Citation. Levin v. Metro-Goldwyn-Mayer, Inc., 264 F. Supp. 797, Fed. Sec. L. Rep. (CCH) P91,891 (S.D.N.Y. Feb. 10, 1967)
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Brief Fact Summary.
Plaintiffs, Philip Levin, et al., sought an injunction against Defendants, Metro-Goldwyn-Mayer (MGM) and several of its directors, from their practices of soliciting proxies to elect Defendant’s choice of directors.
Synopsis of Rule of Law.
There is no law against the solicitation of proxies through the use of corporate resources, and if there is no showing of irreparable harm to Plaintiffs then proxy solicitation should not be prohibited.
Facts.
Plaintiffs and Defendants were fighting for control of MGM, and each was campaigning for their directors to be elected at the annual shareholder’s meeting. Defendants used resources of the company and hired outside assistance to promote their candidates, but Plaintiffs did not allege any fraud or corruption. MGM limited the proxy solicitation budget to $125,000.
Issue.
The issue is whether directors of a company can use company resources to solicit proxies for an upcoming vote for directors.
Held.
The United States District Court for the Southern District of New York held that Plaintiffs were not entitled to an injunction. There was no indication that there was fraud or corruption on behalf of Defendants. There also is no statute prohibiting the solicitation practice and the amount MGM spent was limited.
Discussion.
The court, absent a statute or regulation stating otherwise, will not restrict the directors of a company from spending the company’s money on proxy solicitation.
