Pell v. Kill

Before the events giving rise to this litigation, the eight members of the Board were aligned to varying degrees with either plaintiff Lewis C. Pell or defendant Robert C. Kill. Through a Board Reduction Plan, the Defendant Directors sought to preserve the legacy-Uroplasty directors' control over the Board and neutralize the threat of Pell's proxy contest. Although the point is contested, the court assumed for purposes of analysis that the Defendant Directors sought to preserve their control not to extract personal benefits, but rather for the selfless purpose of overseeing a thorough and deliberative process after the Annual Meeting to re-constitute the Board with independent directors that they would identify, vet, and select. The court held that, when facing an electoral contest, incumbent directors are not entitled to determine the outcome for the stockholders. Stockholders elect directors, not the other way around. Even assuming that the Defendant Directors acted for an unselfish purpose, they still acted inequitably. Therefore, the court issued a preliminary injunction enjoining the Company from implementing the portion of the Board Reduction Plan that otherwise would become effective at the Annual Meeting. View "Pell v. Kill" on Justia Law