Court Opinion

ID: 9401921
Source: CourtListenerOpinion
Date Created: 2023-06-14 17:04:03.045071+00
Date Added: 2024-06-11T17:19:56.205699
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BARRY STERNLICHT, DR. LEWIS GOLD,             )
ELLIOT COOPERSTONE,                           )
                                              )
                 Plaintiffs,                  )
                                              )
     v.                                       ) C.A. No. 2023-0477-PAF
                                              )
MARLOW HERNANDEZ, ANGEL                       )
MORALES, JACQUELINE GUICHELAAR,               )
ALAN MUNEY, KIM RIVERA, SOLOMON               )
TRUJILLO,                                     )
                                              )
                Defendants,                   )
                                              )
      and                                     )
                                              )
CANO HEALTH, INC.,                            )
                                              )
                Nominal Defendant.            )

                        MEMORANDUM OPINION

                         Date Submitted: June 9, 2023
                         Date Decided: June 14, 2023

John M. Seaman, April M. Ferraro, ABRAMS & BAYLISS LLP, Wilmington,
Delaware; Adrienne Ward, Lori Marks-Esterman, OLSHAN FROME WOLOSKY
LLP, New York, New York; Attorneys for Plaintiffs Dr. Lewis Gold and Elliot
Cooperstone.

John M. Seaman, April M. Ferraro, ABRAMS & BAYLISS LLP, Wilmington,
Delaware; Tariq Mundiya, Richard Li, WILLKIE FARR & GALLAGHER LLP,
New York, New York; Attorneys for Plaintiff Barry Sternlicht.
Blake Rohrbacher, Kevin M. Gallagher, Matthew W. Murphy, Nicole M. Henry,
Jordan L. Cramer, Sandy Xu, Mari Boyle, Edmond S. Kim, Morgan R. Harrison,
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Attorneys for
Defendants Marlow Hernandez, Angel Morales, Jacqueline Guichelaar, Alan
Muney, Kim Rivera, Solomon Trujillo, and Nominal Defendant Cano Health, Inc.

FIORAVANTI, Vice Chancellor
         Three former directors of Cano Health, Inc. (“Cano” or the “Company”) ask

the court to issue a preliminary injunction to prevent the Company from holding its

annual meeting of stockholders on June 15, 2023 and to enjoin enforcement of the

Company’s advance notice bylaw. The plaintiffs, who resigned en masse six weeks

after the deadline to submit director nominations and stockholder proposals, contend

that it would be inequitable to permit enforcement of the bylaw due to a radical

change in circumstances at the Company after the deadline. For the reasons that

follow, the motion is denied.

I.       BACKGROUND

         The facts are drawn from the record developed in connection with the

application for a preliminary injunction. The parties have submitted approximately

250 exhibits and deposition testimony from seven fact witnesses.1

         After depositions were complete, the plaintiffs submitted an affidavit from

plaintiff Elliot Cooperstone in support of their motion for a preliminary injunction.

The affidavit was accompanied by two audio files, which were produced the evening

before Cooperstone’s deposition.2 Defendants have moved to strike it, arguing that

1
  Exhibits are cited as “Ex. #.” Documents that do not already contain page numbers are
cited using the last three digits of their Bates number. After being identified initially,
individuals are referenced herein by their surnames without regard to formal titles such as
“Dr.” No disrespect is intended. Unless otherwise indicated, citations to the parties’ briefs
are to their preliminary injunction briefs.
2
    Dkt. 70.
plaintiffs could have adduced the information in the affidavit by examining

Cooperstone at his deposition, which would have been subject to cross-examination.

See Meyers v. Quiz-DIA LLC, 2017 WL 76997, at *18 (Del. Ch. Jan. 9, 2017); Pell

v. Kill, 135 A.3d 764, 770 (Del. Ch. 2016). In the exercise of my discretion, I afford

“little if any weight” to the Cooperstone affidavit. In re W. Nat. Corp. S’holders

Litig., 2000 WL 710192, at *19 (Del. Ch. May 22, 2000).

         What follows are the facts as they are likely to be found after trial, based on

the current record.3

              A. The Parties

         Cano is a primary care provider and population health company.                 The

Company owns and operates medical centers and delivers healthcare services

through affiliate relationships with other providers, focusing primarily on

coordinating care to members under Medicare Advantage health plans.                     The

Company is incorporated in Delaware and has its principal place of business in

Miami, Florida.       Dr. Marlow Hernandez and Richard Aguilar co-founded the

Company in 2009.4 Since its inception, Hernandez has acted as the chief executive

officer of the Company. Hernandez controls 4.75% of Cano’s voting power.5 Cano

3
 Of course, “the eventual findings of fact after trial could be different.” Pell, 135 A.3d at
770.
4
    Ex. 10.
5
    Ex. 185 at 58.
                                             2
received early investments from Angel Morales and Solomon Trujillo. Trujillo

invested in Cano in 2014 and joined its board of directors shortly before the

Company went public in June 2021.6 Jason Conger and Rick Sanchez also became

involved with Cano early in its lifecycle. While Cano remained a private company,

