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This section contains the nature of the case and procedural background.

D is a publicly traded pharmaceutical company incorporated in Delaware and headquartered in Florida. D has a four-member board of directors - Thomas Equels, William Mitchel, Stewart Appelrouth, and Nancy K. Bryan. Equels is AIM's Chief Executive Officer, having served in his role since 2008. Mitchell, a scientist who has studied Ampligen since the 1980s, is the chairman of the board. Appelrouth, an accountant, has served on the board since 2016. Bryan, the President of BioFlorida Inc., an LLC of which AIM is a member, is the latest addition, beginning her board tenure in March 2023. P is a retired founder, portfolio manager, philanthropist, minority owner of a professional basketball team, and a major D stockholder. A group of D stockholders thought that the board of directors was mismanaging the company. Since 2016, D's stock price has fallen precipitously. The insurgents made two attempts to nominate directors to the board. The Court of Chancery denied the insurgents' request for a mandatory preliminary injunction to place their nominees on the annual meeting ballot. The court held that factual disputes about the veracity of the insurgents' disclosures precluded temporary mandatory injunctive relief. The board took a new look at its governance structure and sought to add additional directors who would 'bring diversity and additional biotechnology commercialization experience.' The board considered amendments to D's advance notice bylaws. The proposed bylaw amendments were intended to respond 'to significant activist activity during 2022 in which an activist group . . . engaged in efforts to conceal who was supporting and who was funding the nomination efforts and to conceal the group's plans for the Company,' and to modernize and bring the bylaws in line with recent amendments to the Delaware General Corporation Law (DGCL) and federal law. The amended bylaws required detailed disclosures by P and his nominees. Many of the amendments were approved by the D board as a direct response to the insurgents' campaign. The new bylaws were adopted. P led a third attempt to nominate three new directors to D's board. The nominees' director and officer questionnaires contained information regarding the nominees, such as their: educational background; trade qualifications; prior board service; criminal history; financial information; regulatory action; diversity; group agreements; economic interest in the nomination; and social media presence. A draft press release was made and submitted for approval. The board met over three sessions in a two-week period to discuss the nominations. D filed a motion seeking to revive the prior dismissed Florida action. D's complaint characterized the third attempt as an 'ongoing . . . threat to D and its shareholders.' Counsel advised the board that P's notice did not comply with the Amended Bylaws. Specifically, absent from the notice, as interpreted by counsel, were: (1) undisclosed AAUs among the activists; (2) disclosure of known supporters of the nomination; (3) disclosure of the specific date, rather than windows of time, of first contact between the activists; and (4) other information, such as past adverse recommendations for public board service from independent proxy advisory firms. Counsel reviewed litigation options with the board. The board unanimously rejected P's nomination notice for not complying with the Amended Bylaws. P filed suit and issued a press release urging AIM stockholders to disregard board proxy contest communications. P asked for declarations that the Amended Bylaws are unlawful, or in addition and in the alternative, that the Ds' application of the bylaws to reject his notice is unlawful and/or inequitable. The court treated the Amended Bylaws adoption as a defensive measure, applied the enhanced scrutiny standard of review, and placed the burden of proof on Ds. The court held that the board was reasonable when it concluded that it faced a threat to its objective of gathering complete information regarding director nominations, including the identity of those making and supporting the nominations. The court held that four of the six challenged bylaws were inequitable and 'facially invalid. After finding the AAU Provision 'invalid,' the court reverted to D's prior, valid AAU version. It held that 'given the vital corporate considerations at risk if nominating stockholders conceal AAUs, it would risk further inequity to excuse P's Notice from disclosing them when D had a validly enacted provision in place pre-amendment. It held that D's notice and the director nominees' D&O responses did not comply with the 2016 AAU Provision, the First Contact Provision, and the Questionnaire Provisions. P and D appealed.

The court's holding and decision will be displayed here.

Legal analysis from Dean's Law Dictionary will be displayed here.