Citations
- 250 F. Supp. 3d 856
Full opinion text
MEMORANDUM OPINION AND ORDER
James O. Browning, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on: (i) the requests in the Plaintiffs’ Motion to Strike Affirmative Defenses, filed November 4, 2015 (Doc. 191)(“Plaintiffs’ Motion to Strike Affirmative Defenses”); (ii) the requests in the Defendants’ Motion for Summary Judgment on Acquiescence Defense and Brief in Support, filed April 3, 2015 (Doc. 83)(“Defendants’ Acquiescence MSJ”); (iii) the requests in the Defendants’ Second Motion for Summary Judgment and Brief in Support Thereof, filed September 14, 2015 (Doc. 154)(“Defen-dants’ Estoppel MSJ”); (iv) the requests in the Plaintiffs’ Memorandum of Law in Support of Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims, filed September 14, 2015 (Doc. 157)(“Plaintiffs’ MSJ”); (v) the requests in the Plaintiffs’ Motion to Strike, filed April 20, 2015 (Doc. 86), and the requests in the Plaintiffs’ Motion to Strike Affidavit of Randall Lorett and Memorandum of Law in Support Thereof, filed April 20, 2015 (Doc. 87)(collectively “Motion to Strike Lorett Affidavit”); and (vi) the requests in the Plaintiffs’ Motion in Limine to Preclude Evidence of Plaintiffs’ Conduct, and Brief in Support, filed October 26, 2015 (Doc. 182)(“Motion in Limine”). The Court held a hearing on December 27 and 28, 2016.
The Court sua sponte assesses whether it has jurisdiction over the case. The primary issues that the parties raise and that the Court resolves in this Memorandum Opinion are whether: (i) the Court should strike, or not allow evidence at trial regarding, the Defendants’ affirmative defenses of acquiescence, unclean hands, estoppel, and waiver; (ii) Delaware or Oklahoma law governs the Plaintiffs’ claims and the Defendants’ affirmative defenses; (iii) the Plaintiffs’ claims are barred under the theory of acquiescence; (iv) the Oklahoma common-law clean hands doctrine bars the Plaintiffs’ claims; (v) the Oklahoma common law of waiver bars the Plaintiffs’ claims; (vi) the Oklahoma common law of estoppel bars the Plaintiffs’ claims; (vii) the Court should expand Securities Exchange Commission rule 10b-5 to include the force-seller doctrine; (viii) the entire fairness standard governs the Plaintiffs’ claims for breach of fiduciary duty; (ix) the Defendants bear the burden of proof that the cash-out merger was entirely fair to the minority shareholders; (x) the Defendants are liable for breaching their duty of entire fairness; (xi) the Court should strike the affidavit of Randall Lorett; (xii) the Court should preclude evidence at trial of the Akin Gump Letter and other letters that the Plaintiffs and the Plaintiffs’ counsel exchanged with the Defendants between September, 2013, and December, 2013; (xiii) the Court should preclude evidence at trial of letters sent to and received from the Triangle Capital mezzanine lenders; and (xiv) the Court should preclude the Defendants from mentioning during trial that the Plaintiffs’ are residents of states other than Oklahoma.
The Court finds it advisable, because of this opinion’s length and complexity, to summarize and clarify its holdings before it lays out the case’s facts in the next section. In the Court’s analysis’ first section, as a preliminary threshold issue, the Court examines sua sponte whether it has jurisdiction over this case. The Court concludes that it exercises federal question jurisdiction over the federal securities claims. The Court further concludes that it exercises federal diversity jurisdiction over the ease’s entirety even if the securities claims do not survive a motion for summary judgment against the securities claims.
In the Court’s analysis’ second section, the Court examines Oklahoma choice-of-law rules to determine whether it should apply Delaware or Oklahoma law to the claims and defenses in the case. The Court concludes that: (i) Delaware law applies to the Plaintiffs’ claims regarding the cash-out merger, which entails consideration of the defense of acquiescence in accordance with Delaware law; and (ii) Oklahoma law applies to the Defendants’ other contract defenses of equitable estoppel, waiver, and unclean hands.
In the Court’s analysis’ third section, the Court evaluates the Defendants’ Acquiescence MSJ. The Court'concludes that: (i) the Defendants did not set up a well-functioning committee of independent directors to examine and approve the merger; (ii) a fully-informed majority of the minority shareholders never voted to approve the merger; (iii) the evidentiary burden to prove the merger’s entire fairness remains with the Defendants; (iv) when' the Court interprets the facts in the light'most favorable to the Plaintiffs, the Defendants do not meet this evidentiary burden; and (v) Delaware common law requires the Court to allow any case where the Defendant bears the burden to prove entire fairness to proceed to trial so that the entire fairness of the transaction can be evaluated. Accordingly, the Court denies the Defendants’ Acquiescence MSJ.
Because the Court denies the Defendants’ Acquiescence MSJ, in the Court’s analysis’ fourth section, the Court assesses the Defendants’ Estoppel MSJ. The Court concludes that: (i) the Defendants’ Estop-pel MSJ largely duplicates the Defendants’ Acquiescence MSJ’s facts; (ii) the Defendants fail to demonstrate that they reasonably relied on the Plaintiffs’ merger acceptance or that the alleged reliance caused the' Defendants to suffer a detrimental change of position; (iii) the Defendants fail to demonstrate that the Plaintiffs waived their right to challenge the entire fairness of the contested merger transaction; (iv) the Defendants fail to demonstrate that the Plaintiffs undertook the allegedly fraudulent and deceitful conduct of which they complain, thereby failing.to show that the Plaintiffs have unclean hands; (v) the Tenth Circuit is unlikely to support the Plaintiffs’ contention that the forced-seller doctrine is 'good law within the Tenth Circuit,- and therefore the Court should- not expand SEC rule 10b-5 to include the forced-seller doctrine and should dismiss the Plaintiffs’ federal securities claims; and (vi) the Supreme Court of Oklahoma likely would dismiss the Plaintiffs’ state securities claims and the Court, under the Erie doctrine’s required deference’ to a state’s supreme court, should dismiss the Plaintiffs’ state securities claims. Accordingly, the Court: (i) denies the Defendants’ Estoppel MSJ in part as it relates to the Oklahoma common-law clean hands doctrine, the Oklahoma common law of waiver, and the Oklahoma common law of estoppel; and (ii) grants the Defendants’ Estoppel MSJ in part as it'relates to 'securities claims, dismissing the securities claims.
Because the Court only grants in part the Defendants’ Estoppel MSJ, in the Court’s analysis’ fifth section, the Court adjudges the Plaintiffs’ MSJ. The Court concludes that (i) the entire fairness standard governs the Plaintiffs’ claims for breach of fiduciary duty; (ii) the Defendants bear the burden of proof that the merger was entirely fair to the minority shareholders; and (iii) the Defendants are liable for breaching their duty of entire fairnéss, because the undisputed material facts show that the Defendants did not. put into place sufficient safeguards protecting minority shareholder rights to meet this burden. Accordingly, the Court grants in part the Plaintiffs’ MSJ with respect to liability underthe entire fairness standard. The Court, however, leaves determination of damages—and only damages—to be resolved at trial.
