## Facts

- Cablevision Systems Corp., controlled by the Dolan family, owned News 12 Networks, a set of regional 24-hour local news channels.
- In a 2015 merger agreement, Altice agreed to acquire Cablevision for approximately $17.7 billion.
- The Dolan family agreed to include News 12 in the sale after negotiating a covenant (Merger Agreement § 6.4(f)) requiring Altice to operate News 12 substantially in accordance with an attached business plan through the end of plan year 2020.
- The business plan contemplated staffing levels and budgets that would not be materially reduced during 2016–2020.
- The merger agreement also included (i) a no-third-party-beneficiaries clause, (ii) provisions preserving discretion over employee terminations, and (iii) a survival clause listing provisions that would survive closing; § 6.4(f) was not expressly listed.
- After closing in June 2016, Altice implemented layoffs at News 12, including terminations totaling roughly 70 employees and expense reductions, and allegedly planned continuing annual reductions.
- The Dolan family and two News 12 employees sued, asserting contract and non-contract theories and seeking declaratory relief.
- Altice moved to dismiss under Court of Chancery Rule 12(b)(6).

## Issues

1. Whether the former stockholder-sellers plausibly had post-closing enforceable rights to sue for breach of § 6.4(f) given the survival clause and related provisions.
2. Whether the merger agreement unambiguously foreclosed any continuing obligation to operate News 12 under the business plan through 2020, or instead was ambiguous.
3. Whether plaintiffs could proceed on promissory estoppel and other non-contract claims alongside (or in lieu of) the contract theory at the pleading stage.

## Decision

- The court granted in part and denied in part the motion to dismiss.
- The motion to dismiss was denied as to the Dolan family’s breach of contract claim based on § 6.4(f).
- The motion to dismiss was denied as to the Dolan family’s promissory estoppel claim pleaded in the alternative.
- The motion to dismiss was denied as to declaratory relief concerning obligations under § 6.4(f).
- The motion to dismiss was granted as to breach of the implied covenant of good faith and fair dealing.
- The motion to dismiss was granted as to equitable fraud and negligent misrepresentation.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded facts as true and draws reasonable inferences in the non-movant’s favor; dismissal is improper where a plausible claim is stated.
- A contract is ambiguous where provisions are reasonably susceptible to more than one interpretation; at the pleading stage, a reasonable plaintiff-friendly interpretation can warrant denial of dismissal and later consideration of extrinsic evidence.
- A covenant promising performance for a defined future period may support a plausible inference of post-closing enforceability when the agreement’s survival language does not clearly negate that reading.
- Promissory estoppel may be pleaded in the alternative at the pleading stage where the scope or enforceability of contractual obligations is genuinely disputed.
- The implied covenant of good faith and fair dealing is a narrow gap-filling doctrine and cannot be used to override negotiated terms or restate an express-contract dispute.
- Equitable fraud and negligent misrepresentation require well-pleaded misrepresentation and reliance allegations distinct from nonperformance of contractual promises; claims sounding in tort are disfavored when the dispute is fundamentally contractual.

## Conclusion

The Court of Chancery held that the merger agreement was plausibly ambiguous regarding whether Altice’s News 12 operational covenant survived closing and could be enforced by the seller stockholders, allowing contract, alternative promissory estoppel, and declaratory claims to proceed, while dismissing implied-covenant and tort-based claims as improper attempts to recast a contract dispute.


Dolan v. Altice USA, Inc., C.A. No. 2018-0651-JRS, 2019 WL 2711280 (Del. Ch. June 27, 2019)