPC to amend the JOA without approval of the KTLLC Board. (See id. § 3.03 (vii).) Moreover, as 50% owner of the NAC, it may be that MNG, and not SLTPC, is the party with the right to propose and make amendments to the JOA. (See id. § 3.01(a), stating that SLTPC's management is "subject to the direction and authority of KT"; id. § 3.02, stating that SLTPC's management is "on behalf of and for the benefit of KT"; id. § 8.01, stating that SLTPC "shall act solely as agent of KT".) SLTPC has therefore failed to "raise questions going to the merits [that are] so serious, substantial, difficult, and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation." Koerpel, 797 F.2d at 866.
5. Intentional Interference with Contract by MNG
SLTPC's final claims are that MNG's actions constitute intentional interference with the contractual relationships between (a) ATT and SLTPC for the sale of KTLLC and (b) SLTPC and DNPC under the JOA. A party is subject to liability for an international interference with contract "if he intentionally and improperly causes one of the parties not to perform the contract." St. Benedict's Dev. Co. v. St. Benedict's Hosp., 811 P.2d 194, 201 (Utah 1991).
Liability for intentional interference is, of course, predicated on the existence of a contract. As discussed above, SLTPC has not presented sufficient evidence that would entitle it to a preliminary injunction on its claim that ATT and SLTPC were in a contractual relationship for the sale of KTLLC. (See discussion supra § A(3).) Hence, SLTPC fails to present sufficient evidence of MNG's intentional interference of a contract between ATT and SLTPC for the sale of KTLLC.
SLTPC also claims that MNG is liable for intentional interference with the contractual relationship between SLTPC and DNPC under the JOA. In its discussion of this point, SLTPC argues that MNG's proposed changes to the JOA would violate the Management and Option Agreements. (See Mem. in Supp. of Restated Mot. for Prelim. Inj. at 20.) This appears to be a restated version of SLTPC's claim of anticipatory breach, discussed and rejected above. (See discussion supra § A(4).)
Since SLTPC fails to raise questions that are "serious, substantial, difficult, and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation," Koerpel, 797 F.2d at 866, SLTPC has not shown that these claims would entitle it to injunctive relief
B. Irreparable Harm
To constitute irreparable harm, an injury must be "certain, great, and actual." Chemical Weapons Working Group. Inc. v. United States Dep't of the Army, 963 F. Supp. 1083, 1095 (D. Utah 1997).
Bare allegations of what is likely to occur are of no value since the court must decide whether the harm will in fact occur. The movant must provide proof that the harm has occurred in the past and is likely to occur again, or proof indicating that the harm is certain to occur in the near future. Further, the movant must show that the alleged harm will directly result from the action which the movant seeks to enjoin.Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (emphasis added). "Irreparable harm cannot be speculative; `the injury complained of [must be] of such imminence that there is a "clear and present' need for equitable relief to prevent irreparable harm." Chemical Weapons, 963 F. Supp. at 1095; see also Regan v. Vinick Young 862 F.2d 896, 902 (1st Cir. 1988) ("[s]peculation or unsubstantiated fears about what may happen in the future cannot provide the basis for a preliminary injunction"); Maximus. Inc. v. Thompson, 78 F. Supp.2d 1182, 1189 (D. Kan. 1999) (same); Wisconsin Gas, 758 F.2d at 674 (same).
SLTPC's claims of irreparable injury appear to relate to (1) the possibility that MNG will interfere with SLTPC's right to exercise its option under the Option Agreement; (2) the possibility that MNG will interfere with SLTPC's rights to manage The Salt Lake Tribune under the Management Agreement and JOA; (3) the possibility that MNG's oversight of KTLLC will somehow devalue or otherwise injure the Tribune Assets; and (4) the harm suffered by SLTPC as a result of ATT's alleged breach of a binding preliminary commitment.
The first three harms listed above are not the types of harms a preliminary injunction is designed to prevent. They are speculative for at least three reasons. First, as discussed above in the discussion of MNG's alleged anticipatory breach, if MNG buys KTLLC, it is unclear exactly what changes MNG intends to make to the Tribune Assets. MNG may implement all of its proposed changes to the JOA; it may implement only some of the proposed changes. Second, MNG makes a viable argument that it has the right to make the proposed changes after purchasing KTLLC. Hence, there are serious questions as to whether MNG's proposals would even constitute a breach of the Management Agreement. Third, even if SLTPC has the rights it believes it has under the various agreements, its injury (at this moment) from MNG's purchase of KTLLC is not irreparable. If, at some point after the sale of KTLLC, SLTPC believes that MNG has violated the Option or Management Agreements, it may seek to enforce its rights. This motion concerns the pending sale of KTLLC to MNG; it is, quite simply, the wrong time and place for SLTPC to raise its concerns about uncertain breaches of contract by MNG as a result of some uncertain acts by MNG at some uncertain time in the future.