Hernandez, Aguilar, Morales, Trujillo, Conger, Sanchez, and other early investors

held their shares in Cano through an entity called Cano America.7

         In 2016, InTandem Capital Partners, LLC (“InTandem”), a private equity firm

specializing in healthcare, invested in Cano through its affiliate, ITC Rumba, LLC

(“ITC Rumba”).8 Following that investment, InTandem’s founder and managing

partner, Elliot Cooperstone, joined the Cano board. InTandem, through ITC Rumba,

currently holds approximately 30.3% of Cano’s total voting power.9

         Dr. Lewis Gold, a prominent anesthesiologist and healthcare entrepreneur,

joined Cano’s board in 2018. Gold currently holds approximately 1% of Cano’s

voting power.10

         On June 3, 2021, Cano went public through a de-SPAC transaction with

JAWS Acquisition Corp. (“JAWS”). Barry Sternlicht was the chairman of JAWS

6
    Ex. 5 (“Trujillo Dep.”) at 24:2–25.
7
    Ex. 6 (“Hernandez Dep.”) at 277:24–279:7.
8
    Ex. 2 (“Cooperstone Dep.”) at 28:9–29:19.
9
    Ex. 185 at 58.
10
     Ex. 189 at 35.
                                            3
prior to the merger.11        When Cano merged with JAWS, Sternlicht personally

invested $50 million in Cano and joined the Cano board of directors.12 Around this

time, Sternlicht also raised around $800 million through private placement in public

equity (“PIPE”) financing and introduced Cano to certain institutional investors.13

He currently holds approximately 4.8% of the voting power of Cano.14

         After the merger was consummated, Hernandez ascended to the position of

chairman and remained as CEO. Trujillo, Cooperstone, and Gold also continued as

directors, with Trujillo being designated as the Company’s “Lead Independent

Director.”15 Morales, Kim Rivera, Dr. Alan Muney, and Jacqueline Guichelaar

joined the board after the merger. Immediately following the merger, Cano’s stock

was trading at around $15 per share.16

         Following the merger, Hernandez, Trujillo, Morales, Rivera, Muney,

Guichelaar, Sternlicht, Gold, and Cooperstone constituted the Cano board of

directors. Gold, Guichelaar, Muney, Rivera, and Morales served on the Company’s

11
     Ex. 200.
12
     Ex. 1 (“Sternlicht Dep.”) at 193:8–12.
13
     Id. at 26:23–29:3.
14
     Ex. 189 at 28.
15
     Ex. 27 at 10.
16
   Cano Historical Data, Nasdaq, https://www.nasdaq.com/market-activity/stocks/cano/
historical (listing Cano’s closing stock price at $15.09 on June 4, 2021).
                                              4
Audit Committee, which was chaired by Morales.17 Rivera, Guichelaar, Trujillo,

and Sternlicht served on the Company’s Nominating and Corporate Governance

Committee (the “Governance Committee”), which Rivera chaired.18

           Sternlicht, Gold, and Cooperstone (the “Plaintiffs”) control 35.7% of the

voting power of Cano.19 They resigned from the board on or shortly after March 30,

2023.20       Hernandez, Trujillo, Morales, Rivera, Muney, and Guichelaar (the

“Defendants”) currently serve as Cano’s board of directors and are each named as

defendants in this case. Cano has a classified board.21 The terms of Rivera, Muney,

and Cooperstone were to expire at the 2023 annual meeting. 22 Following the

Plaintiffs’ resignations, the board reduced its size to six directors.23 Rivera and

Muney are on the board slate for the 2023 election of directors.24

17
     Ex. 27 at 16.
18
     Id.
19
     Ex. 185 at 28.
20
     Ex. 156; Ex. 157; Ex. 160.
21
     Ex. 202 at Art. VI § 4.
22
     Ex. 85 at ‘263.
23
     Cano Health, Inc., Annual Report Amendment No. 1 (Form 10-K/A) (Apr. 7, 2023).
24
     Ex. 185 at 13.
                                           5
             B. Relevant Board Policies

         Cano has a policy that no director may pledge Company securities as collateral

for a loan unless the Audit Committee first approves the pledge (the “Anti-Pledging

Policy”).25 The Company explained in its 2022 proxy statement that it viewed a

limited amount of pledging as necessary and appropriate, but as part of its risk

oversight function, required the Audit Committee to review any share pledges to

assess whether the pledging would pose an undue risk to the Company.26 According

to the Company’s 2023 proxy:            “As of December 31, 2022, there were no

outstanding pledges for our NEOs and directors.”27

         The Audit Committee is also responsible for reviewing all related person

transactions, which the Company defines as “any transaction in which the Company

is a participant and a Related Person[, including a director or executive officer of the

