Lawyers for Dallas-based Texas Pacific Land Trust have filed a lawsuit that has upped the ante in an already-heated proxy battle waged by a group of dissident shareholders after a spot opened on TPL’s board of trustees.
The lawsuit, filed Tuesday by Sidley Austin, alleges trustee-hopeful Eric Oliver, who was nominated by the group of dissident shareholders, refuses to answer questions TPL says are material to his candidacy. The lawsuit seeks to enjoin his candidacy until he answers them.
The suit also alleges Oliver and the dissident shareholders violated parts of the Exchange Act by making multiple misstatements and omissions relevant to shareholders in their press releases, presentations, blog articles and letters related to the proxy battle.
Moreover, TPL alleges, Oliver has been acting in concert with a dissident group that includes Santa Monica Partners, Universal Guaranty Life Insurance Company and other third parties with longstanding ties to Oliver and Horizon Kinetics, the largest shareholder of the dissident group.
The proxy battle began after one of TPL’s trustees, who enjoy the privilege of lifetime appointments, resigned Feb. 25 for health reasons and died a month later. The replacement process has become a contentious fight over the future leadership of the publicly-traded trust, which is one of the largest landowners in Texas. It owns more than 900,000 acres in the Permian Basin.
The lawsuit seeks to compel Oliver, a hedge fund manager, to provide “full and accurate disclosures,” and seeks to enjoin his candidacy until he does so. It also asks the court to order Oliver to issue corrections to alleged misstatements and omissions in his group’s proxy materials.
Of particular concern to the trust, according to the lawsuit, are questions about his ownership of significant oil and gas interests in the Permian Basin which could either compete with, or profit from, the trust.
“We have repeatedly raised serious questions about Mr. Oliver’s background and potential conflicts of interest, to which he has refused to provide an adequate reply,” TPL Trustee David Barry said in a statement. “Election of an unqualified or conflicted trustee could cause significant harm to the Trust and its shareholders, so we have no choice but to ask the court to help us protect shareholders’ interests.”
Due to delays created by the proxy battle, TPL also announced upon filing its lawsuit that it will postpone until further notice the shareholder special meeting to fill the trustee vacancy, which has already been rescheduled two other times.
“The Trust believes it is important that all shareholders have access to the same information on the trustee candidates up for consideration,” Sidley partner Yvette Ostolaza, TPL’s lead attorney, told The Texas Lawbook in an email. “The trustee questionnaire is part of that process. We are disappointed that court intervention was necessary, but we have confidence that the court will ensure a legal process is followed.”
Oliver did not return a call seeking comment, and counsel information for him was not immediately available.
The lawsuit points out that another candidate, General Donald Cook of San Antonio – who has been endorsed by current TPL leadership – has provided meaningful disclosures of his background, business dealings and potential conflicts of interest.
“The only information that defendant provided the trustees was a résumé,” the lawsuit says. “This minimal disclosure left the trustees (and shareholders) with more questions than answers, especially in light of information previously received concerning conflicts of interest and other issues regarding defendant’s background and business dealings.”
The suit objects, in particular, to allegations that General Cook was “hand-picked” by the incumbent trustees on the recommendation of its outside lawyers.
“Notably, all three independent proxy advisory firms – ISS, Glass Lewis and Egan-Jones – have recommended that shareholders vote for the trust’s candidate General Donald Cook,” Ostolaza said.
The lawsuit also points out that General Cook was one amongst 15 “highly-qualified candidates” provided by Spencer Stuart, a specialist director search firm that TPL retained.
The remainder of the Sidley team representing TPL in the litigation includes Yolanda Garcia, Tiffanie Limbrick and Mason Parham in Dallas and Andrew Stern, Alex Kaplan, Isaac Lara and Jon Muenz in New York. A separate Sidley team based out of New York is representing TPL in the proxy battle, which is being led by partners Kai Haakon Liekefett and Holly Gregory and includes associates Reuben Zaramian, Chris Porcelli, Jerry O’Young, Immanuel Kim, Philipp Nuernberger and Pragyan Patnaik.
The case number is 3:19-cv-01224-B and has been assigned to U.S. District Judge Jane Boyle in the Northern District of Texas.