In a lawsuit filed by Patrick Spearman, former CEO, and Kevin McHale, former General Manager of the MN Timberwolves, along with other Envoy investors, a District Judge denied Glen Taylor’s attempt to dismiss claims for fraud and other causes of action Taylor is facing in connection with Envoy Medical. Mr. Taylor is the owner of the Minnesota Timberwolves and reported to be the wealthiest person in the state.
When the case was originally filed, Glen Taylor and Brent Lucas, current CEO of Envoy, both denied the allegations in the suit which claimed Taylor engaged in “self dealing” following a series of business deals that gave Taylor control of the Company. Taylor and the other defendants asked the District Judge to dismiss all claims against them. But, in a November 24, 2020 order, the court denied that request and permitted all of Spearman and McHale’s claims to proceed against Taylor and the other defendants, including claims for fraud and breach of fiduciary duty in connection with Envoy.
Regarding the claim for fraud, the court observed that the investors’ “allege that Defendants touted the benefits of [Taylor’s] preferred share issuance, suggesting that the transaction would ‘create tangible shareholder value,’ and that this was false because the issuance would, in fact, dilute such value.” In light of this, the court ruled that the investors “have sufficiently pled a claim for fraud under Minnesota law.”
Regarding the claims for breach of fiduciary duty, the court noted that Taylor’s arguments were “not sufficient to dismiss the claim at this state of the proceedings.”
Patrick Spearman, one of the initiators of this litigation, calls the judge’s rulings “significant.” According to Spearman, after the lawsuit was initiated, Glen Taylor told the Minneapolis Star Tribune in the Feb 4, 2020 publication “I deny these allegations”, yet the judge recently ruled that discovery will go forward on all claims. Spearman further said, “We believe this will shine a light on Glen Taylor’s questionable dealings. Jurors do not like when billionaires try to take advantage of honest fellow shareholders.”
Spearman and other shareholders are represented by attorney David Wille of Baker Botts LLP