Portnoy v. Cryo-Cell International, Inc.
Court of Chancery of Delaware
940 A.2d 43 (2008)
Heading into the 2007 annual meeting, dissident shareholders of Cryo-Cell International, Inc. (Cryo-Cell) (defendant) hoped to unseat the incumbent board. The CEO of Cryo-Cell, Mercedes Walton (defendant), took four significant steps to avoid a board takeover. She promised one dissident, Andrew Filipowski, a seat on the board in exchange for his support of the rest of the board and his promise to buy more stock. She further promised him that if the management slate won, the board would act to expand the board by one member and seat one of Filipowski’s associates. Third, Walton obtained the backing of Saneron CCEL Therapeutics, Inc. (Saneron) by threatening to cut off business ties with Saneron if they withheld support. Finally, at the meeting itself, Watson extended the voting period by several hours on a pretext, in order to give management allies enough time to secure needed votes. The management slate won the election by a slim margin. One dissident, David Portnoy, filed suit against Watson and Cryo-Cell, asking the court to void the election results and declare the opposition slate the winners.
Rule of Law
Holding and Reasoning (Strine, J.)
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