On February 1, 2010, the U.S. District Court for the Southern District of New York issued an opinion denying a motion for a preliminary injunction, seeking to delay the Enzo Biochem, Inc. (“the Company”) shareholder meeting. A co-founder and director of Enzo Biochem filed the motion for a preliminary injunction, alleging violations of Section 14(a) of the Securities Exchange Act, and the various rules promulgated thereunder. The plaintiff alleged that the Company and certain of its officers and directors: (1) filed a proxy statement containing material misstatements of fact; (2) failed to file a preliminary proxy statement; and (3) improperly solicited shareholder votes prior to the filing of the proxy statement. The basis for the plaintiff’s allegations was that the Company failed to disclose in its proxy statement the plaintiff’s letter to the Company’s board informing them of his intent to nominate several candidates for election to the board.
The district court found that the plaintiff failed to satisfy the standard for a preliminary injunction – showing a likelihood of success on the merits – because the Company had filed a proxy supplement, disclosing that the plaintiff intended to oppose the Company’s nominated slate of directors and disclosing the location of the plaintiff’s own proxy statement. Therefore, the Company’s proxy supplement cured any potential omission from the proxy statement. With respect to the plaintiff’s second claim, the court found that the Company was not required to file a preliminary proxy statement because the plaintiff’s letter to the board did not constitute a “solicitation” of shareholders triggering a duty to file a preliminary proxy. Lastly, the court found that the plaintiff failed to show that the Company solicited shareholder votes prior to filing the proxy statement.
The court also found that the plaintiff did not show a likelihood of success on the merits of his state law claims for breach of contract, and breach of the duty of good faith and fair dealing.