Denying Brown’s motion in part, the Court held that the 225 Action should survive summary judgment and continue to trial because the defendant-directors, the incumbent Board members of SGRP (the “Director Defendants”), asserted inequitable conduct by Brown bearing on the Board’s composition. Upholding Brown’s motion in part, the Court held that certain disputed written stockholder consents were effective on delivery under 8 Del. C. § 228(e), even though the Board had not taken action to deliver prompt notice of such written consents to SGRP’s stockholders as required pursuant to Section 228(e). This case arose from a larger dispute among SGRP, Brown, and William H. Bartels (“Bartels”), another stockholder. SGRP is a Delaware company specializing in merchandising and marketing services based out of New York and Michigan.

Dubroff v. Wren Holdings, LLC, C.A. No. 3940-VCN (Del. Ch. Aug. 20, 2010) (Noble, V.C.)August 20, 2010In this decision, the Court of Chancery declined to certify a class of stockholder plaintiffs where the sole claim was for breach of fiduciary duty arising from alleged disclosure violations made in an after-the-fact notice of corporate action by written consent pursuant to 8 Del. C. § 228(e). Specifically, the Court held that common questions of law or fact did not exist among the putative class members because the alleged inadequate disclosures were not made in connection with a request for stockholder action.

The Court next determined that the Fuchs Plaintiffs adequately pled their Section 228 disclosure claim against the Director Defendants. Because the Recapitalization was approved by written consent of NSC’s Control Group, the Director Defendants were obligated to provide prompt notice to the stockholders pursuant to 8 Del. C. § 228(e). The Court explained that the “precise parameters of the disclosure required by § 228(e) have not yet been delineated,” but the Fuchs Plaintiffs stated a claim that defendants did not meet them because defendants never informed the Fuchs Plaintiffs of who benefited from the Recapitalization and what benefits they received.

The Court explained that the DGCL is clear that stockholders vote at meetings. The Court further held that the October 28 email was not a written consent because the email requested that QLess draft the stockholder consent, and because, under 8 Del. C. § 228, electronic transmissions “still must [set] forth the action so taken by the stockholder giving the consent.” The October 28 email did not comply with those formalities because it did not set forth the action so taken; it merely expressed a request that certain action be taken.

Specifically, the amendment would make clear that the street, number, city, and postal code of the corporation’s registered office in Delaware must be included in such report and that the street, number, city, state, or foreign country of the corporation’s principal place of business also be included.Notes:[1]See 8 Del. C. § 228(c).[2]Id. (emphasis added).

This condition was satisfied on September 12, 2011. On September 8, 2011, the Company filed a proxy statement pursuant to 8 Del. C. § 228 to request that holders that had not previously consented to the merger ratify the merger, waive appraisal rights and consent to certain golden parachute payments.Plaintiff alleged that the Board breached its fiduciary duties by (i) failing to undertake an adequate sales process in violation of Revlon and (ii) filing a proxy statement that failed to disclose material information regarding the merger.