The Court sixth investigates and adjudges the Plaintiffs’ Motion to Strike Affirmative-Defenses. The Court concludes that: (i) rule 12(f) motions to strike are disfavored and should be denied unless the challenged allegations have no possible relation or logical connection to the controversy’s subject matter; and (ii) the Court •will not “strike” Defendants’ affirmative defenses of acquiescence, unclean hands, 'estoppel, and waiver have a possible relation or logical connection to the controversy’s subject matter. Accordingly, the Court denies the Plaintiffs’ Motion to Strike Affirmative Defenses. Nevertheless, given the unique procedural history and posture of this case,- the Court further concludes that, because the entire fairness doctrine applies, the Defendants are precluded from raising these defenses at trial.
Further, because the Court grants the Plaintiffs’ MSJ with respect to the Defendants’ • liability under the entire fairness standard, leaving only the determination of damages for the trial, in the Court’s analysis’ seventh section, the Court appraises the Plaintiffs’ Motion to Strike Lorett. Affidavit. The Court concludes that: (i) the Lorett Affidavit is not a pleading; (ii) the Lorett Affidavit is not redundant, immaterial, impertinent, or scandalous; and (iii) that the Court therefore cannot strike the Lorett Affidavit under rule 56 of the Federal Rules of Civil Procedure. Accordingly, the Court denies the Plaintiffs! Motion to Strike Lorett Affidavit.
Again, because the Court leaves only the determination of damages for trial, in the Court’s analysis’ eighth and final section, the Court also evaluates the Plaintiffs’ Motion in Limine. The Court concludes that: (i) the Akin Gump letter’s - plain language and other letters that the Plaintiffs and the Plaintiffs’ counsel exchanged with the Defendants between September, 2013, and November, 2013, reflect that they are compromise offers under rule 408 of the Federal Rules of Evidence; (ii) -the Akin Gump letter and other letters that-the Plaintiffs and the Plaintiffs’ counsel exchanged with the’ Defendants between September, 2013, and November, 2013 do not fall into any of the rule 408(b) exceptions that permit a court to admit compromise-offer evidence; (iii) letters sent to and received from Triangle Capital are not compromise offers between the Plaintiffs and the Defendants; and (iv) the Triangle Capital correspondence is not irrelevant to a determination of the TIR shares’ fair price and is not likely to mislead or confuse the jury. Accordingly, the Court: (i) grants the Plaintiffs’ Motion In Limine in part, precluding entry into evidence of the Akin Gump letter and other letters that the Plaintiffs and the Plaintiffs’ counsel exchanged with the Defendants between September, 2013, and November, 2013; and (ii) denies the' Motion In Limine in part, allowing letters sent to and received from Triangle Capital to come into evidence during the trial.
FACTUAL BACKGROUND
“Charles Stephenson is -the, owner of Regent Private Capital.” Defendants’ Acquiescence MSJ ¶ 1, at 7 (stating this fact). See Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion for Summary Judgment on Acquiescence Defense ¶ 1, at 8, filed April 20, 2015 (Doc. 84)(“Response to Defendants’ Acquiescence MSJ”)(not disputing this fact). “Defendant Cynthia Field is the daughter of Defendant Charles Stephenson.” Plaintiffs’ Memorandum of Law in Support of Motion for Partial Summary Judgment on Breach of Fiduciary Claims ¶ 1, at 3, filed September 14, 2015 (Doc. 157)(“Plaintiffs’ MSJ”)(stating this fact). See Defendants’ Response in Opposition to Plaintiffs’ Motion for Pai'tial Summary Judgment on Breach of Fiduciary Duty Claims (Doc. 157), at 2, filed October 5, 2015 (Doc. 170)(“Response to Plaintiffs’ MSJ”)(not disputing this fact). “Defendant Lawrence Field is the husband of Defendant Cynthia Field and the son-in-law of Defendant Charles Stephenson.” Plaintiffs’ MSJ ¶2, at 3 (stating this fact). See Response to Plaintiffs MSJ at 2 (not disputing this fact). “Defendant CEP-TIR, LLC[’s] ... principals are Defendants Stephenson, Cynthia Field and Peter Boylan, [sic] III.” Plaintiffs’ MSJ ¶ 3, at 3 (stating this fact). “In 2009, Regent and Mr. Stephenson individually became together TIR Inc.’s largest shareholder owning approximately 40% of the TIR Inc. shares.” Defendants’ Acquiescence MSJ ¶ 1, at 7 (stating this fact). “At the same time a number of the Plaintiffs associated with Alan Stuart acquired a minority interest in TIR Inc.” Defendants’ Acquiescence MSJ ¶3, at 7 (stating this fact). “Alan Stuart is a ‘seasoned, successful, long-term investor with more than 40 years’ experience in business development, investment management, and corporate governance.’ ” Defendants’ Acquiescence MSJ ¶ 4, at 7 (stating this fact). “The Defendant Lawrence Field, the son-in-law of Mr. Stephenson and an officer of Regent, became the chairman, and Alan Stuart became a member of the board of directors of TIR Inc.” Defendants’ Acquiescence MSJ ¶ 5, at 7 (stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “In February 2013, Alan Stuart prepared a proposal for Mr. Field, which he named ‘Project Poirot’ to acquire control of TIR, Inc. at $369,507 per share which he later increased to $385,175.” Defendants’ Acquiescence MSJ ¶ 6 (stating this fact). “On February 11, 2013, Stuart purchased individual shareholder J.W. Lorett’s TIR Inc. shares for $275,000 per share.” Defendants’ Acquiescence MSJ ¶ 7, at 7 (stating this fact). “On March 21, 2013, Stuart presented an offer to the TIR board for TIR Inc. shares of $380,382 per share.” Defendants’ Acquiescence MSJ ¶ 8, at 7 (stating this fact). “On May 16, 2013, Alan Stuart revised his offer to the board, increasing the repurchase price to $413,143 per share,” Defendants’ Acquiescence MSJ ¶ 9, at 8 (stating this fact). “The Defendants [Charles C.] Stephenson, [Peter] Boylan, and [Cynthia A.] Field were principals in Cypress Energy Partners-TIR, LLC (“Cypress Energy Partners”). Defendants’ Acquiescence MSJ ¶ 10, at 8 (stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not disputing this fact), “In 2013, two TIR Inc. directors (Alan Stuart on the one hand and Lawrence Field on the other hand) [sought] to acquire control of TIR Inc.” Defendants’ Acquiescence MSJ ¶ 11, at 8 (stating this fact)(relying on Videotape Deposition of Rodney Reynolds Taken on Behalf of the Defendants (taken Nov! 17, 2014), filed Apr. 3, 2015 (Doc. 83-ll)(“Reynolds Depo.”). “In June 2013, the Defendants [completed] the bidding process to acquire control of TIR Inc.” Defendants’ Acquiescence MSJ ¶ 13, at 8 (stating this fact)(relying on Affidavit of Randall Lorett, filed Apr. 3, 2015 (Doc. 83-2)(“Lorett Aff.”).