Company,] has a direct or indirect interest.”28

25
     Ex. 13; Ex. 14.
26
     Ex. 27 at 35.
27
     Ex. 185 at 34.
28
   Ex. 12 (the “Related Party Transaction Policy”) at App’x A. The Company also has a
conflict of interest policy that prevents directors, officers, and employees from engaging
in activities that could impair, influence, or interfere with the performance of their duties
to the Company or their ability to act in the Company’s best interest. See Ex. 13 at 3 (the
“Conflict of Interest Policy”).
                                             6
               C. Hernandez Leverages His Cano Stock

         On August 25, 2021, shortly after the de-SPAC merger, Hernandez pledged

22,034,622 of his shares of Cano’s Class B common stock to secure a loan from

Citibank, which he used to purchase Cano stock on margin.29 On September 27,

2021, Hernandez publicly disclosed this loan in a Schedule 13D filed with the United

States Securities and Exchange Commission (“SEC”).30 Conger, Sanchez, Aguilar,

and Morales each opened a margin account with Citibank around the same period.31

At this time, Conger served as Cano’s senior vice president of business development,

Aguilar served as Cano’s chief clinical officer, and Morales sat on Cano’s board of

directors.

         By late 2021, Cano’s stock traded around $9 per share, about 40% below its

post-merger trading price.32 Hernandez began to face margin calls and explored

possible sources of funding.33 Among those approached was Robert Camerlinck,

29
 Ex. 17 at 6–7; id. at Ex. D. Hernandez pledged these shares through a holding company,
Hernandez Borrower Holdings, LLC.
30
     Ex. 17.
31
     Ex. 21 § 5.1(b).
32
   Cano Historical Data, Nasdaq, https://www.nasdaq.com/market-activity/stocks/cano/
historical.
33
     Hernandez Dep. 185:16–186:23.
                                          7
the president of Cano’s wholly owned subsidiary Healthy Partners, Inc., which Cano

had acquired in July 2020.34

           At a January 26, 2022 board meeting, the Audit Committee shared

information on an equity earnout payment to Camerlinck in lieu of a cash payment.35

At this meeting, Hernandez disclosed that he was considering a loan from

Camerlinck. According to the minutes of that meeting: “The Board had no

objections to the equity in lieu of cash payment, the disclosure of a potential loan, or

to the Audit Committee report addressing [pledging], lock up agreements, and

disclosures.”36

           In January 2022, Hernandez and his wife, Stephanie Hernandez, borrowed

$10 million from Ventura De Paz (the “De Paz Loan”).37 The loan is memorialized

in a January 28, 2022 promissory note.38 The De Paz Loan provided for a one-year

term, maturing on January 28, 2023.39 Six months earlier, Cano had purchased De

Paz’s company, Doctor’s Medical Center, LLC, for $300 million. 40 Hernandez did

34
  Id. at 211:13–212:7; see Cano Health, Inc., Annual Report (Form 10-K) (Mar. 14, 2022)
(“2021 10-K”) at 157 (disclosing the acquisition of all assets of Healthy Partners, Inc.).
35
     Ex. 19 at 4.
36
     Id.
37
     Ex. 20.
38
     Id.
39
     Id. § 1.1.
40
     Ex. 16 at 3.
                                            8
not disclose the De Paz Loan at the January 26 board meeting or any other board

meeting in 2022.

           On February 28, 2022, Hernandez executed a promissory note and loan

agreement providing for a $30 million loan from Camerlinck (the “Camerlinck

Loan”).41 Hernandez secured the loan with stock that his wife owned in Dental

Excellence Partners, LLP (“Dental Excellence Partners”).42 At that time, Dental

Excellence Partners was a contractor of Cano. Aguilar, Conger, and Sanchez

guaranteed the Camerlinck Loan.43 The terms of the Camerlinck Loan required

Hernandez to use the loan proceeds to repay part of his debt to Citibank and to make

subsequent loans to Aguilar, Conger, and Sanchez to repay their margin loans from

Citibank.44 The loan had a maturity date of February 27, 2023.45

           In April 2022, Onsite Dental purchased Dental Excellence Partners.46 At the

same time, Cano entered into a strategic partnership with Onsite Dental.47 Stephanie

