Datapoint Corp. v. Plaza Securities Co.
Delaware Supreme Court
496 A.2d 1031 (1985)
Asher B. Edelman was the general partner of Plaza Securities Co. and Arbitrage Securities Co. (plaintiffs) and a shareholder of Datapoint Corp. (Datapoint) (defendant). Edelman made two offers to acquire Datapoint before withdrawing the offers and indicating his intent to solicit shareholder consents on January 30, 1985. Datapoint’s certificate of incorporation was silent as to solicitation of shareholder consents under Delaware law. In January 1985, Datapoint’s directors adopted a bylaw governing the procedure. The amended bylaw provided that the record date would be set 15 days after notice of a shareholder’s intent to solicit consents, and action would not occur until 45 days after the record date. The bylaw also delayed action by shareholder consent until any related litigation was resolved. The plaintiffs sued in the Court of Chancery for injunctive relief that would bar Datapoint from enforcing the bylaw. March 4 was designated the record date for Edelman’s notice of intent, and no action could take place before April 18. Datapoint sued to invalidate Edelman’s consents in the United States District Court for the Western District of Texas. The Court of Chancery concluded that the bylaw conflicted with 8 De. C. § 228 (§ 228) and granted injunctive relief to the plaintiffs. Datapoint appealed to the Delaware Supreme Court.
Rule of Law
Holding and Reasoning (Horsey, J.)
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