Opinion ID: 1541285
Heading Depth: 1
Heading Rank: 4

Heading: Claim for Damages

Text: As we have noted, much of this case is moot. [18] The 1995 Annual Meeting of stockholders is ancient history. The terms of the directors elected at that meeting have come and gone. So the opportunity for injunctive or section 225 relief has come and gone. There is, however, a theoretical claim for damages, which we now take up. There may be circumstances under which a proxy statement soliciting votes for the election of directors is actionable under Delaware law for material misstatements or omissions. Injunctive relief in the form of corrective disclosures and resolicitation may be appropriate if the matter is addressed in time by a court of equity. [19] It is difficult to see how damages may also be available in such a case. [20] Construing the complaint most favorably to plaintiff, we find that no cause of action for damages is stated. Plaintiff seeks to invoke a per se rule of damages, relying on the following dictum in this Court's 1993 opinion in Tri-Star: [21] In Delaware existing law and policy have evolved into a virtual per se rule of damages for breach of the fiduciary duty of disclosure. [22] Tri-Star was a stockholder class action that involved the entire fairness of a complex business combination. The Court held that the pleadings alleged sufficient individual monetary injury to stockholders resulting from the defendants' alleged manipulation of the combination so as to dilute the cash value and impinge on the voting rights of the minority's shares. [23] Disclosure violations were only one aspect of the case, and all that we address here. There, the trial court had held that proof of special damages was required for breach of the duty of disclosure and granted summary judgment because there was a failure of proof according to that standard. In reversing the trial court, the Tri-Star Court held that, under the circumstances of that case involving stockholder approval of an improperly manipulated transaction implicating cash values and voting rights, there should be some damage award. [24] The court cautioned, however, that if plaintiff sought more than nominal damages, proof (including expert testimony) would have to replace hypothetical estimates. [25] The Court in Tri-Star explained the context of the per se dictum quoted above. Citing cases involving breaches of disclosure duties where stockholders had approved economically injurious transactions, the Court recognized a discrete set of conditions in which a damage remedy for non-disclosure would be appropriate. [26] The particular facts of Tri-Star placed the case squarely within that context. Therefore, Tri-Star stands only for the narrow proposition that, where directors have breached their disclosure duties in a corporate transaction that has in turn caused impairment to the economic or voting rights of stockholders, there must at least be an award of nominal damages. [27] Tri-Star should not be read to stand for any broader proposition. The plaintiff asserts here that the Proxy Statement issued by ADM in connection with the company's 1995 Annual Stockholder Meeting failed to disclose material facts. Plaintiff's damages claim therefore rests solely on the issue of election of directors. The circumstances recognized in Tri-Star  disclosure violations and deprivation of stockholders' economic or voting rights  that would give rise to a damages remedy are absent here. [28] In claiming damages for directors' breach of the duty of disclosure in this instance, plaintiff takes out of context and would stretch too far the Tri-Star Court's dictum referred to above. [29] We now turn seriatim to the alleged disclosure violations.