Hernandez received cash and stock in Onsite Dental in the sale.48

41
     Ex. 21.
42
     Hernandez Dep. 206:25–207:17.
43
     Ex. 22; Ex. 23; Ex. 24.
44
     Ex. 21 § 5.1(b).
45
     Id. § 1.1.
46
     Ex. 28.
47
     Id.
48
     Ex. 204.
                                            9
           At a July 21, 2022 board meeting, Hernandez announced that the Company

had created the positions of chief operating officer and chief administrative officer

and planned to seek the board’s approval to appoint Camerlinck and Amy Charley

to those positions, respectively.49 On July 30, 2022, the board approved those

appointments.50 On August 5, 2022, Cano filed a form 8-K, signed by Hernandez,

announcing the appointment of Camerlinck as chief operating officer.51           The

disclosure made no mention of the Camerlinck Loan.52 Cano’s securities counsel,

Goodwin Procter LLP (“Goodwin”), had not been made aware of the loan when

preparing the 8-K.53

           On August 9, 2022, Cano’s general counsel, chief compliance officer, and

corporate secretary, David Armstrong, contacted Goodwin regarding the

Camerlinck Loan.54 Armstrong indicated that Hernandez was in default on the first

$10 million installment and would likely default on the impending second $10

million installment.55 Counsel at Goodwin later recalled these discussions, noting:

           I mentioned to [Armstrong] that the Form 8-K requires companies to
           disclose any arrangements or understandings between the individual

49
     Ex. 32.
50
     Ex. 33.
51
     Ex. 34.
52
     Id.
53
     Ex. 77 at ‘460–61.
54
     Id. at ‘460.
55
     Id. at ‘461.
                                          10
           appointed (i.e., in this case, [Camerlinck]) or any other person pursuant
           to which the individual was appointed as COO. I queried whether
           [Camerlinck] was appointed as COO by [Hernandez] as a result of the
           loan. A separate question came up as to whether the loan should be
           disclosed in a stand-alone Form 8-K or the upcoming Form 10-Q. Per
           Item 404 of Regulation S-K, we got comfortable that the loan did not
           have to be disclosed because it was a private loan between two parties
           —and the company was not a party to the loan.56

Goodwin “suggested follow up to ensure the Board was informed.”57 Armstrong

discussed the loan with Hernandez, who said that he had informed certain directors

of the loan, including Morales, chair of the Audit Committee.58 Armstrong notified

Morales and Rivera, chair of the Governance Committee, of the Camerlinck Loan.59

At Morales’s request, Armstrong posted a memorandum about the loan to the Audit

Committee on the Company’s online portal.60 Armstrong informed Weil, Gotshal

& Manges LLP (“Weil”), counsel to the board, about the Camerlinck Loan and

provided Weil with a memorandum discussing the loan.61

           On August 27, 2022, Rivera convened a special confidential meeting of all

committee chairs to discuss the Camerlinck Loan.62 Michael Aiello of Weil joined

56
     Id.
57
     Ex. 79 at 1.
58
     Ex. 36; Ex. 79 at 1.
59
     Ex. 37; Ex. 62; Ex. 79 at 2.
60
     Ex. 79 at 2.
61
   Id. Armstrong also provided Weil with the loan documents and the memorandum
provided to the Audit Committee.
62
     Ex. 79 at 2.
                                              11
as board counsel, and Hernandez, Lopez, Conger, Armstrong, and other Cano legal

staff also attended.63 According to a March 11, 2023 timeline of events created by

Armstrong: “Following this special meeting the Directors decided to do nothing

about the Camerlinck loan.”64 Formal minutes were not taken at this meeting. Gold,

Sternlicht, and Cooperstone, were not informed of the issues discussed at that time.

           Nevertheless, Cooperstone was generally aware that Hernandez had borrowed

money from Camerlinck in mid-summer 2022, although he did not then know the

details of that loan.65 Gold claims not to have been aware of the Camerlinck Loan

at that time, even though he was a member of the Audit Committee, to which

Armstrong posted a memo on the subject in August 2022.66

              D. Plaintiffs Push for a Sale

           As the Cano stock lost its post-merger value, Plaintiffs began pushing the

Company to sell. In November 2022, Sternlicht told the board that the Company

must announce that it is for sale and that any other course of action would be

63
     Id.
64
     Ex. 120 at ‘796.
65
     Cooperstone Dep. 87:8–15.
66
     Ex. 3 (“Gold Dep.”) at 96:4–11; Ex. 36.
                                               12
negligent.67 He proclaimed that Cano was on the verge of insolvency and that the

current strategy of relying on revolving debt was infeasible.68

           During this period, Cano was in exclusive talks with CVS to explore a

potential acquisition of the Company.69 When it was publicly disclosed that CVS

walked away from a deal in October 2022, Cano’s stock price fell dramatically. The

Company’s stock, which had begun October at around $9 per share, was trading for

less than $2 by the end of November.70 In a November 2022 email exchange,

Sternlicht repeated an allegation that Hernandez had told CVS and Humana that the