“On June 26, 2013, Defendant CEP-TIR, LLC acquired 26.45 shares of TIR from certain other shareholders, known as the Pooled Shareholders, in voluntary sales transactions.” Plaintiffs’ MSJ ¶ 4, at 3 (emphasis in the original)(statiiig this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “Defendants subsequently referred to this share acquisition as the ‘Control Acquisition,’” Plaintiffs’ MSJ ¶ 5, at 3 (stating this fact).. See Response to Plaintiffs MSJ at 2 (not disputing this fact). “Between June 2013- and October 2013, CEP-TIR LLC also [acquired] certain other outstanding shares of TIR.” Plaintiffs’ MSJ ¶ 6, at 3 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “As a result of these transactions, Defendants CEP-TIR, LLC, Stephenson, and Cynthia Field ... became, collectively, the majority shareholders of TIR, owning at least 69.4%'of the outstanding shares.” Plaintiffs’ MSJ ¶ 7, at 3 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). CEP-TIR, LLC, Stephenson, and Field “thereby collectively gained control of TIR.” Plaintiffs’ MSJ ¶ 8, at 4 (stating this fact). See Response to Plaintiffs’ MSJ at, 2 (not disputing this fact).
“From June 2013 through December 23, 2013, the Plaintiff SFF-TIR, LLC was represented by legal counsel.” Defendants’ Acquiescence MSJ ¶ 14, at 8 (stating this fact). “From June 2013 through December 23, 2013, the Plaintiffs Stuart Family Foundation, Inc.; Alan Stuart 2012 GST Family Trust; Stuart 2005 GST Family Trust; and .Celebration, LLC were represented by legal counsel.” Defendants’ Acquiescence MSJ ¶ 15, at 8 (stating this fact). “Each of the individual Plaintiffs executed and delivered a proxy to SFF-TIR, LLC to act on his or her behalf with respect to his or its TIR Inc. shares which proxies were in effect on November 2, 2013.” Defendants’ Acquiescence MSJ ¶ 16, at 8 (stating this fact). “[Tjhe Plaintiffs, led by Alan Stuart, attempted to negotiate a sale of their minority block of shares to Cypress for a substantially higher share price.” Defendants’ Acquiescence MSJ ¶ 19, at 9 (stating this fact).
“Following the June 26, 2013 Control Acquisition, and after certain resignations, TIR’s Board of Directors had three members as of October 31, 2013: Defendant Lawrence Field, Defendant Peter Boylan, and Randall Lorett, the President and CEO of TIR.” Plaintiffs’ MSJ ¶ 10, at 4 (stating this fact). “On September 20, 2013, Cypress Energy Partners Limited Partnership filed a Registration Statement (including the prospectus) for the public offering of partnership units of TIR shares, pursuant to the confidentiality provisions of the Jumpstart Our Business Startups Act.” Defendants’ Acquiescence MSJ ¶20, at 9 (stating this fact). See Response to Defendants’ Acquiescence-MSJ ¶ 1, at 8 (not disputing this fact). “As of November 2, 2013, all plaintiffs had granted proxies to Plaintiff SFF-TIR to vote their TIR Inc. shares and agreed among themselves not to sell their TIR Inc. shares for less than $654,632.” Defendants’ Acquiescence MSJ ¶ 21, at 9 (stating this fact). “On October 31, 2013, Cypress and TIR Inc. made a Tender Offer [Letter from Cypress Energy Partners to Shareholders of Tulsa Inspection Resources, Inc. (dated Oct. 31, 2013), filed Sept. 15, 2015 (Doc. 158-3)(“Tender Offer”)] to TIR Inc.’s remaining shareholders, including the Plaintiffs, for $451,000.” Defendants’ Acquiescence MSJ ¶ 22, at 9 (stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not disputing this fact).
The Tender Offer disclosed (i) that the Registration Statement had been filed, (ii) that Cypress Energy intended to enter into an underwriting agreement for the public offering of master limited partnership units and that the equity of TIR Inc. might be dropped into the new publicly traded entity, and (iii) the purchase of shares (and share prices) by which the Defendants acquired TIR Inc. shares.
Defendants’ Acquiescence MSJ ¶23, at 9 (stating this fact)(relying on Exhibit 1 to Videotaped Deposition of Anurag Agarwal (taken Sept. 29, 2014), filed Apr. 3, 2015(Doc. 83-20)(“Agarwal Depo. Ex. I”). In a section called “Certain Conflicts of Interest,” the Tender Offer stated:
“As a result of the June Acquisition, Mr. Boylan, and Mr, Field (who is affiliated with Mr. Stephenson and Ms. Field) may each be deemed to have a conflict of interest related to this Offer.” Id. [Tender Offer] at 2.
“As a result of the foregoing potential conflicts of interest, the TIR Board has not been asked to and is not making any recommendation to you regarding this Offer.” Id. [Tender Offer at 2]
“None of the Purchasers, nor any of their respective affiliates has performed or commissioned any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion respecting the value of the Shares in connection with this Offer.” Id. [Tender Offer at 2]
Plaintiffs’ MSJ ¶ 12, at 4 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). The merger between TIR, Inc. and TIR, LLC “enabled the Controlling Shareholder Defendants to exchange their own TIR shares for equity in the new entity, Defendant TIR LLC, in proportion to their prior shareholders in TIR.” Plaintiffs’ MSJ ¶ 15, at 4 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “The Merger was approved and carried out by the following Defendants: [ (i) ] The Controlling Shareholder Defendants, ie., Defendants CEP-TIR, LLC, Stephenson, and Cynthia Field; and [ (ii) ] TIR Directors Lawrence Field and Peter Boylan III ....” Plaintiffs’ MSJ ¶ 16, at 4-5 (bullets and internal citations omitted)(stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “TIR’s Rule 30(b)(6) witness, Dan O’Keefe, admitted that because the Board composition had not changed, the same conflicts of interest that existed at the time of the Tender Offer also existed at the time of the Merger.” Plaintiffs’ MSJ ¶ 18, at 6 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact).
“On November 13, 2013, Cypress Energy’s SEC Registration Statement containing the prospectus for the sale of partnership units in the master limited partnership became public.” Defendants’ Acquiescence MSJ ¶ 24, at 9 (stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, 8 (not disputing this fact). “Shortly after November-13, 2013, the Plaintiffs analyzed or had analyzed by one or more of their representatives the Registration Statement.” Defendants’ Acquiescence MSJ ¶ 25, at 9 (stating this fact), “By November 26, 2013, the Plaintiffs had received and either personally reviewed the October 31 Tender Offer or had had the October 31 Tender Offer reviewed by legal counsel or SFF-TlR, LLC on their behalf.” Defendants’ Acquiescence MSJ ¶ 26, at 9 (stating this fact). “The Plaintiffs did not accept the October 31 Tender Offer.” Defendants’ Acquiescence MSJ ¶ 27, at 9 (stating this fact). See- Response to Defendants’ Acquiescence MSJ ¶ 1, ■ at 8 (not disputing this ■ fact). “The Plaintiffs could not -have tendered their shares in response to the Tender Offer no matter what the Offer said or ■ did not say; the Plaintiffs had contractually agreed prior to the Tender Offer not to sell their TIR Inc, shares for less than $654,632.” Defendants’ Acquiescence MSJ -¶ 28, at 9 (stating this fact). “By November 26, 2013, the Plaintiffs had received and either (i) personally reviewed or (ii) had had reviewed by legal counsel or SFF-TIR, LLC on their behalf the Cypress Energy Partners Limited Partnership registration Statement.” Defendants’ Acquiescence MSJ ¶ 29, at 10 (stating this fact).
