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Levin v. Metro-Goldwyn-Mayer, Inc., 43 Del.Ch. 168, 221 A.2d 499

Facts

The plaintiff, a director of Metro-Goldwyn-Mayer, Inc., claimed to hold 112,510 shares and sought a restraining order against a charter amendment and stock issuance approved at a stockholders' meeting. He argued that the meeting was improperly conducted, alleging that the counting of votes was flawed and that stockholders were misled. Despite these claims, the court found no evidence of immediate and irreparable injury to the plaintiff.

Plaintiff, who is a director of the defendant Metro-Goldwyn-Mayer, Inc., claims to be the record holder of 112,510 shares of such corporation. Furthermore, according to his complaint, he and his wife own directly or indirectly a total of approximately 10% Of defendant's currently issued and outstanding common stock.

Issue

Did the plaintiff establish that the stockholders' meeting was improperly conducted or that there were irregularities in counting votes that would warrant a restraining order?

Did the plaintiff establish that the stockholders' meeting was improperly conducted or that there were irregularities in counting votes that would warrant a restraining order?

Rule

A restraining order may be granted to prevent immediate and irreparable injury, but such an order should not be issued unless the plaintiff demonstrates a probability of ultimate success and the balance of equities favors the plaintiff.

A restraining order may be entered in a proper case to preserve the status quo and to prevent ‘* * * immediate and irreparable injury, loss or damage.’ However, such a drastic order should not be granted unless earned both on the basis of the facts and the applicable law.

Analysis

The court analyzed the evidence presented by the plaintiff regarding the conduct of the stockholders' meeting and the counting of votes. It found that the plaintiff's allegations were largely unsubstantiated and that the statutory requirements for the meeting and vote were met. The court emphasized the importance of looking at the substance of the voting process rather than mere formality.

Turning to the principles to be applied in determining whether or not a necessary statutory stockholder vote has been in fact obtained, it appears that the Delaware cases concerned with stockholder voting have consistently looked to substance rather than to form.

Conclusion

The court denied the plaintiff's request for a restraining order, concluding that he failed to demonstrate a threat of immediate and irreparable injury and that the corporate amendment was validly approved.

I conclude for the reasons given above, particularly the failure to establish a threat of immediate and irreparable injury, loss or damage, that plaintiff has not established his right to a restraining order.

Who won?

Metro-Goldwyn-Mayer, Inc. prevailed because the court found that the plaintiff did not establish any irregularities in the stockholders' meeting or the voting process.

Metro-Goldwyn-Mayer, Inc. prevailed because the court found that the plaintiff did not establish any irregularities in the stockholders' meeting or the voting process.

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