Company was not for sale.71 Around the same time, Morales complained that

Sternlicht had held an unauthorized meeting with Humana and his bankers to discuss

a sale and possible price, even though Cano had been in exclusive talks with CVS.72

Humana has a right of first refusal on any sale of the Company under an Amended

and Restated Right of First Refusal Agreement executed in connection with Cano’s

de-SPAC merger.73

67
     Ex. 40 at 1.
68
     Id.
69
  Id. at 2. The CVS deal fell through at the end of October 2022. Cooperstone Dep. 274:8–
10.
70
   Cano Historical Data, Nasdaq, https://www.nasdaq.com/market-activity/stocks/cano/
historical.
71
     Ex. 40 at 3.
72
     Id. at 2.
73
     2021 10-K at 37.
                                           13
               E. Whistleblowers

          Sternlicht had emerged as Hernandez’s most vocal critic.74 In December

2022, Cano’s senior vice president of corporate finance, Amy Wilson, complained

to Sternlicht regarding Hernandez’s activity, including his loans, tax payments, and

other transactions.75 The board’s counsel at Weil interviewed Wilson on December

22, 2022. Wilson expressed her concern that Hernandez had taken out loans that she

regarded as related party transactions and that no one other than Armstrong,

including Cano’s accounting team and Goodwin, had the opportunity to review.76

          On December 30, 2022, the board commissioned a “360 Report,” requesting

feedback from the Company’s senior executives on Hernandez’s performance.77

Muney, chair of the Compensation Committee, sent the report to Trujillo and Rivera

on January 7, 2023.78 The report revealed that the majority of Cano’s executives

disagreed that Hernandez exemplified values of high ethical awareness, integrity,

and fairness.79 It also included complaints that Hernandez had dragged the Company

into distracting and conflicted transactions, lacked professionalism, and has an

74
     See, e.g., Ex. 40 at 9–11.
75
     Id. at 10.
76
     Ex. 41.
77
     Ex. 43.
78
     Ex. 194.
79
     Ex. 43 at 6.
                                         14
inherent conflict of interest regarding his personal finances.80 The report was not

shared with the full board until March 21, 2023.81

           On January 11, 2023, Wilson informed Sternlicht that Camerlinck had filed

UCC liens against Hernandez, Conger, Aguilar, and Sanchez.82 Sternlicht emailed

Aiello, Rivera, and Cooperstone regarding this allegation.83 Aiello inquired as to the

source of the allegation but acknowledged that he was “sure it’s accurate.”84 On

January 20, 2023, Sternlicht emailed Aiello, Muney, and Rivera about the UCC

filing, reporting that Hernandez, Aguilar, Conger, and Sanchez had granted a first

priority lien to Camerlinck in the “Pledged Shares.”85

           Sternlicht also initiated an email chain with Aiello, Gold, Cooperstone, and

Muney, inquiring as to the next steps in investigating these loans.86 Sternlicht

expressed his frustration to Aiello, speculating that Hernandez and his fellow

indebted executives may be inflating projections and conducting transactions solely

to improve their debt position.87         Sternlicht said, “If that doesn’t border on

80
     Id. at 7.
81
     Ex. 148.
82
     Ex. 46.
83
     Ex. 49.
84
     Id.
85
     Ex. 51; Ex. 53.
86
     Ex. 55.
87
     Id.
                                            15
dismissal... I mean what is so hard? Why aren’t you reading the riot act to these

directors and this Board? I don’t get it.”88 Gold tagged on, “I agree with your

assessment- our fiduciary duty is to find out exactly who has margin loans and how

much.”89

           On January 21, 2023, Hernandez emailed Weil, revealing that in addition to

the Camerlinck Loan, he had received three other loans totaling $16 million from

individuals who had been bought out in Cano acquisitions.90 This included the $10

million De Paz Loan as well as a loan from Margarita Quevedo for $4 million and

from Joel Lago for $2 million.91 Cano had acquired Quevedo’s family business in

June 2021 for $609.7 million and had acquired Lago’s company in 2017.92

           Brian Koppy, Cano’s chief financial officer, and Mark Novell, Cano’s chief

accounting officer, became concerned about the non-disclosure of Hernandez’s

loans.       Koppy sent a four-page email to Sternlicht, Gold, and Cooperstone,

explaining that the finance team needed information and guidance as to whether the

loans needed to be disclosed in the 10-K.93 Gold responded to Koppy: “We are

88
     Id. at ‘461 (cleaned up).
89
     Id.
90
     Ex. 57 at ‘188–90.
91
     Id.
92
     Ex. 8 at 2–3; 2021 10-K at Ex. 2.3.
93
     Ex. 61.
                                           16
aware of this and [are] discussing with outside counsel / obviously we will do the

right thing once counsel advises – I appreciate you sharing and bringing this to our

attention (we have been working on this).”94 Plaintiffs forwarded Koppy’s email to

