Third Lawsuit Claims Biote CEO, Chairman, Aided by Law Firm, Conspired to Direct BioTE Holdings, LLC into SPAC Transaction to Enrich Themselves
July 16, 2024 – A third lawsuit filed by Brewer, Attorneys & Counselors alleges that company executives from Irving-based Biote Corp. – aided by the Cooley LLP law firm – breached their duties to plaintiffs by channeling the hormone therapy company into a value-destructive special purpose acquisition company (“SPAC”) transaction.
The lawsuit was filed by co-trustees of The Yosaki Trust and The Mioko Trust, Russell J. Miller and Mary Miller, on July 12, 2024, in the Court of Chancery of the State of Delaware.
The suit was brought against Biote CEO Teresa “Terry” Weber, Executive Chairman Marc Beer, Mary Elizabeth Conlon, Haymaker Sponsor III LLC, Steven J. Heyer, and Cooley LLP. Haymaker was the SPAC company that acted as the sponsor of the transaction and Cooley acted as outside counsel. The complaint states that the Cooley firm acted in aiding and abetting defendants’ breaches of their fiduciary duties.
The lawsuit alleges that “The Insider Defendants conspired to close this disastrous transaction to divert approximately $70 million of merger consideration to themselves and gain control of an enterprise they did not build. Plaintiffs respectfully request that the Court order Defendants to disgorge their ill-gotten gains.”
The filing follows a recent settlement with shareholder Marci Donovitz over similar issues.
As explained in the filing, a SPAC – also known as a “blank check company”—is a shell company set up by a sponsor that goes public without an operating business to raise funds, but with a plan to find a target private company with an operating business with which it would merge within a fixed period, usually two years.
“Our clients believe this case reveals a startling fact – company insiders worked with a blank check company and a law firm to enrich themselves and dilute the ownership interest of others,” says William A. Brewer III, partner at Brewer, Attorneys & Counselors, and counsel to plaintiffs.
The lawsuit alleges that plaintiffs’ ownership was diluted and devalued by the transaction, which enriched defendants at the expense of the legacy owners – plaintiffs bring the action to recover damages caused by the “disloyal fiduciaries, and those who aided them.”
As publicly reported, Biote was a recent defendant in a separate lawsuit filed by Biote founder and Brewer client Dr. Gary Donovitz regarding the SPAC deal. As reported, in February 2024, Biote disclosed it agreed to buy back nearly $77 million of Dr. Donovitz’s stock to settle the matter. In July 2024, it was reported that Biote reached a $60 million settlement with another shareholder Marci Donovitz, also a Brewer client.
The New York Times: The NRA Is Facing a Court Fight for Control of Its Future
July 14, 2024 – The New York Times reports that Brewer client the National Rifle Association of America (NRA) is preparing to return to a Manhattan courtroom in connection with a lawsuit filed by the New York Attorney General's office – and that the "stakes this time will be far higher."
The Times reports that "the NRA's leadership, not the group itself, was most at risk heading into the earlier phase of the trial. In the second phase, scheduled to begin on Monday in State Supreme Court, a judge will decide whether the group needs outside monitoring, a step that would curb its independence, at least temporarily, and that it stridently opposes."
“Every witness with personal knowledge of the internal workings of the association today concurs that further state intrusion poses a grave, needless threat to the NRA’s recovery,” the association said in a recent legal filing, adding that the first part of the trial had aired events from its “distant past.”
The reporting included comment from the NRA's lead counsel, William A. Brewer III, who acknowledged that "there was misconduct by former vendors and insiders" but said there was "no evidence it continues today. Not a shred."
To read the full report, click here.
Vault Names Brewer, Attorneys & Counselors to 2025 “Top 150 Under 150" List
July 12, 2024 – Brewer, Attorneys & Counselors has been named to Vault's 2025 "Top 150 Under 150" list of leading small and midsize law firms.
The annual list recognizes firms with 150 lawyers or less that "deliver big results." The firms highlighted are determined by analyzing peer feedback, survey data, other published rankings, news stories, trade journals, and other legal publications.
The Brewer firm was also named to Vault's 2023 and 2019 "Top 150 Under 150" lists, as well as to its 2017 "Best Law Firms in Texas" list.
Above the Law reported on the national award, stating that Brewer was among the most "recognizable" firms on the list. Read the report here.
Let's Applaud the Mississippi Court for Confirming Private Right of Action in Voting Rights Act Cases
July 11, 2024 - Brewer Storefront applauds a three-judge panel in the U.S. District Court for the Southern District of Mississippi for upholding a private right of action to sue under Section 2 of the Voting Rights Act in Mississippi State Conference of the NAACP v. State Board of Election Commissioners.