The SEC Registration Statement included the following information respecting Cypress Energy Partners Limited Partnership and the Initial Public Offering: (a) Prospectus; (b) List of risks to its business; (c) Capitalization; (d) Cash distribution policy, projections and partnership agreement provisions relating to cash distributions; (e) Historical and projected financial data: (f) Management discussion and analysis of financial condition; (g) detailed descriptions of the industries in which Cypress Energy Partners was engaged, Cypress’ business and Cypress’ management; (h) Cypress Energy Partners’ partnership agreement; (i) Underwriting information; (j) complete audited financial statements (as of September 30, 2013).
Defendants’ Acquiescence MSJ ¶ 30, at 10 (stating this fact)(relying on Austin Aff.). “As of November 2013, TIR had (a) revenues of $346.6 million, which was and [sic] 28 percent higher than TIR’s budgeted figure; (b) pretax profits of $1.6 million; and (c) $9 million year to date, which were all were [sic] the ‘highest numbers [TIR] had had historically’ as of that time.” Plaintiffs MSJ ¶ 26, at 6 (last set of bracketed material in the original)(stating this fact)(citing O’Keefe Depo. at 297:16-299:13). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “TIR did not do a valuation [to inform] its merger consideration offer.” Plaintiffs’ MSJ ¶ 27, at 6 (internal quotation marks omitted)(stating this fact). “Defendants did not disclose to Plaintiffs TIR’s internal October and November 2013 financial statements ... showing record-breaking revenues or TIR’s November 16, 2013 management projections ... of even higher revenues through 2018.” Plaintiffs’ MSJ ¶ 28, at 6 (internal citations omitted)(stating ' this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “On November 26, 2013, the plaintiffs claimed each share of TIR Inc. was worth $660,000.” Defendants’ Acquiescence MSJ ¶ 32, at 10 (stating this fact). “On November 29, 2013, Defendants advised that the Defendants could not negotiate any purchase during the tender offer period;” Defendants’ Acquiescence MSJ ¶ 33, at 10 (stating this fact).
“The TIR Board unanimously approved the Merger in a consent dated December 9, '2013 signed by all three Directors.” Plaintiffs’ MSJ ¶ 19, at 5 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “CEP-TIR, LLC, Stephenson, and Cynthia Field, the majority shareholders in TIR, approved the Merger in a similar consent dated December 9, 2013 signed by all. three of the majority shareholders.” Plaintiffs’ MSJ ¶20, at 6 (stating this fact). See Response to Plaintiffs’ MSJ at 2 (not disputing this fact). “Plaintiffs were all minority shareholders of TIR at the time of the Merger, owning the 32.882 outstanding shares that were canceled by the Merger.” Plaintiffs’ MSJ ¶ 21, at 5 (stating this fact). See Response to Plaintiffs MSJ at 2 (not disputing this fact)., “The Merger Agreement stated in its ‘Governing Law’ provision ... that ‘the provisions of this Agreement relating to mechanics or the effects of the Merger under Delaware law shall be governed by and construed and enforced in accordance with the laws of the State of Delaware.’. ” Plaintiffs’ MSJ ¶22, at 5 (stating this factXquoting Merger Agreement, at § 8.04). and so does not materially affect the Plaintiffs’ admission of the fact.
“On December 9,2013, Cypress and TIR exercised their statutory right to cash-out the Plaintiffs' Defendants’ Acquiescence MSJ ¶ 34, at ,10 (stating this fact)(relying on Notice to Former Shareholders of Tulsa Inspection Resources, Inc. of Shareholder Action and. Appraisal Rights, filed Apr. 3, 2015(Dóc. 83-27)(“Agarwal Depo. Ex. 7”). “On December 11, 2013, the Plaintiffs received timely after-the-fact notice of the. Merger and their appraisal rights in accordance with the Oklahoma statutes.” Defendants’ Acquiescence MSJ ¶ 37, at 11 (stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not. disputing this fact). “The Merger Agreement (dated December 9, 2013), filed Apr. 3, 2015. (Doc. 83-27), provides that:
For the avoidance of doubt, any former shareholder who surrenders his, her or its share certificate (or acceptable evidence of share ownership for payment of Merger Consideration pursuant to Section 2.02 [payment provisions], shall be deemed to have (a) accepted .the Merger Consideration and (b) forever waived any appraisal rights pursuant to this Section 2.03 [provisions respecting dissenting share], Section 1091 of the [Oklahoma General corporation Act], or otherwise.'
Defendants’ Acquiescence MSJ ¶ 38, at 11 (citing Agarwal Depo. Ex. 7)(stating this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not disputing this fact). “On December 18-20, 2013, each Plaintiff delivered his or its TIR Inc. share certificates to the Defendant CEP-TIR, along,with stock powers, pursuant to the provisions of the Merger Agreement.” Defendants’ Acquiescence MSJ ¶ 39, at 11 (stating this fact). “On December 23, 2013, the Defendant TIR LLO paid ... Plaintiffs ... the $451,000 per share Merger Consideration.” Defendants’ Acquiescence MSJ ¶ 40, at 11 (stating this fact)., As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares ...), the Plaintiffs knew the Defendants had acquired control of TIR Inc.” Defendants’ Acquiescence MSJ ¶41, at 11 (stating this fact). “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares ...), the Plaintiffs knew the transactions by which the Defendants acquired controlling shares of TIR, Inc. and the prices paid for those shares.” Defendants’ Acquiescence MSJ ¶ 42, at 11 (stating this fact).
“Defendants admit that they did not: [ (i) ] Form a special committee of disinterested directors or other disinterested persons to consider the proposed merger; [ (ii) ] Engage any independent financial advisor or other third party valuation analysis; or [ (iii) ] Require a majority-of-the-minority vote for the Merger to be approved.” Plaintiffs’ MSJ ¶ 23, at 5-6 (bullets and internal citations omitted)(stating this fact). See Response to Plaintiffs’ MSJ at 3 (not disputing this fact). “There is no other evidence that Defendants employed any of the above devices at the time of, and in connection with, the Merger.” Plaintiffs’ MSJ ¶ 24, at 6 (stating this fact). See Response to Plaintiffs’ MSJ at 3 (not disputing this fact).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares ...), the Plaintiffs knew the Defendants’ conflicts of interest between their positions as officers, directors and shareholders of TIR Inc. and their positions as officers, directors, and equity owners of Cypress Energy and its Affiliates.
Defendants’ Acquiescence MSJ ¶ 43, at 11 (stating this fact)(relying on Allen Depo. at 108:3-112:3).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares ...), the Plaintiffs knew the intentions of the Defendants respecting the organization of a master limited partnership, the exchange of shares of TIR Inc. for units of ownership in the master limited partnership, and an initial public offering of units of ownership in the master limited partnership.
