Jones Apparel Group v. Maxwell Shoe Co.
Court of Chancery of Delaware, New Castle
May 14, 2004, Submitted ; May 27, 2004, Decided
C.A. No. 365-N
[*837] STRINE, Vice Chancellor.
This expedited case centers on the validity of a charter provision of Maxwell Shoe [*838] Company, Inc. By its plain terms, that provision establishes that the record date for any consent solicitation of Maxwell's stockholders shall be the date on which the first consent is delivered to the company. In so providing, the charter adopts one of the default rules set forth in 8 Del. C. § 213(b) [**2] , a default rule that governs when no prior board action is required to take the corporate action at issue and the board of directors does not exercise its discretion, within the statutory boundaries, to set a record date itself.
Here, a consent solicitation was announced by a hostile bidder, Jones Apparel Group, Inc., to remove the Maxwell board. Jones initiated this litigation to, among other things, obtain a ruling that the record date for its solicitation was the date the first consent was delivered to Maxwell, per the charter provision. For its part, Maxwell's board has taken the view that its own charter should not be interpreted in accordance with its plain meaning or, in the alternative, should be declared invalid. It has taken that position to validate its own decision to set an earlier record date.
In this decision, I conclude that the Maxwell charter provision is valid and that its plain terms establish the record date for Jones's consent solicitation. ] Both § 102(b)(1) and § 141(a) of the Delaware General Corporation Law ("DGCL") provide authority for charter provisions to restrict the authority that directors have to manage firms, unless those restrictions are "contrary [**3] to the laws of this State." These statutory provisions, I find, are important expressions of the wide room for private ordering authorized by the DGCL, when such private ordering is reflected in the corporate charter. The Maxwell charter provision is a valid exercise of authority under those sections and is not contrary to law, in the sense that our courts have interpreted that phrase. A consideration of § 213(b)'s terms and legislative history, as well as of the related statutory section governing consent solicitations, § 228, reveals that no public policy set forth in the DGCL (or in our common law of corporations) is contravened by the Maxwell charter provision at issue. Given the absence of any conflict with a mandatory aspect of Delaware corporate law, the Maxwell charter provision's restriction on the board's authority to set a record date is valid.
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883 A.2d 837 *; 2004 Del. Ch. LEXIS 74 **; 2004 WL 5366716
JONES APPAREL GROUP, INC., and MSC ACQUISITION CORP., Plaintiffs, v. MAXWELL SHOE COMPANY, INC., MARK J. COCOZZA, JAMES T. TINAGERO, STEPHEN A. FINE, MALCOLM L. SHERMAN and ANTHONY J. TIBERII, Defendants.
Disposition: [**1] Plaintiff's motion for summary judgment GRANTED. Defendant's motion to dismiss DENIED.
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