Dish says it's standing down, clearing a path for Sprint to acquire the small wireless company.
Sprint has increased its bid for Clearwire to $5 a share in the hopes of forcing satellite TV provider Dish Network to drop out of the race.
The satellite television provider says the lawsuit is an aim to divert attention from Sprint's failure to offer a fair deal to Clearwire shareholders.
The wireless carrier's lawsuit claims the deal violates shareholder rights and Delaware laws.
Wireless broadband provider's board recommends shareholders accept Dish's bid, which is $1 a share greater than a rival bid by majority owner Sprint Nextel.
Dish's proposal to acquire Clearwire is not "actionable" as certain aspects of it violate Delaware state law, claims Sprint.
Wireless broadband provider postpones shareholder vote to review Dish's offer, which topped Sprint's by $1 per share.
After proxy advisory firm Glass Lewis reiterates that shareholders should vote "no" to an acquisition by Sprint, Clearwire pipes up.
Satellite TV provider offers $1 a share more than Sprint for the wireless broadband provider, a 29 percent premium over the carrier's offer.
The board urges shareholders to vote "yes" for the bill when they meet to place their ballots on May 31.