Sisters of the Precious Blood v. Bristol-Myers Co.: A Shareholder-Management Dispute

Sisters of the Precious Blood (the Sisters) (plaintiff), a shareholder of Bristol-Myers Co. (Bristol) (defendant), sued Bristol for allegedly distributing proxy materials to shareholders that included serious misrepresentations of fact. The Sisters argued that Bristol’s marketing and sales practices for infant formula were contributing to illness in and death of infants in the third world. The Sisters requested that Bristol issue a corrected proxy solicitation during a special shareholder meeting rather than waiting until the next annual meeting. The Sisters wanted Bristol to share the full extent of its sales practices for infant formula in the third world with all its shareholders. The lower court declined the Sisters’ requested relief and granted summary judgment in favor of Bristol. The Sisters appealed to the United States Court of Appeals for the Second Circuit. The Second Circuit required the parties to participate in a mediation program. The parties engaged in a four-conference mediation beginning July 19, 1977. Initially, the Sisters refused to settle without Bristol admitting that it lied to its shareholders. Bristol argued that it was truthful to its shareholders and offered the Sisters the option to make a written statement at the next annual meeting, to which Bristol would state its opposition without elaboration. The Sisters declined the offer. Each party believed the other was acting in bad faith. On December 24, 1977, through successful mediation, the parties were able to reach an agreement.