Defendants’ Acquiescence MSJ ¶ 44, at 12 (stating this fact)(relying on Allen Depo. at 191:8—193:4).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares .,the Plaintiffs knew the Defendants had not performed or commissioned any appraisal, or engaged any independent financial advisor or other third party to perform any valuation analysis or provide any opinion respecting the value of the TIR, Inc. shares.
Defendants’ Acquiescence MSJ ¶ 46, at 12 (stating this fact)(relying on Allen Depo. at 99:6104:24, Agarwal Depo. at 42:1-44:17, and Agarwal Depo. Ex. I).
As of December 9, 2013 (the date on which- the Merger, was consummated) and as of December 18-20, 2013,(the date on which the Plaintiffs surrendered their TIR Inc. shares ,..), the Plaintiffs knew the Defendants had not obtained the approval of a majority of the minority in effecting the Merger: the Plaintiffs were the remaining TIR Inc. minority shareholders. As a group, the Plaintiffs had demanded in September to sell their shares for a price in excess of $600,000 per share, and in November had agreed amongst themselves not to accept the Tender Offer,
Defendants’ Acquiescence MSJ ¶46, at 12 (stating this fact). “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered- their TIR Inc. shares ...), the Plaintiffs knew the Defendants had not formed a special committee to consider the proposed Merger.” Defendants’ Acquiescence MSJ ¶ 47, at 12 (stating this fact)(relying on Allen Depo. at 272:3-273:17).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc, shares ..-,), the Plaintiffs had been provided the financial statements of TIR Inc. for 2011 and 2012, and for . the nine month period ending September 30,, 2013.
Defendants’ Acquiescence MSJ ¶ 48, at 12 (stating this fact)(relying on Allen Depo. at 83:1884:1, 223:21-224:3). “As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Ine. shares to obtain the Merger consideration), the Plaintiffs had received the Registration Statement.” Defendants’ Acquiescence MSJ ¶ 49, at 12 (stating this fact)(relying on Allen Depo. at 194:2-11).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the date on which the Plaintiffs surrendered their TIR Inc. shares ...), the Plaintiffs believed that the Defendants did not believe (and had no reasonable basis to believe) that $451,100 per TIR Inc. share represented a premium over the fair value of such shares.
Defendants’ Acquiescence MSJ ¶ 50, at 13 (stating this fact)(relying on Allen Depo. at 206:11—208:25).
As of December 9, 2013 (the date on which the Merger was consummated) and as of December 18-20, 2013 (the dates on which the Plaintiffs surrendered their TIR Inc. shares ...), Plaintiffs believed both Plaintiffs* financial presentations and Defendants’ financial presentations showed the TIR Inc. shares were worth several multiples of $451,000.
Defendants’ Acquiescence MSJ ¶ 51, at 13 (stating this faet)(relying on Complaint, filed July 3,2014 (Doc. I)).
On February 4, 2014, Plaintiff SFF-TIR, LLC by its Managing Member, Alan Stuart, sent a letter to the investors in Plaintiff SFF-TIR in the form and content of Ex. 26, Allen Deposition, Ex. 116 [Letter to SFF-TIR, LLC Investors (dated Feb, 12, 2014), filed Apr. 3, 2015 (Doc. 83-31)(“Letter to SFF-TIR, LLC Investors”) ], which stated, in part, as follows
“We are pleased to inform our investors in SFF-TIR, LLC (‘SFF[-]TIR’) we were able to liquidate our equity position in Tulsa Inspection Resources, Inc. (‘TIR’). On December 23, 2013 we received cash consideration of $451,000 per share for a total cash consideration of $5,763,780. The investment in TIR has generated 2.47x our original investment with a net annualized IRR of 40.42%.”
Defendants’ Acquiescence MSJ ¶ 53, at 13 (stating this fact)(quoting Letter to SFF-TIR, LLC Investors 1, filed April 3, 2015 (Doc. 83-32)).
After ... December 18-20, 2013, Defendants CEP-TIR, Charles Stephenson, and Cynthia Field, believing the Plaintiffs to have waived all claims to additional consideration for their shares, contributed 50.1% of the member interest in TIR LLC to Cypress Energy Partners Limited Partnership, and Cypress Energy Partners Limited Partnership effected a sale of partnership units to the public pursuant to the Registration Statement.
Defendants’ Acquiescence MSJ ¶ 54, at 13 (stating this fact)(relying on Austin Aff. ¶ 5, at 2—3). “On July 3, 2014, the Plaintiffs filed this action.” Defendants’ Acquiescence MSJ ¶55, at 13 (stating this fact)(relying on Complaint). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (not disputing this fact).
PROCEDURAL BACKGROUND
With this Memorandum Opinion, the Court resolves and decides six of the motions that the parties have filed in this case and that the parties argued during motion hearings on December 27-28, 2016. The Court’s analysis, infra, will reorder the motions so that they progress logically from one argument to the next argument. To increase reader comprehension, however, the Court orders the motions in this part based on the order in which the parties argued them at the hearing.’ First, the Defendants’ Acquiescence MSJ asks the Court to grant the Defendants summary judgment on the theory that the Plaintiffs acquiesced to the merger when the Plaintiffs took merger consideration. Second, the Defendants’ Estoppel MSJ asks the Court to grant the Defendants summary judgment on the theory that (i) the Oklahoma common-law clean hands doctrine; (ii) the Oklahoma common law of waiver; or (iii) the Oklahoma common law of estop-pel bars the Plaintiffs’ claims. Third, the Plaintiffs’ Motion'to Strike Lorett Affidavit moves for the Court to strike the Lorett Aff. on the grounds of alleged inconsistencies between the Lorett Aff. and the Lor-ett Depo. Fourth, the Plaintiffs’ Motion to Strike Affirmative Defenses petitions the Court to strike the Defendants’ affirmative defenses from their two summary judgment motions—acquiescence, unclean hands, waiver, and estoppel—under rule 12(f) of the Federal Rules of Civil Procedure. Fifth, the Plaintiffs’ MSJ asks the Court to grant the Plaintiffs partial summary judgment on breach of fiduciary duty claims. Sixth and last, the Plaintiffs’ Motion in Limine moves for the Court to preclude evidence of (i) a letter from .Akin Gump' and all letters between the Plaintiffs’ and Plaintiffs’ counsel and the Defendants from September, 2013, to December, 2013; (ii) all letters sent to or received from Triangle Capital; and (iii) any mention during trial that the Plaintiffs reside outside of'Oklahoma. In this section’s remainder, the Court will summarize each motion and the response and reply to it, along with the transcript of two days of hearings that the Court heard on these six motions.