Aiello and Rivera.95 Sternlicht had seen enough. In an email to Rivera and Aiello,

copying Cooperstone, Gold, and Muney, Sternlicht wrote, in pertinent part:

           This is as bright a RED FLASHING LIGHT as you can have and the
           Board should be shot for not doing something right now. I think we
           need to have a Board meeting and get this information THIS WEEK.
           No more… manana.96
Rivera responded to the group that “there is no reason the full board (other than

[Morales]) potentially shouldn’t have full visibility into [Koppy’s] note.”97 Rivera

then wrote separately to Aiello:

           I think we may have hit a tipping point with [Koppy] (and other mgmt)
           openly going to three board members only, multiple directors calling
           for [Sternlicht] to be investigated/removed, and [Sternlicht] threatening
           to sue us. Not to mention the implication that [Armstrong] is hiding the
           ball. I am concerned that we cannot continue our current approach.98
Rivera also texted Trujillo: “[W]e have a new issue with [Koppy] now raising issues

formally with Lew, Barry and Elliott.”99 After a call with Cooperstone, Gold,

94
     Ex. 59 at ‘648 (cleaned up).
95
     Id.
96
     Id. (cleaned up).
 Ex. 61 at ‘913. Morales was identified in Koppy’s email as a recipient of funds from the
97

Camerlinck Loan. Id. at ‘917.
98
     Id. at ‘913.
99
     Ex. 58.
                                              17
Sternlicht, and counsel from Weil, Rivera wrote separately to Weil, “It’s important

that we not fall into a pattern of updating subsets of the board. Please help me ensure

that, unless there is a specific reason, we provide updates to the full board.”100

            Also in January 2023, Amy Charley, the chief administrative officer of Cano,

raised concerns to Weil regarding payments from Cano to Cano Builders USA Inc.

(“Cano Builders”), an entity owned by Hernandez’s father.101 Charley believed that

there was a lack of clarity surrounding the Company’s relationship with Cano

Builders.102

            As Plaintiffs began receiving complaints about Hernandez from management,

the Company was also in discussions with Humana to acquire more financing. 103

Cano had signed a convertible note agreement and certain collaboration agreements

with Humana in 2020.104 The Plaintiffs hoped to finalize a transaction with Humana

before addressing the concerns about Hernandez.105

100
      Ex. 65.
101
      Ex. 70.
102
      Id.
103
   Ex. 213 (“[D]uring the last Board meeting we instructed management, the special Board
Committee (Angel & Lew), and our advisors to pursue the Humana transaction and any
viable alternative avenue.”).
104
      Ex. 35.
105
     Ex. 60 (replying to Koppy’s email detailing concerns about Hernandez with the
statement that “my hope is that we get Hum deal done next week and immediately address
this issue”); see also Ex. 63 (“Do you mean where do we stand on closing Humana? That
is all Barry, Elliott, Lew and Amy (newest board member) care about.” (cleaned up)).
                                             18
             F. Preparing the 2022 10-K

          On February 2, 2023, Cano’s chief accounting officer prepared an Audit

Committee deck that contained a proposed draft of a related party disclosure for the

10-K relating to Hernandez’s loans.106 Meeting resistance from Morales, Novell

reached out to Goodwin, which advised him that “given the materiality of the loans

and the perceived conflict of interest,” there should be “some disclosure in the

upcoming 10-K – whether it be in the related party transaction and/or risk factors –

about these loans as the information could be arguably material to an investor.”107

Weil instructed Cano’s general counsel to pull the slide from the deck for now,

noting that it could be revisited once Weil had reported its findings to the board.108

          Meanwhile, Sternlicht’s distrust of Weil and frustration with the pace of its

investigation was growing.109 On February 1, 2023, Sternlicht fumed to Weil,

Cooperstone, and Gold, “This company has $20m of unrestricted cash and $20m left

on its credit line. They are struggling to do a cash flow forecast. Rome isn’t just

burning… it’s in flames… and we wait and wait and wait. If this doesn’t warrant an

106
      Ex. 77 at ‘462.
107
      Id. at ‘461.
108
      Id. at ‘459.
109
   See Ex. 107 (noting Sternlicht’s “serious reservations about Weil Gotshal advice and
conflicts of interest which [he had] repeatedly raised”).
                                            19
off cycle Board update... what does?”110 Sternlicht also disclosed that he had been

receiving reports from “two moles” in management.111

          On February 4, 2023, Weil indicated that the board would meet in advance of

its regularly scheduled board meeting to discuss the loans and related matters and

would discuss the disclosure of the loans at that juncture.112 Cooperstone emailed

