Campbell v. Loew's Inc.

37 Del. Ch. 17, 136 A.2d 191 (1957)

RULE:

Permissive intervention is allowed under Del. Ch. Ct. R. 24 timeliness aside, when an applicant's
claim or defense and the main action have a question of law or fact in common. Under Del. Ch. Ct.
R. 24 the court must also consider whether intervention will unduly delay or prejudice the
adjudication of the rights of the original parties.

FACTS:

Joseph Tomlinson, a stockholder and director of Loew’s, Inc. filed a motion to intervene as a party
plaintiff in a dispute over proxy solicitation expenses in order to assert the matters contained in the
complaint filed by Ralph Campbell and to assert a claim which would direct Loew’s, Inc. to pay the
reasonable sums incurred by the director in the solicitation of proxies for the stockholders' meeting.

ISSUE:

Could the moving party intervene as a matter of right?

ANSWER:

Yes

CONCLUSION:

The Court held that the director could intervene insofar as the subject matter of the complaint was
concerned. In support, the court held that the director's claim with respect to the invalidity of the
procedure adopted to solicit proxies seeking authority to vote for his removal as a director presented
a question of law and fact in common with that claim as asserted by present plaintiff. The Court
reasoned that present Campbell's status to assert such a claim was attacked by the Loew’s, Inc..
Further, the Court did not rule upon the legal sufficiency of the subject matter of the amendment and
the adequacy of parties.

Campbell v. Loew’s, Inc. case brief

Campbell v. Loew’s, Inc. case brief summary
134 A.2d 852 (1957)

CASE SYNOPSIS
Plaintiff corporate directors sought an order enjoining defendants, corporation and rival directors,
from holding a meeting or from counting proxy votes seeking to oust plaintiffs.

CASE FACTS
Plaintiffs, corporate directors, sought to enjoin defendants (corporation and rival directors) from
holding a stockholders' meeting at which stockholders would be called upon to remove them. The
Delaware chancery court declined to enjoin the stockholders' meeting but did preclude the corporation
from counting proxy votes and from using corporate personnel and facilities to solicit proxy votes.
DISCUSSION

 In so ruling, the court reasoned that

 (a) the president of the board of directors was authorized by the bylaws to call a stockholders'
meeting for any reason;
 (b) stockholders were not restricted in when they could vote on directorships, and thus they
could replace a director at any time;
 (c) directors could be removed for good cause, and allegations made by defendants supported
the proposed removal of plaintiffs; but
 (d) plaintiffs had not been afforded sufficient opportunity to respond to the allegations in the
proxy solicitations, and thus the votes tendered by the proxies could not be counted unless and until
plaintiffs were given such an opportunity.

CONCLUSION
The injunction was denied as to the meeting itself, as the president of the board of directors was
authorized by the bylaws to call a stockholders' meeting and the bylaws permit the stockholders to
replace the directors for good cause; the injunction was granted as to proxy voting owing to the failure
to afford plaintiffs specifics about the allegations and an opportunity to be heard.