Superwire.com, Inc. v. Hampton

Superwire.com, Inc. (Superwire) (plaintiff) was the principal shareholder in Entrata Communications Corporation (Entrata) and a major creditor of Entrata. Superwire wanted to replace Entrata’s board of directors with its own slate of nominees, so Superwire obtained written consents to that effect from a majority of Entrata’s shareholders and delivered the consents to Entrata. To counter Superwire’s move, Entrata issued new shares of Entrata stock to dilute Superwire’s voting power and asked certain shareholders to revoke the consents they had signed for the removal of Dean Hampton (defendant), one of the Entrata directors. Superwire brought an action to determine whose slate of nominees constituted the Entrata board of directors and to enforce its removal of Hampton. Entrata and Hampton moved to dismiss Superwire’s complaint because the complaint did not allege facts showing that Hampton was afforded notice of the charges against him and an opportunity to be heard before his removal, which was purportedly for cause. Superwire argued that the consent was valid because (1) Superwire was not required to allege those facts in order to survive a motion to dismiss, and (2) Entrata’s certificate of incorporation allowed directors to be removed without cause, so it was immaterial whether Hampton was afforded the procedural safeguards of notice and an opportunity to be heard.