The last harm concerns the harm suffered as a result by SLTPC by its inability to own the Tribune Assets now. As discussed above, this claim has very little chance of success on the merits. (See discussion supra § A(3).) If the claim had merit, the harm to SLTPC approaches an irreparable injury, due to the unique character of The Salt Lake Tribune. See Starlight Sugar. Inc. v. Soto, 114 F.3d 330, 332 (1st Cir. 1997) ("[W]e have recognized that the loss of a unique or fleeting business opportunity can constitute irreparable injury."); see also McKinney v. Gannett Co., Inc., 660 F. Supp. 984, 1014 (D. N.M. 1981) (the right to control the business of a newspaper is a unique asset). If SLTPC were to succeed on its claim that ATT has an obligation to sell the Tribune Assets to SLTPC now, SLTPC would suffer as a result of the loss of the Assets, though perhaps only temporarily.
After the sale of KTLLC to MNG, SLTPC will retain all of the rights it currently enjoys under the Option Agreement. SLTPC apparently believes that the Option Agreement gives it the right to purchase the Tribune Assets in two years, and as discussed elsewhere in this order, there is no evidence that SLTPC'S rights under the Option Agreement will be impeded by the pending sale.
To be clear, the irreparable loss contemplated here is the inability to now own the Tribune Assets. The possibility that MNG will somehow damage the Tribune Assets or cause the Assets to lose their unique character is, as discussed above, too speculative to constitute irreparable harm.
In the end, SLTPC's injury approaches irreparable harm and this element therefore favors SLTPC.
C. Balance of Injury to the Parties
ATT claims that it may lose the opportunity to sell KTLLC to MNG, a willing and able buyer, if an injunction is issued. According to ATT, even a temporary injunction would seriously injury ATT because "the sale of ATT's interest in [KTLLC] is part of a crucial effort by ATT to boost its debt ratings, which have been downgraded during the past several months." (ATT Mem. in Opp'n to Mot. for Prelim. Inj. at 31.)
MNG claims that it would be injured by the grant of a preliminary injunction because a delay could raise customer suspicions over the pending deal and also place MNG in an "environment in which speculation, rumor, and concern among the employees runs rampant. There is a real danger of employees fleeing the Tribune." (MNG Mom. in Opp'n to Mot. for Prelim. Inj. at 17.) In addition, MNG contends that a delay would damage the fair market value of the Tribune Assets.
During argument, SLTPC emphasized the size of ATT, the minor amounts (to a company the size of ATT) involved in the pending transaction, and ATT's contractual protections if there is a delay in the closing. In addition, SLTPC counsel indicated that SLTPC was willing to post bond to cover any of ATT's potential losses pending the outcome of this lawsuit.
The balance of injuries to the parties favors SLTPC. While SLTPC's possible injury approaches irreparable harm, ATT and MNG's injuries are (generally) financial in nature, amounting to a loss of the benefit of their agreement. This element, therefore, weighs in favor of SLTPC.
D. Public Interest
The parties appear to agree that the public interests implicated here are freedom of the press and maintenance and protection of a Salt Lake Tribune that is strong and independent, capable of voicing opinions and views different from those of the Deseret News. Although SLTPC contends that, under MNG ownership, the newspaper would lose its independent voice and unique characteristics, the record does not support such a conclusion.
As the court has discussed elsewhere in this opinion, MNG has agreed "to honor the terms of the Management Agreement that ensure the independence of the Tribune's reporting and editing functions." (Acquisition Agreement § 5.5(a).) Further, Singleton testified concerning MNG's plan and ability to increase the circulation and the financial strength of the newspaper.
Based on all the evidence before it, the court concludes that SLTPC has not shown that MNG's acquisition of KTLLC would be adverse to the public interest.
Conclusion
SLTPC has failed to establish that it is entitled to injunctive relief Accordingly, its motion for a preliminary injunction is DENIED.