1. Defendants’ Motion for Summary Judgment on Acquiescence Defense and Brief in Support.
On April 3, 2015, the Defendants filed Defendants’ Acquiescence MSJ. According to the Defendants, the dispositive facts are relatively simple. See Defendants Acquiescence MSJ at 1. The Defendants say that six months after having obtained and accepted payment of the Merger consideration, the Plaintiffs filed this action. See Defendants’ Acquiescence MSJ at 2. The Defendants maintain that all eight claims alleged in the . Plaintiffs’ Complaint are predicated on four core allegations “repeated time after time throughout the Complaint’s 212 paragraphs .... ” Defendants’ Acquiescence MSJ at 2. As the Defendants distill them, these four core allegations are as follows:
(i) in June 2012, the Defendants misled a group of minority shareholder (the “Pooled Shareholders”) to gain control of the TIR, Inc.; (ii) in November, 2013, the Plaintiffs were misled by a Tender Offer, which the Plaintiffs rejected; (iii) in December, 2013, the Merger Notice contained false representations upon which the Plaintiffs relied; and (iv) the Defendants did not obtain an independent appraisal of TIR Inc. or the approval of a majority of the minority shareholders or take other steps to protect the Plaintiffs.
Defendants’ Acquiescence MSJ at 2-3. The Defendants respond that the equitable doctrine of acquiescence precludes the Plaintiffs from challenging the merger on these four core allegations for six different reasons. See Defendants’ Acquiescence MSJ at 14. First, the Defendants insist, the Plaintiffs “engaged in an agreed competition with the Defendants to acquire control of TIR Inc.” Defendants’ Acquiescence MSJ at 14. Second, the Defendants contend, the Plaintiffs “lost the competition.” Defendants’ Acquiescence MSJ at 14. Third, the Defendants assert, the Plaintiffs “were represented by legal counsel.” Defendants’ Acquiescence MSJ at 14. Fourth, the Defendants aver, the Plaintiffs “were fully advised of all material facts, including all TIR Inc. financial information and the organization of, and initial public offering of limited partnerships in, Cypress Energy Partners Limited Partnership.” Defendants’ Acquiescence MSJ at 14. Fifth, the Defendants asseverate, the Plaintiffs “surrendered their shares in order to obtain the Merger consideration.” Defendants’ Acquiescence MSJ at 14. Sixth, the Defendants argue, the Plaintiffs “surrendered their shares pursuant to a Merger Agreement that expressly provided that the Plaintiffs would he deemed, by such surrender, to have accepted the Merger consideration and waived all appraisal rights, whether pursuant to the appraisal statute or otherwise.” Defendants’ Acquiescence MSJ at 14.
The Defendants further insist that, even assuming that all of the Plaintiffs’ allegations are true “no matter how untrue they may be,” the acquiescence defense “renders the questions whether the merger process was fair and whether the value paid to the Plaintiffs was fair moot.” Defendants Acquiescence MSJ at 15. Moreover, the Defendants insist, acquiescence bars all claims that the Plaintiffs allege in the Complaint, see Defendants’ Acquiescence MSJ at 15, including unjust enrichment claims and implied causes of action that the Plaintiffs brought pursuant to SEC Rule 10b-5, see Defendants’ Acquiescence MSJ at 15-16. The Defendants highlight three options that they believe the Plaintiffs had vis-á-vis the merger: (i) surrender their shares and receive the merger consideration in accordance with the merger agreement’s terms and conditions; (ii) keep their shares and exercise their statutory appraisal rights as the merger agreement provides; or (iii) keep their shares and, as the Plaintiffs have done in this action, sue for an appraisal. See Defendants’ Acquiescence MSJ at 16. According to the Defendants, the acquiescence doctrine makes options 1 and 3 mutually exclusive; the Plaintiffs could not surrender their shares for merger consideration and then sue. See Defendants’ Acquiescence MSJ at 16. The Defendants finally observe that the merger agreement expressly provides that any shareholder who surrenders his or her shares shall be deemed to have waived appraisal rights, “whether pursuant to the appraisal statute or otherwise.” Defendants’ Acquiescence MSJ at 16.
2. Plaintiffs’ Response to the Defendants’ Acquiescence MSJ.
On April 20, 2015, the Plaintiffs filed the Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion for Summary Judgment on Acquiescence Defense. See Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion for Summary Judgment on Acquiescence Defense, filed April 20, 2015 (Doc. 84)(“Re-sponse to Defendants’ Acquiescence MSJ). Abstracting their argument, the Plaintiffs start by asserting that, under settled law, “acquiescence plays no role in the self-interested cash-out merger, which is scrutinized solely under Delaware’s ‘entire fairness’ standard—its most exacting standard of review.” Response to Defendants’ Acquiescence MSJ at 1 (quoting Kahn v. Lynch Communication Systems, Inc., 638 A.2d 1110, 1116-17 (Del. 1994)(“Kahn v. Lynch”)). According to the Plaintiffs, the entire fairness doctrine imposes on the Defendants a fiduciary duty to ensure that the transaction is entirely fair to the Plaintiffs in two respects: (i) the use of fair procedure to protect the minority shareholders’ interests; and (ii) offer of a price that is entirely fair to minority shareholders. Response to Defendants’ Acquiescence MSJ at 1. That doctrine, the Plaintiffs insist, imposes on the Defendants the evidentiary burden of proving, at trial, each of these aspects of entire fairness. See Response to Defendants’ Acquiescence MSJ at 1. The Plaintiffs maintain that this showing is a threshold legal burden that the Defendants must satisfy. See Response to Defendants’ Acquiescence MSJ at 1. As the Plaintiffs see it, the Defendants admit in the Defendants’ Acquiescence MSJ that they cannot satisfy this exacting burden. See Response to Defendants’ Acquiescence MSJ at 2.
According to the Plaintiffs, the Defendants ignore settled law when they assert that the Plaintiffs forewent statutory appraisal rights and acquiesced in the Defendants’ “self-dealing conduct” when they received merger consideration. Response to Defendants’ Acquiescence MSJ at 2. The Plaintiffs maintain that this assertion is incorrect and that the entire fairness standard still applies for two reasons. See Response to Defendants’ Acquiescence MSJ at 2. First, under settled law as the Plaintiffs read it, the Defendants cannot relieve themselves of'their burden to establish the transaction’s entire fairness by pointing to the Plaintiffs’ conduct, as such conduct cannot establish fair procedure or fair price as Kahn v. Lynch requires. See Response to Defendants’ Acquiescence MSJ at 2 (citing Kahn v. Lynch, 638 A.2d at 1110). The Plaintiffs insist that the doctrine of acquiescence has no role to play in the determination of fair procedure or fair price, particularly with respect to shareholders who had no say in the cash-out decision and were presented with a fait accompli. See Response to Defendants’ Acquiescence MSJ at 2. Second, under settled law as the Plaintiffs read it, statutory appraisal against a corporation is only a non-exclusive remedy, i.e., by foregoing appraisal, the Plaintiffs did not forego their separate claims against the Defendants for breach of their duties of entire fairness. See Response to Defendants’ Acquiescence MSJ at 2.
The Plaintiffs further maintain that the Defendants do not address and cannot establish the elements of acquiescence, which the Defendants insist require a clear and decisive showing that (i) the Defendants disclosed all material facts; (ii) the Defendants gave the Plaintiffs a meaningful choice; and (iii) the Plaintiffs unequivocally approved the challenged conduct. See Response to Defendants’ Acquiescence MSJ at 2. To the contrary, the Plaintiffs assert, in addition to giving the Plaintiffs no say in the merger, the Defendants omitted material information required for an informed decision, e.g., the equity value in the Merger Sub that they received on cancelling the Plaintiffs’ shares. See -Response to Defendants’ Acquiescence MSJ at 2. The Plaintiffs conclude that the foregoing facts “doom” the Defendants’Acquiescence MSJ. See Response to Defendants’ Acquiescence MSJ'at 3.