The Storefront is the community service affiliate of the law firm, Brewer, Attorneys & Counselors. The Storefront recently launched the Texas Voting Rights Initiative (TVRI).
The Mississippi judges ruled in favor of the NAACP and numerous Black voters in a case concerning Republican-drawn state legislative maps. The court properly noted that “few congressional enactments have had a more profound effect on the country than the Voting Rights Act of 1965, and a large percentage of the enforcement actions under the Voting Rights Act have been brought by private individuals…”
Mississippi falls within the Fifth Circuit Court of Appeals, which also covers Texas. Importantly, the Fifth Circuit has held that Section 2 of the Voting Rights Act does provide a private right of action, and this Mississippi three-judge panel embraces the wisdom of that holding. This right of action has been acknowledged in hundreds of cases at the federal district level, and many times at the Supreme Court.
“The Mississippi court should be commended for validating that individuals may continue to serve as plaintiffs in Voting Rights Act cases,” Storefront Partner William A. Brewer III said. “It is critical that Black voters and other voters of color be empowered to challenge discriminatory election systems where they exist. Otherwise, these voters will be silenced and their rights suppressed.”
Late last year, a three-judge panel in the Eighth Circuit Court of Appeals found in a 2-1 decision in a redistricting case filed in Arkansas that only the federal government can bring a Section 2 voting rights challenge. That case was brought by the Arkansas State Conference NAACP and others.
“Unfortunately, judges in the Eighth Circuit removed the rights of individual voters in those seven states to bring lawsuits asserting their voting rights,” Brewer said. “We believe the private right of action should ultimately be restored in order to continue to ensure that voters of color in the United States are guaranteed a fair opportunity to elect candidates of their choosing.”
The Storefront has brought many successful voting rights cases on behalf of private individual plaintiffs; these cases spur election reform in districts across Texas and help minority communities elect the officials they choose to numerous school boards and city councils.
In March 2024, Brewer Storefront launched the Texas Voting Rights Initiative (TVRI), a statewide effort focused on ensuring that Texas school boards operate in compliance with the Voting Rights Act. The Storefront undertook an extensive analysis of voting systems across Texas and believes that many operate in violation of the VRA.
The Storefront currently has pending cases challenging at-largeelection systems used to elect school boards in the Pearland Independent School District, Humble Independent School District, and Angleton Independent School District in Texas.
Bloomberg Law and The Dallas Morning News Report on $60 Million Shareholder Settlement with Biote
July 8, 2024 – Bloomberg Law and The Dallas Morning News report that Biote reached a $60 million settlement with Brewer, Attorneys & Counselors client and Biote shareholder Marci Donovitz in a lawsuit over its merger with a special purpose acquisition company, also known as a “SPAC” or “blank check company.”
Bloomberg Law reported that Donovitz alleged her shares in the hormone therapy company were diluted by the deal. The article reported that the company will buy back her shares over a three-year period, with $30 million paid upfront. Bloomberg reports that the lawsuit filed in Delaware Chancery Court alleged that Biote company insiders benefited from the transaction with Haymaker Acquisition Corp. III that delivered almost no cash to the company.
“This settlement validates our client’s claim that the transaction was a scheme to enrich a few company ‘insiders’ – and reward them with financial and managerial benefits to which they were not entitled,” William A. Brewer III, a partner at the Brewer firm, said in a statement quoted in the media reports.
The Morning News report noted that as part of the settlement, Biote will be forced to repurchase all 8.3 million of Donovitz’s shares at $7.23 each.
The Morning News article observes that SPACs were once a very popular way for companies to go public but have faced scrutiny from the Securities and Exchange Commission in recent years.
Read the Bloomberg Law report here and The Dallas Morning News report here.
Biote Shareholder Achieves $60 Million Settlement of Breach of Fiduciary Duty Claims
July 3, 2024 – Brewer, Attorneys & Counselors announced today that its client, Marci Donovitz, reached a $60 million settlement with the company. The settlement resolves a lawsuit alleging that Biote executives breached their fiduciary duties by channeling the hormone therapy company into a speculative transaction with a special purpose acquisition company (“SPAC”) which provided almost no cash for the merger.
The lawsuit was filed by Ms. Donovitz on June 5, 2024, against defendants Biote CEO Teresa “Terry” Weber, Biote Executive Chairman Marc Beer, Biote General Counsel Mary Elizabeth Conlon, Haymaker Sponsor III LLC, Steven J. Heyer, and Cooley LLP. Haymaker was the SPAC sponsor for the transaction and Cooley advised those involved with the deal. Ms. Donovitz is the trustee of the Donovitz Family Irrevocable Trust and a BioTE Holdings, LLC shareholder.
