264 F.Supp. 797 (S.D.N.Y. 1967)
- P and D were both shareholders of the company (MGM) and sought control through election of their respective board of directors.
- The board of directors were elected at the annual shareholder’s meeting.
- D (Metro) used company funds to hire outside consultants who would help campaign for their preferred directors.
- MGM had placed an internal limit on shareholder solicitation funds of $125,000.
- P sough an injunction for the use of these funds.
- Whether funds may be used to campaign or solicit shareholder votes for directors.
- Yes, the injunction will not be sustained.
- There is no existing statute on which to prohibit this activity; and nothing indicates that Ds were guilty of fraud or any misrepresentation.
- Moreover, it hadn’t even been proven that Ps were full harmed by the solicitation efforts.
- The Directors of the company permitted solicitation but set a limit on its expenditures. There is no rule of regulation on which the court could base an injunction. Their behavior is a valid business judgment which the court shall defer to.