![if gte IE 9]><![endif]><![if gte IE 9]><![endif]><![if gte IE 9]><![endif]>
Thank You For Submiting Feedback!
Supreme Court of Delaware
December 3, 2002, Submitted ; January 7, 2003, Decided
No. 606, 2002
[*1120] HOLLAND, Justice:
This is an expedited appeal from a final judgment entered by the Court of Chancery. That final judgment permitted an incumbent board of directors to adopt defense measures which changed the size and composition of the board's membership. The record reflects that those defensive actions were taken for the primary purpose of impeding the shareholders' right to vote effectively in an [**2] impending election for successor directors. We have concluded that the judgment of the Court [*1121] of Chancery must be reversed. This matter is remanded for further proceedings in accordance with this opinion.
On August 26, 2002, MM Companies, Inc. ("MM") filed its original complaint in this action in the Court of Chancery against Liquid Audio, Inc. ("Liquid Audio"), as well as Raymond A. Doig, Gerald W. Kearby, Robert G. Flynn, Stephen V. Imbler and Ann Winblad (the "Director Defendants"). The original complaint sought injunctive relief against the August 22, 2002 action taken by the board of directors of Liquid Audio ("Board") to expand from five to seven members, and the purported effects that expansion might have on Liquid Audio's 2002 annual meeting that was scheduled for September 26, 2002. MM alleged that the Director Defendants' decision to expand the Board violated the principles established by the decision of the Court of Chancery in Blasius 1 [**3] and the decision of this Court in Unocal. 2 At a scheduling conference on August 29, 2002, the Court of Chancery set October 21, 2002 as the date for trial.
On September 26, 2002, Liquid Audio held its 2002 annual meeting at which MM's two nominees were elected as Class III directors replacing incumbent directors Doig and Kearby. On October 1, 2002, MM filed an amended complaint, once again seeking to invalidate the August 22, 2002 action by Liquid Audio's board of directors to expand the size of the Board from five to seven members and to appoint two new directors to those recently created vacancies. The amended complaint also alleges that the Director Defendants' decision to expand the Board violated the principles established by Blasius and Unocal.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
813 A.2d 1118 *; 2003 Del. LEXIS 5 **
MM COMPANIES, INC., Plaintiff Below, Appellant, v. LIQUID AUDIO, INC., RAYMOND A. DOIG, GERALD W. KEARBY, ROBERT G. FLYNN, STEPHEN V. IMBLER, ANN WINBLAD, JAMES D. SOMES and JUDITH N. FRANK, Defendants Below, Appellees
Subsequent History: On remand at, Judgment entered by MM Cos. v. Liquid Audio, Inc., 2003 Del. Ch. LEXIS 157 (Del. Ch., Jan. 16, 2003)
Prior History: [**1] Court Below - Court of Chancery of the State of Delaware, in and for New Castle County. C.A. No. 19869.
Disposition: REVERSED and REMANDED.
shareholders, elected, board of directors, stockholders, primary purpose, compelling justification, nominees, annual meeting, board's action, impede, contested election, judicial review, appointed, incumbent, announced, merger, franchise, enhanced, bylaws, proxy, defend the action, interfering, interfere, fill, standard of review, business judgment rule, member of the board, right to vote, proportionate, resign
Business & Corporate Law, Meetings & Voting, Annual Meetings, Director Elections & Removals, Directors & Officers, Management Duties & Liabilities, General Overview, Terms in Office, Corporate Formation, Corporate Existence, Powers & Purpose, Corporate Governance, Shareholders, Shareholder Duties & Liabilities, Scope of Authority, Elections, Voting Shares, Governments, State & Territorial Governments, Civil Procedure, Appeals, Standards of Review, Fiduciary Duties, Business Judgment Rule, Defenses, Mergers & Acquisitions Law, Takeovers & Tender Offers, Duties & Liabilities of Directors & Officers, Duties & Liabilities of Shareholders, Administrative Law, Judicial Review, Distributorships & Franchises, Criminal Law & Procedure, Sentencing, Proportionality