The lawsuit alleged that “Defendants knew for months that astronomical redemptions would eviscerate almost all the cash raised by the SPAC and would cause the transaction to be destructive of value. Nonetheless, Defendants proceeded with their scheme to enrich themselves.” The lawsuit further alleged that as part of the transaction, defendants improperly diverted $70 million from the deal to Biote executives and $135 million in cash and stock in total to all defendants.
“This settlement validates our client’s claim that the transaction was a scheme to enrich a few company ‘insiders’ – and reward them with financial and managerial benefits to which they were not entitled,” says William A. Brewer III, partner at Brewer and counsel to Ms. Donovitz. “Our client hopes this outcome lights a path for those victimized by similar deals. This case underscores the rights of those too often viewed as pawns in these speculative pursuits.”
As explained in the underlying lawsuit, filed in The Court of Chancery of The State of Delaware, a SPAC – also known as a “blank check company” – is a shell company set up by a sponsor that goes public without an operating business to raise funds, but with a plan to find a target private company with an operating business with which it would merge within a fixed period, usually two years.
Ms. Donovitz is the ex-wife of Biote founder Dr. Gary Donovitz, who the lawsuit contends was tricked into waiving a minimum cash closing condition just days before the SPAC deal was completed on May 26, 2022.
As has been publicly reported, Biote was a defendant in a separate lawsuit filed by Dr. Donovitz regarding the SPAC deal. As reported, in February 2024, Biote disclosed it agreed to buy back nearly $77 million of Dr. Donovitz’s stock to settle the matter.
In addition to breaches of fiduciary duties, the lawsuit by Ms. Donovitz also alleged that defendant Biote executives negligently “misled Plaintiff’s trustee regarding the likely impact of this Merger on the value of her shares, failed to disclose material information regarding the risks of this SPAC transaction (including the possibility that it would provide virtually no cash), and failed to disclose that these risks had materialized.”
Under the terms of the settlement with Ms. Donovitz, Biote will repurchase all of the approximately 8.3 million shares she owns. At an average of $7.23 per share, the payout will occur over a three-year schedule: approximately 4.1 million shares valued at $30 million immediately, followed by 1.4 million shares valued at $10 million for each of the next three years.
Lights, Camera, Action! Brewer Summer Program Profiled by Law 360
June 25, 2024 – Law 360 showcased the Brewer firm in its article, “Small Firms Put Unique Spin on Summer Associate Programs.” The article notes how the Brewer summer program provides participants with real-life experience, networking opportunities, and social activities.
Firm partner Will Brewer says, “We had the law clerks and even the college interns working on substantive stuff, preparing for depositions, attending depositions, taking notes in meetings, going to court if that arises," he said. "We're just trying to give them a good experience, not just watching but also contributing to the end product and really working on the case."
As Law 360 reports, Brewer's [summer] program is also unique in that it takes not just law students but also MBA students who work with the firm's business consultants, and undergraduate public relations and communications majors who work with the firm's public affairs managers.
"It's big, but it's super fun," Brewer said. "And it kind of gives people a chance to shadow and work with the people who they would potentially want to step into their role one day."
Click here to read the full article.
Houston Chronicle Reports on Voting Rights Lawsuit Against Angleton ISD
June 27, 2024 – The Houston Chronicle reports that Brewer Storefront filed a lawsuit on behalf of plaintiff Laura Jaso against the Angleton Independent School District (AISD), alleging that it is violating the Voting Rights Act of 1965 and denying fair representation to Hispanic voters by using an at-large election system to elect trustees.
The article notes that Brewer Storefront is the advocacy arm of Brewer, Attorneys & Counselors. In a statement, William A. Brewer III, founder and partner at Brewer Storefront, said the at-large election system used by the district denies Hispanic voters a fair opportunity to elect school board candidates of their choosing.
“Obviously, change is needed to address the needs of Hispanic children attending Angleton ISD schools, and to position the parents to address academic outcomes for the students being failed by the District," Brewer said in a statement.
As reported, the lawsuit points to a lack of diversity among Angleton ISD’s school board and teachers, and an achievement gap between white and Hispanic students. The article reports that the lawsuit says that based on the district’s demographics, there should be at least one Hispanic board member. Jaso, a Mexican American, ran for Position 6 on the school board in May 2021 and lost to a white candidate.
"Hispanic candidates who run for the Board are disadvantaged due to the at-large voting system, which illegally dilutes the votes of ethnic minorities," the lawsuit reads. "Hispanic children, who are the majority of AISD students, are failed by this system and the Board."
To read more, click here.