Kistefos v. Trico Marine Servs. - Civil Action No. 4497-CC, 2009 Del. Ch. LEXIS 58 (Ch. Apr. 14, 2009)

Rule:

In deciding whether to expedite proceedings, a court must determine whether the plaintiff has articulated a sufficiently colorable claim and shown a sufficient possibility of a threatened irreparable injury, such that the additional costs of proceeding on an expedited basis are justified.

Facts:

The company's majority stockholder sent a letter to the company's board that included several proposals to be put before the company's stockholders for a vote at its annual meeting. Included in the letter was a proposal for a bylaw regarding the eligibility of directors. The company rejected the proposal as invalid if adopted because it was inconsistent with the company's certificate of incorporation and Del. Code Ann. tit. 8, § 141(b), (k). Plaintiff minority stockholder argued that the proposal should be presented at the annual meeting in the same manner as the other proposals. The company argued that, in order to preserve its legal position, it had to disregard the proposal at the meeting and prevent it from being presented to the stockholders as a valid proposal for a vote. Subsequently, plaintiff minority stockholder filed a motion to expedite an action for a declaration that defendants, company and its board, improperly rejected a proposed bylaw as inconsistent with Delaware law and the company's certificate of incorporation.

Issue:

Under the circumstances, should plaintiff’s motion to expedite be granted?

Answer:

No.

Conclusion:

The court noted that in deciding whether to expedite proceedings, a court must determine whether the plaintiff has articulated a sufficiently colorable claim and shown a sufficient possibility of a threatened irreparable injury, such that the additional costs of proceeding on an expedited basis are justified. In this case, the court found that because the company's legal position was preserved, it had no reason to prevent a vote on the proposal. Accordingly, the majority stockholder could solicit proxies and present arguments at the annual meeting regarding the proposed bylaw in the same manner that it was permitted to do with respect to the other proposals. Thus, the need for expedited proceedings was obviated.