3. Reply to the Defendants’ Acquies- . cence MSJ.
The Defendants filed the Defendants’ Reply in Support of Motion for Summary Judgment on Acquiescence Defense on April 24, 2015. See Defendants’ Reply in Support of Motion for Summary Judgment on Acquiescence Defense, filed April 24, 2015 (Doc. 93)(“Reply to Defendants’ Acquiescence MSJ”). The Defendants assert that the undisputed facts present the Court with a question of law regarding the acquiescence defense. See Reply to Defendants’ Acquiescence MSJ at 1. Asserting that the Plaintiffs respond to a motion that the Defendants did not file—“a motion for summary judgment on the question whether the TIR Inc. merger process was fair”—the Defendants assert that all of the Plaintiffs’ arguments in the response are for naught. Reply to Defendants’ Acquiescence MSJ at 1-2.
As the Defendants see it, the only relevant facts with regard to the Defendants’ Acquiescence MSJ are the facts establishing the Plaintiffs’ knowledge when they surrendered their shares in exchange for merger consideration on December 18-20, 2013. See Reply to Defendants’ Acquiescence MSJ at 2. The Defendants insist that the acquiescence defense bars the Plaintiffs’ claims if the Plaintiffs had knowledge of the facts they allege in their Complaint on the date when the Plaintiffs surrendered their shares. See Reply to Defendants’ Acquiescence MSJ at 2. The Defendants’ further insist that the single issue before the Court is one of Oklahoma common law, viz. whether the Plaintiffs may both surrender their .shares “in order to induce payment of the Merger consideration by the Defendants,” and “sue for rescission -and rescissionary damages.” Reply to Defendants’ Acquiescence MSJ at 2. The Defendants assert that Delaware law applies only to provisions relating’ the merger’s mechanics or effects. See Reply to Defendants’ Acquiescence MSJ at 3. As the Defendants see it, none of the Plaintiffs’ eight claims' relates to the merger’s mechanics or effects, and, consequently, all eight claims are subject to the acquiescence defense. See Reply to Defendants’ Acquiescence MSJ at 3-4.
The Defendants maintain that the Plaintiffs can challenge the applicability of neither Oklahoma law nor the acquiescence defense. See Reply to Defendants’ Acquiescence MSJ at 8. According to the Defendants, the Plaintiffs obtained the merger consideration “knowing every fact material to their decision and intending to obtain payment.” Reply to Defendants’Acquiescence MSJ at 8. The Defendants aver.that the Plaintiffs knew, thanks to the Merger Agreement, that the merger consideration would not be paid unless they surrendered their stock certificates along with executed powers of attorney. See Reply to Defendants’ Acquiescence MSJ at 8. Thus, the Defendants assert, the Plaintiffs had only four options open to them. See Reply to Defendants!. Acquiescence MSJ at 8. The Plaintiffs could (i) obtain payment of the merger consideration; (ii) have their shares appraised; (iii) simultaneously seek a statutory appraisal of their share and sue for rescission arid rescissionary' damages; or (iv) file suit seeking rescission and rescissionary damages. See Reply to Defendants’ Acquiescence MSJ at 8. The Defendants argue that the Plaintiffs could not “deceitfully obtain payment of the Merger consideration pursuant to the Merger Agreement -and, after eight months’ delay, file suit seeking rescission and rescissionary damages.” Reply to Defendants’ Acquiescence MSJ at 8 (emphasis in the original)(citing Bershad at 848 (Del. 1987)). According to the Defendants, because the Plaintiffs “voluntarily rejected each of the four [options] in order to inequitably obtain payment of the Merger consideration prior to filing this action,” the Plaintiffs acquiesced in the transaction, and the Defendants are entitled to summary judgment. Reply to Defendants’ Acquiescence MSJ at 10 (emphasis in the original).
4. The Defendants’ Estoppel MSJ.
The Defendants filed, the • Defendants’ Estoppel MSJ on September 14, 2015, The Defendants argue that the Plaintiffs delivered their share certificates to induce the Defendants to pay the merger consideration once the Plaintiffs discovered that they had no legal ability to block the merger. See Defendants’ Estoppel MSJ at 16. The Defendants then argue that: (i)-they established an independent committee, which secured neither an appraisal nor a majority vote of the minority shareholders necessary for the. cash ‘out to satisfy fair process. See Defendants’ Estoppel MSJ at 17. Furthermore, the Defendants contend, the Plaintiffs engaged in “legal blackmail to extract a premium price” after having failed to acquire control of TIR in a competitive bidding war, and then bragging about the price they received as a result of the cash out. Defendants’ Estoppel MSJ at 17.
According to the Defendants, the Defen-' dants had a statutory right to effect -a cash-out merger with after-the-fact notice, and 'the Plaintiffs received notice of their appraisal rights. See Defendants’ Estoppel MSJ at 17. The Defendants insist that the Plaintiffs’ claims regarding the Defendants’ alleged breach of fiduciary duty and unjust enrichment therefore fail under settled Oklahoma law, because: (i) the Oklahoma common-law -clean hands doctrine bars the claims; (ii) the Oklahoma common law of waiver bars the claims; arid (iii) the Oklahoma common law of estoppel bars the claims. See Defendants’ Estoppel- MSJ at 17-18. The Defendants further assert that the Plaintiffs’ claims under the Oklahoma Securities Act fail,' because: (i) the Plaintiffs have no private right of action; and (ii) the Oklahoma common law of unclean hands, waiver, and estoppel bar the claims. See Defendants’ Estoppel MSJ at 18. Finally, the Defendants maintain that the Oklahoma common law of unclean hands, waiver, and estoppel also bar the Plaintiffs’ claims under 'the Securities Exchange Act of 1934. See Defendants’ Es-toppel MSJ at 18.
