Plaintiffs in TCT case intend to appeal

LOVELL —The plaintiffs who allege wrongdoing in the 2014 sale of Tri-County Telephone (TCT) say they are disappointed but by no means deterred by a recent district court judge’s ruling that went against them. 

“This case is not over and may have a long way to go,” said William (Bill) Loveland, a former TCT board member, who suggested in a statement that he and Barbara Campbell intend to appeal the ruling to the Wyoming Supreme Court.

Loveland admitted that he and Campbell were disappointed by the ruling but that “as class representatives, (we) remain as committed to the case as we always have been. We are resolute in working toward obtaining the true and correct outcome. 

“This case will be an important precedent for Wyoming. There are cooperatives across Wyoming, and this case will make important decisions as to the rights of the owners who are members/owners of other cooperatives, as well.”

District Court Judge Jason M. Conder, in a ruling entered Oct. 10, granted a motion for summary judgment on all claims that were filed by defendants Neil Schlenker, Chris Davidson, Steve Harper, Dalin Winters, Clifford Alexander, J.O. Sutherland, Daniel Greet, John K. Johnson, and Tri-County Telephone Association, together with its affiliated companies.

According to court documents, plaintiffs Joe Campbell and Loveland were members of the cooperative’s board in 2009 when Schlenker made his initial inquiry into purchasing the TCT cooperative and subsidiaries. 

At the time, Davidson was the TCT’s CEO, Harper its CFO. 

The other defendants — Winters, Alexander, Sutherland, Greet and Johnson —spent time on the board during the period leading up to and including the sale in 2014. 

Alexander, Johnson, Winters and Greet voted for the sale to go through. 

Campbell opposed and later, along with wife Barbara, filed suit contending that TCT was acquired through a grand scheme of fraud, deceit and collusion. 

Judge Conder disagreed. 

While noting the repeated arguments of plaintiffs filled with what was characterized in the order as “vitriolic assertions, beliefs and opinions regarding the issue of fraud,” the court determined that plaintiffs had failed to show any evidence that fraud or other wrongful conduct occurred.

The court’s order dismissing the class action states, “Plaintiffs have failed to present specific facts demonstrating that a genuine issue of material fact exists as to intentional torts or illegal acts.” 

It continues: “Plaintiffs must do more than loudly and repeatedly state their allegations and opinions. They must provide some measure of proof, evidentiary facts to support their position and overcome the business judgment rule, which they have failed to do.”

Loveland reiterated this week that he and Barbara Campbell represent 720 class members, stating, “Former Tri-County members who are part of this class action consist of individuals, businesses, families, churches and non-profit organizations who have waited a very long time for the outcome of this case.

“The original complaint was filed by Joe and Barbara Campbell in December of 2015, almost seven years ago. Unfortunately for class members, we will now have to wait longer.”

Richard Wardell, TCT’s chief executive officer, said the order granting summary judgement “vindicates the conduct of the defendant officers and directors in conducting the negotiation of the transaction resulting in the sale of TCT to Big Horn Telecommunications (BHT) Holdings, Inc.” 

“Since the case was initiated, over 500 documents have been filed with the court, revealing the story of a disgruntled board member’s pursuit of vengeance by submitting mountains of paperwork laden with vitriolic accusations, but devoid of any actual evidence of wrongdoing,” Wardell continued. “The lawsuit filed in December of 2015—served on the individual defendants in the midst of their holiday seasons—was the continuation of a dissident director’s ill-fated, decade-long quest to get his way respecting the future of the Big Horn Basin’s native telecom company. While the Campbells and Loveland attempted through their complaints and other filings with the court to paint a grandiose conspiracy to defraud, the filings of the defendants, with whom the court has sided, tell a different story.”

In a three-page statement, Wardell described Schlenker’s initial pitch to purchase the company in 2009, followed by the board’s decision to reject it as “undervalued.” 

He acknowledged the board’s fear, in an era of telecommunications consolidation, of the cooperative being sold to a “large, out-of-state consolidator that would ruin the local, community-focused nature of TCT.”

According to Wardell, the board did not have a policy in place to provide guidance in that respect, so it retained the services of Michael Balhoff, a renowned telecommunications company advisor. 

With Mr. Balhoff’s assistance, the board adopted a policy prescribing a process for the board to assess and negotiate unsolicited offers, and if the offer fell within certain parameters defined in the policy, then negotiate and ultimately submit the offer to the cooperative members for their approval or rejection.

“Campbell and Loveland (who was also serving as a director of TCT at that time) made and seconded the motion to adopt that board policy,” Wardell said.

When Schlenker upped his offer in 2013, into the policy described parameters, the board then began to negotiate with Schlenker to maximize the value of terms to be submitted to the cooperative utility members for their approval or rejection, Wardell said.

“Despite his earlier approval of the board’s policy, Campbell resisted, indicating his dissatisfaction with the possible sale of the company to BHT,” Wardell said. “Eschewing company policy and customary business practice, Campbell initially refused to execute a non-disclosure agreement respecting those negotiations.

“The board created a committee to engage in negotiations with Schlenker without Campbell, due to his refusal to execute the nondisclosure agreement. But faced with the loss of any input or control in the process, Campbell ultimately executed the required nondisclosure agreement, at which point he was provided all details of the nascent negotiations and enjoyed full privileges to participate in the lengthy ensuing process.”

Negotiations continued for more than a year, eventually resulting in an agreement.

Wardell rejected allegations of “fraudulent conduct” and “breach of fiduciary duties” that were leveled against the officers and directors. 

“They fought for every last penny that BHT was willing to pay when the deal closed, then they asked for more in the form of future obligations,” Wardell said. “The monetary terms negotiated by the board ultimately resulted in significant payouts; Campbell, for example, received and cashed checks worth over $28,000. The future obligations of BHT negotiated by the board resulted in discounts to the members’ monthly bills for services, ensured investment by BHT of millions into the telecom infrastructure of the member area, and were designed to ensure that the locally controlled company retained its focus on serving the residents of our communities into the future.”

In time, cooperative members “decided for themselves that the deal negotiated by the board and agreed to by BHT was in their best interest,” Wardell said. 

The sale went through and “those former cooperative members received significant financial compensation for their membership interests, and they continue to enjoy the quality services provided by the community-focused TCT.”

Wardell said TCT was hoping to redirect “the extraordinary expense of litigation” into the community it serves but will not be able to do so if the plaintiffs follow through with their appeal of the judge’s ruling.

“This intended continuation of what appears to be an ego-driven saga of revenge will surely continue to drain the resources of our judicial system and resources that could better be spent on our community members,” said Wardell.