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Taseko Mines Ltd. v. Raging River Capital

United States District Court, District of Columbia

April 26, 2016

TASEKO MINES Ltd., Plaintiff,
RAGING RIVER CAPITAL, et al., Defendants.



Plaintiff Taseko Mines Limited ("Taseko" or "the Company") brings this action against Raging River Capital LP, Raging River Capital GP LLC, Granite Creek Partners, LLC, Westwood Capital LLC, Paul M. Blythe Mining Associates Inc., Jonathan G. Lee Partners LLC, Paul Blythe ("Blythe"), Nathan Milikowsky ("Minkowsky"), Mark Radzik ("Radzik"), Henry Park ("Park") and Jonathan Lee ("Lee") (collectively "Defendants"), alleging violations of Section 13(d) of the Securities Exchange Act of 1934 ("Exchange Act") .

This matter is before the Court on Defendants' Motion to Dismiss ("Motion") [Dkt. No. 28]. Upon consideration of the Motion, Opposition [Dkt. No. 34], Reply [Dkt. No. 36], and the entire record herein, and for the reasons set forth below, the Motion shall be granted in part and denied in part.

I. Background

A. Factual Overview [1]

Taseko is a Canadian-based mining company whose shares are traded on both the NYSE MKT and the Toronto Stock Exchange. Amended Complaint ¶ 2 ("Am. Compl.") [Dkt. No. 13]. Defendant Raging River Capital LP, a Delaware limited partnership, was formed in December 2015 in order to acquire Taseko common shares. Id.¶16. Defendant Raging River Capital GP LLC, is the General Partner for Raging River Capital LP. Id.¶17. Defendants Granite Creek Partners, LLC, Westwood Capital LLC, Paul M. Blythe Mining Associates Inc., and Nathan Minkowsky are Managing Members of Raging River Capital GP LLC, Id. ¶¶ 18-20, 23. Defendant Jonathan G. Lee Partners LLC is a Member of Raging River Capital GP LLC. Id. ¶ 21. Defendants Paul Blythe, Mark Radzik, and Henry Park have been nominated by Defendants for seats on Taseko's Board. Id. ¶¶ 22, 24-25. Radzik is also the Managing Partner of Granite Creek Partners, LLC, and Park is the Chief Investment Officer and Principal of Westwood Capital LLC. Id. ¶¶ 24-25. Defendant Jonathan Lee is the President of Jonathan G. Lee Partners LLC and a Limited Partner of Raging River Capital LP. Id. ¶ 26.

In January 2016, Defendants acquired more than 5% of Taseko common shares ("Taseko shares") and disclosed their acquisitions of shares by filing a Schedule 13D on January 13, 2016 ("First 13D"), as required by the Exchange Act. Id. ¶ 5. In December 2015 and January and February 2016, Defendants acquired Taseko senior notes due in 2019 ("Notes"). Am. Compl. ¶ 38. During that same time period, Raging River Capital 2 LLC also acquired Taseko senior notes due in 2019 ("Additional Notes"). Opp'n at 26.

Shortly after acquiring their shares, Defendants exercised their rights under the Business Corporations Act (British Columbia) ("BCBCA")[2] to demand that Taseko convene a shareholder meeting to vote on the removal of three current Taseko directors and the addition of four new directors nominated by Defendants. Id. The shareholder meeting is currently scheduled for May 10, 2016.

On February 26, 2016, Taseko filed a Complaint [Dkt. No. 1] in this, matter, alleging that the First 13D failed to include information required by § 13(d) of the Exchange Act and is false and misleading. In response, Defendants filed an amended Schedule 13D on March 9, 2016 ("First Amended 13D"), which included the original Complaint as an exhibit. See First Amended 13D, Exhibit 2 to Mot. [Dkt. No. 28-2]; Amended Complaint ("Am. Compl.") ¶ 6 [Dkt. No. 13]. On March 21, 2016, Plaintiff filed an Amended Complaint, claiming that the First Amended 13D only cured some of the issues it had raised and that Defendants' disclosures remain materially deficient. Am. Compl. ¶ 6. On March 28, 2016, Raging River filed a second amended Schedule 13D ("Second Amended 13D"). Opp'n at 4.

In the midst of these actions, Taseko filed a Motion to Lift Stay and Expedite Discovery on March 14, 2016 [Dkt. No. 12], in anticipation of Defendants' Motion to Dismiss. In private securities actions, the Private Securities Litigation Reform Act of 1995 ("PSLRA") imposes an automatic stay of all discovery and other proceedings pending a motion to dismiss, subject to certain exceptions. 15 U.S.C. § 78u-4(b)(3)(B). Taseko expressed its need for limited discovery on certain issues to support its planned preliminary injunction motion, and indicated that it would suffer prejudice if the stay were not lifted and discovery expedited. Motion to Lift Stay at 2-3. This Court granted the Motion to Lift Stay for purposes of limited discovery on April 4, 2016. See Memorandum Order [Dkt. No. 33].

After Defendants filed the Second Amended 13D, Plaintiffs acknowledged that the filing mooted some of the issues it had raised. Specifically, Taseko is no longer seeking corrective disclosures with respect to Defendants' alleged affirmative misrepresentations nor is it seeking disclosure of "undisclosed groups" in light of Defendants' representation that no such additional groups exist. Opp'n at 13. Taseko is still seeking the following information that it believes Defendants are required to disclose:

1. The amount of funds provided by each limited partner of Raging River Capital LP for the purchase of Taseko shares and Notes;
2. The purpose for which Defendants acquired the Taseko Notes;
3. All contracts, arrangements, understandings and/or relationships between Defendants and other persons with respect to any Taseko securities.

Id. On April 15, 2016, the same day Defendants filed their Reply in support of the present Motion to Dismiss, Defendants filed a Third 7\mended Schedule 13D ("Third 7\mended 13D") . See Third 7\mended 13D, Exhibit A to Reply [Dkt. No. 36-2]. Defendants argue that the Third 7\mended 13D addresses all of Taseko's remaining issues. Reply at 1-2.

B. Securities Exchange Act of 1934

Section 13(d) of the Exchange Act mandates that "any person" who becomes "directly or indirectly the beneficial owner of more than 5 per centum" of a class of securities of an issuing corporation must file a statement setting forth certain information with the SEC and send the statement to the issuer within 10 days after such acquisition. 15 U.S.C. § 78m(d). "Person" is not limited just to individuals; the Exchange Act states that "when two or more persons act as a . . . group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syndicate or group shall be deemed a 'person' for the purposes of this subsection." 15 U.S.C. § 78m(d)(3). The SEC has prescribed Schedule 13D as the official form for compliance with § 13(d) of the Exchange Act. 17 C.F.R. § 240.13d-101.

Under the Exchange Act, the Schedule 13D shall contain the following information:

(A) the background, and identity, residence, and citizenship of, and the nature of such beneficial ownership by, such person and all other persons by whom or on whose behalf the purchases have been or are to be effected;
(B) the source and amount of the funds or other consideration used or to be used in making the purchases, and if any part of the purchase price is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading such security, a description of the transaction and the names of the parties thereto, except that where a source of funds is a loan made in the ordinary course of business by a bank, as defined in section 78c (a) (6) of this title, if the person filing such statement so requests, the name of the bank shall not be made available to the public;
(C) if the purpose of the purchases or prospective purchases is to acquire control of the business of the issuer of the securities, any plans or proposals which such persons may have to liquidate such issuer, to sell its assets to or merge it with any other persons, or ...

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