Circling back through these sets of claims, the Defendants argue that the Oklahoma common law of unclean hands bars the Plaintiffs’ claims on the grounds that Stuart orchestrated this litigation despite (i) having attempted to seize control of TIR, Inc.; (ii) having entered into an agreement with the other Plaintiffs to attempt to extract an unjustified premium for the Plaintiffs’, shares; and (iii) filing false allegations against the Defendants in an .attempt to justify a trial on their surrendered shares’ value. See Defendants’ Estoppel MSJ at 19-20. The Defendants then argue .that Oklahoma common law of waiver indicates that ■ a contract may achieve waiver provided that the contract is founded on a valuable consideration and made by a party.whose benefit is being waived. See Defendants’ Estoppel MSJ at 20. According to the Defendants, the Plaintiffs delivered their share certificates to the Defendants to induce the Defendants to pay the merger consideration, and in accordance with the merger agreement’s express provision that any former shareholder who surrendered his or her share certificates would be deemed to have forever waived any appraisal rights or quasi-appraisal rights pursuant to the Oklahoma appraisal statute or otherwise. See Defendants’ Estoppel MSJ at 21. The Defendants then argue that the Plaintiffs are equitably estopped from unwinding the merger, because, in reliance on the Plaintiffs’ voluntary and knowing surrender of their share certificates, the Plaintiffs: (i) consummated the merger of TIR, Inc. and TIR LLC; (ii) contributed 50.1% of their member interests in TIR LLC to Cypress Energy Partners L.P.; and (iii) effected a sale of partnership units to the public pursuant to the Registration Statement. See Defendants’ Estoppel MSJ at 22. With regard to the Plaintiffs’ federal securities claims, the Defendants assert that the Plaintiffs must allege and prove both a misleading statement or omission of a material fact and reliance to have a claim under Securities and Exchange Act § 10(b) and rule 10b-5. See Defendants’ Estoppel MSJ at 23-24. According to the Defendants, the Plaintiffs’ federal securities claims fail, because the Plaintiffs do not satisfy the reliance requirement. See Defendants’ Estoppel MSJ at 23-24.
5. The Plaintiffs’ Response to Defendants’ Estoppel MSJ.
The Defendants filed the Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Second Motion for Summary Judgment on October 12, 2015. See Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Second Motion for Summary Judgment, filed October 12, 2015 (Doc. 171)(“Response to Defendants’ Estoppel MSJ”). The Defendants argue that, separate and apart from the fact that the Defendants’ affirmative defenses are barred as a matter of law, the Defendants fail to establish any of the elements of waiver, estoppel, or unclean hands. Responding to the Defendants’ arguments out of order, the Plaintiffs first contend that the Defendants cannot satisfy waiver elements, because the Plaintiffs did not voluntarily and intentionally release each of the Defendants from personal liability either under common law or under securities law. See Response to Defendants’ Estoppel MSJ at 13. According to the Plaintiffs, the Defendants ignore settled law that “a stockholder who ... accepts the consideration from ... a merger effected by a controlling stockholder is not barred by the doctrine of ... waiver ... from challenging the fairness of the merger in an equitable action.” Response to Defendants’ Estoppel MSJ at 13 (emphasis in the original)(quoting In re JCC Holding Co., Inc., 843 A.2d 713, 723 (Del. Ch. 2003)(Strine, V.C.)). The Plaintiffs argue that the Defendants’ argument also fails on its own terms, because (i) waiver requires the “voluntary and intentional relinquishment of a known right,” Response to Defendants’ Estoppel MSJ at 13 (quoting Barringer v. Baptist Healthcare of Oklahoma, 22 P.3d 695, 700-01 (Okla. 2001)); and (ii) a contractual waiver requires a “ ‘contract ... made by the party whose benefit is being waived.’ ” Response to Defendants’ Estoppel MSJ at 13 (quoting Smith v. Minneapolis Threshing Mach. Co., 89 Okla. 156, 214 P. 178, 180 (1923)). The Plaintiffs maintain that they did not enter a contract with the Defendants; rather, the Defendants unilaterally cancelled the Plaintiffs’ shares. See Response to Defendants’ Estoppel MSJ at 13-14. Moreover, the Plaintiffs say, 18 O.S. § 1091 leaves the Plaintiffs free to exercise, or decline to exercise, statutory appraisal rights, a decision not to exercise the appraisal rights has no effect with regard to waiver. See Response to Defendants’ Estoppel MSJ at 14. In summary, the Plaintiffs contend that the waiver defense fails on three grounds: (i) nothing in the merger notice declared such a broad waiver; (ii) 18 O.S. § 1091 does not impose a waiver; and (iii) settled law holds that foregoing an appraisal does not immunize the Defendants from liability for any breach of their duty of entire fairness in undertaking a self-interested merger transaction. See Response to Defendants’ Estoppel MSJ at 15.
The Plaintiffs argue that the Defendants’ estoppel argument also fails. See Response to Defendants’ Estoppel MSJ at 16-17. Again invoking In re JCC Holding Co., Inc., the Plaintiffs say that settled law is that acceptance of merger consideration does not allow an estoppel defense to bar challenges to a self-interested merger’s entire fairness. See Response to Defendants’ Estoppel MSJ at 16. Furthermore, the Plaintiffs maintain, the Defendants cannot satisfy estoppel’s core elements: (i) that the Plaintiffs intended to induce a detrimental chance of position; (ii) that a detrimental chance of position in fact occurred; and (iii) that reasonable reliance upon a belief that the Plaintiffs inculcated induced the detrimental change. See Response to Defendants’ Estoppel MSJ at 16 (citing Spaulding v. United Transp. Union, 279 F.3d 901, 909-10 (10th Cir. 2002)). First, according to the Plaintiffs, the Defendants were committed to paying the merger consideration upon demand regardless what the Defendants believed or did not believe about their personal liability. See Response to Defendants’' Estoppel MSJ at 17. Second, according to the Plaintiffs, 18 O.S. § 1090.2(B)(3) required the Defendants to fix the merger consideration as part of any freeze-out merger. See Response to Defendants’ Estoppel MSJ at 17. The Plaintiffs assert that these two facts left Defendants with no choice whether to pay the merger consideration, and the Plaintiffs therefore could have induced neither belief nor reasonable reliance in the Defendants See Response to Defendants’ Estoppel MSJ at 17.
Turning to the Defendants’ unclean-hands argument, the Plaintiffs contend that the Defendants cannot show unclean hands, because (i) the Plaintiffs’ conduct did not cause the Defendants’ unilateral adoption, execution, and implementation of the freeze-out merger; and (ii) the Plaintiffs did not commit fraud or deceit. See Response to Defendants’ Estoppel MSJ at 18. As a threshold argument, the Plaintiffs again invoke In. re JCC Holding, saying that case disallows defendants from asserting any equitable doctrine to avoid entire fairness review, a prohibition that the Plaintiffs insist includes the unclean hands defense. See Response to Defendants’ Es-toppel MSJ at 18. Regardless, the Plaintiffs continue, the Defendants’ argument fails on its own merits. See Response to Defendants’ Estoppel MSJ at 18. First, the Plaintiffs insist, the Defendants make no showing that the Plaintiffs tainted the transaction that they are challenging by undertaking the very “fraudulent and deceitful conduct ” of which they complain. Response to Defendants’ Estoppel MSJ at 18 (quoting Yeager v. Fort Knox Sec. Products, 602 Fed.Appx. 423, 429 (10th Cir. 2015))(emphasis added in Response to Defendants’ Estoppel MSJ). According to the Plaintiffs, they did not induce the Defendants’- payment of the required merger consideration, through fraud and deceit or otherwise. See Response to Defendants’ Estoppel MSJ at 18. Consequently, the Plaintiffs say, the unclean hands doctrine cannot apply or block an entire fairness review. See Response to Defendants’ Es-toppel MSJ at 18-19.
The Plaintiffs then attack the Defendants’ securities claim arguments as a straw man. See Response to Defendants’ Estoppel MSJ at 19. The Plaintiffs assert that their securities claims rest only on the forced-seller doctrine, which the Plaintiffs maintain provides a cause of action under