Via his investment vehicle Boots Capital Management, Miller has filed a complaint in the Court of Chancery of the State of Delaware.
The suit takes aim at a cooperation agreement between Crown Castle’s board of directors and Elliot, announced on December 2023.
It alleges that a cooperation agreement between the board and Elliott infringes upon the board's powers, violates Delaware Corporation Law, and gives Elliott undue influence, including guaranteed representation on the board and key committees.
Under the terms of the agreement, Crown Castle and Elliot appointed Jason Genrich, a partner at Elliott, and Sunit Patel, chief financial officer of Ibotta (a consumer facing cashback mobile app).
The agreement also saw the formation of a committee to review Crown Castle’s fibre business, with the goal of enhancing shareholder value (presumably a sale), which the two new directors would be a part of.
It also established a CEO search committee following the retirement of Jay Brown in December 2023, which Genrich was also appointed to.
Miller claims the agreement is invalid under Delaware law, citing a recent legal opinion in a case between West Palm Beach Firefighters’ Pension Fund and Moelis & Company.
The lawsuit alleges that Crown Castle violated its own bylaws by entering into the agreement, which curtails the authority of the board. Furthermore, it accuses Elliott of actively assisting the board in these breaches of fiduciary duty.
Miller is unhappy that Elliott received substantial governance rights without the provision that it be required to maintain an equity ownership position in the company. He said that this means Elliott’s short-term profit incentives are “grossly misaligned” with the long-term interests of Crown Castle and its shareholders.
In a similar tone to the open letter he published last week, Miller said entering into the agreement demonstrated the boards short sightedness, poor governance, lack of accountability, hostility towards its shareholders, and track record of flawed decision making.
“Submitting the cooperation agreement to a shareholder vote is a necessary step to help restore the Company’s credibility with investors and forestall costly and distracting litigation, which could delay a sale of the Company’s fibre assets and further erode shareholder value,” Miller said.
“However, given the board’s continued refusal to put the unlawful cooperation agreement to a shareholder vote, we have filed this lawsuit to defend the rights of Crown Castle’s shareholders.”
Miller added that the current board only having seven total years of tower industry operating experience was unconscionable.
Miller’s nominations for the board have over fifty years of experience between them.
"The Ted Miller lawsuit is without merit," Crown Castle said in a statement to Capacity.
"Crown Castle’s board and management team are focused on conducting the company’s business, including completing the strategic and operating review of the fibre business and its CEO search, in a manner that is in the best interest of the company and its shareholders".