Aiello at Weil, indicating that he believed multiple members of management had

lost faith in Hernandez and that the board should decide after Weil’s report whether

to remove the CEO.113 The board convened a call on Sunday, February 5, 2023, to

discuss the four personal loans, as well as loans from InTandem’s affiliate to cover

the taxes of former Cano America members as a result of the de-SPAC transaction.114

Weil delivered its findings and preliminary recommendations, concluding that the

loans violated the Company’s Conflict of Interest Policy as they could raise a specter

of impropriety or favorable treatment given their size and the business relationship

between Hernandez and the lender.115 However, Weil determined that the loans did

not appear to violate the Company’s Related Party Transaction or Anti-Pledging

110
      Ex. 73 at ‘312–13 (cleaned up).
111
      Id. at ‘312.
112
      Ex. 77 at ‘456.
113
      Ex. 78.
114
      Ex. 220.
115
      Id.; Ex. 219.
                                           20
Policy.116        Weil recommended that the board address the ramifications of

Hernandez’s failure to follow the conflicts policy and consider engaging an outside

consultant for training on procedures.117 It also advised that the Company should

consider strengthening its compliance policies, particularly surrounding potential

conflicts of interest, transparency, and personal loans.118

            The board held its regularly scheduled board meeting on February 7 and

meetings of the standing committees on February 8, which included further

conversation about Weil’s investigation.119 In the Audit Committee presentation,

Weil advised that “this matter is not ripe for determination at this time,” referring to

whether the loans needed to be disclosed in the 10-K.120 Weil indicated that it would

issue its “findings and recommendations upon completion of their review.”121

            The Governance Committee met on February 8 to set the date for the annual

meeting and determine the board slate.122 A slide deck prepared in advance of the

meeting, and apparently posted to the online board portal, indicated that the annual

meeting would be held on June 28 and contained a draft resolution nominating

116
      Ex. 219 at 6.
117
      Id. at 7.
118
      Id.
119
      Ex. 84; Ex. 85.
120
      Ex. 7 (“Rivera Dep.”) at 163:10–21.
121
      Ex. 84 at 8.
122
      Ex. 89.
                                            21
Cooperstone, Rivera, and Muney as the Class II directors.123 After reviewing those

materials, Morales texted Rivera, Hernandez, and Trujillo: “Let’s try to talk today

among the four of us. I just read the Nom & Gov recommendations related to the

Proxy. If we are proposing [Cooperstone] to the Board for another three years, I will

not serve.”124 On February 8, 2023, the Governance Committee resolved to set June

28, 2023 as the 2023 annual meeting date.125 The committee deferred consideration

of the nominees for the three seats left open by the expiry of Rivera, Muney, and

Cooperstone’s terms.126 Rivera indicated that the decision on board nominees was

deferred because Cooperstone had previously indicated a desire to be bought out,

and Rivera considered there to be a possibility of Cooperstone being bought out and

concurrently stepping down from the board.127

            In a February 14, 2023 email from Rivera to Morales, Muney, and Trujillo,

Rivera said that they need to align on a slate of directors and approach to board

structure.128 Rivera suggested meeting that weekend.129 Morales responded that he

was “in favor of nominating [Rivera] and [Muney], but not [Cooperstone], for re-

123
      Ex. 85 at ‘267.
124
      Ex. 86.
125
      Ex. 89 at ‘289.
126
      Id.
127
      Rivera Dep. at 66:6–24.
128
      Ex. 94 at ‘081–82.
129
      Id. at ‘082.
                                            22
election. [Sternlicht] has also been clear about his desire to resign from the Board,

and we should accept his resignation.”130 Muney responded that he agreed with

Morales, but clarified that Sternlicht had indicated that he would resign only if

Hernandez was not removed.131 Muney added that he “assumed” that Rivera meant

that the Company would keep Hernandez on as CEO, but require more monitoring,

and potentially split his roles as CEO and chairman or require him to unwind his

current conflicts.132 Rivera did not indicate whether she favored renominating

Cooperstone.133         Trujillo replied that they should wait on making any

recommendations until they met together.134

            As the March 1 filing date for the 10-K drew ever nearer, Novell and Koppy

continued to press for a legal opinion concerning the disclosure of Hernandez’s

transactions.135 Weil refused to deliver a written opinion.136 After repeated pushing

from Novell, on February 18, Weil sent a one-sentence email confirming its view,

based on its investigation, “that it is reasonable to conclude that no disclosure is

130
      Id. at ‘081.
131
      Id.
132
      Id.
133
      Id. at ‘080.
134
      Id.
135
      Ex. 95.
136
      Ex. 96.
                                            23
required regarding” the personal loans received by Hernandez.137 At an Audit

Committee meeting on February 23, Weil reported on its investigation, affirming

that disclosure was not required.138 Ernst and Young (“EY”), the Company’s

independent auditor, reached a similar conclusion.139

            On March 2, 2023, Sternlicht emailed the board.140 Calling the previous day’s

earning call “a joke,” Sternlicht stated that he would “attend this one last Board

meeting, and then if we don’t make real and substantial changes, including removing

[Hernandez] as CEO . . . I will resign. I will also resign w[ith] a full public statement

of why I was resigning.”141

            In reaction to Sternlicht’s email, Morales, Rivera, Muney, and Trujillo

discussed potentially retaining separate counsel from Vinson & Elkins LLP

(“V&E”).142 Morales said, “I’ve been arguing to deal with him for months so not a

moment too soon as far as I’m concerned.”143 At this stage, Rivera noted that

“[Sternlicht’s] threats started to escalate, his threats, the intensity, the frequency, the

nature, you know, in both board meetings, in email, in texts. And so there was a real

137
      Ex. 97.
138
      Ex. 103.
139
      Id.
140
      Ex. 107 at ‘656.
141
      Id.
142
      Ex. 106.
143
      Id.
                                              24
concern about whether or not we needed to take steps to make sure that the board

and the company were doing the right things to protect themselves.”144

            In a March 7, 2023 board meeting, Weil provide a second oral report regarding

its investigation of the Hernandez loans.145 Aiello confirmed Weil’s initial finding

that the Company’s Conflict of Interest Policy was not followed on certain occasions

by certain board members and executives of the Company, but as previously

discussed with the board, there was no evidence to suggest that there was any

violation of the Company’s Related Party Transaction Policy or the Company’s

Anti-Pledging Policy.146 As Weil had previously reported, the violations of the

Conflict of Interest Policy included Hernandez’s loans and the loans that

Cooperstone’s ITC Rumba had made to certain directors in April 2022.147 Weil also

“advised the Board that in the course of our inquiry, we were made aware of certain

insider-related/affiliate transactions – separate from the loans – that should be

reviewed and that, given what we had heard, the Board should make confirm [sic]

that there are no other similar transactions and that, as part of the remediation, that

be appropriately addressed.”148

144
      Rivera Dep. 195:20–196:4.
145
      Ex. 114.
146
      Id.
147
      Id.; Ex. 82.
148
      Ex. 135 at ‘150.
                                              25
         EY required the Audit Committee and Trujillo to sign a letter representing:

“Based on the findings of the Investigation by Legal Counsel, the Company’s Board

of Directors and management are considering, timely and appropriate remedial

action as considered necessary.”149 The board discussed potential remediation

measures, including changes to management, including the CEO, CFO, and general

counsel, the possibility of hiring an outside consultant, and changes to their standing

policies and governance structure.150 At that stage, the board ruled out termination

of the CFO and CEO, but continued to discuss taking other action, such as revising

their compliance policies and taking remedial action as to Hernandez, possibly by

separating his roles as chairman and CEO.151

             G. Relations Break Down Between Board Factions

         With Gold, Sternlicht, and Cooperstone constantly pressing for asset sales and

Hernandez’s removal, the board continued to fracture.152 On March 8, 2023,

149
      Ex. 196.
150
      Rivera Dep. 150:12–152:3.
151
      Id.; Ex. 114.
152
   See, e.g., Ex. 108 (“It goes without saying that I strongly favor selling ALL non florida
assets if we can get anywhere near the 100-150m the bankers have said they are worth.”);
Ex. 115 (listing a discussion or vote “on whether Cano can and should continue as an
independent public company and whether we should plan to sell Cano Holdco within X
days (once non-core assets have been sold) and should prepare for that process now and be
prepared to announce the process once ready.”); Ex. 107 (“I will attend this one last Board
meeting, and then if we don’t make real and substantial changes, including removing
Marlowe as CEO and Jason Conger as his attaché in crime, I will resign. I will also resign
w[ith] a full public statement of why I was resigning.”).
                                            26
Sternlicht sent Cooperstone and Gold a startled message, alleging that he had learned

from his “mole” that the 10-K will not be filed on time and that management

intended to “dump tens of millions of stock the second the window opens.”153 Gold

replied with his plan, one that Plaintiffs had heard from Gold before: fire Hernandez,

Conger, Aguilar, and Pedro Cordero, form a new management team with those loyal

to Plaintiffs, including Charley, Wilson, and Koppy, and commence an “immediate

national search for [a] major healthcare CEO.”154 Cooperstone replied: “Whomever

we hire, it should be a short term gig to sell the company.”155

            The following day, Sternlicht sent Hernandez a three-page email titled “The

future of Cano,” expressing his criticisms of Hernandez’s performance, the loss of

Cano’s stock value, Hernandez’s related party transactions, and his belief that

Hernandez was treating Cano “as your personal piggy bank, almost assuming no one

would notice.”156 Sternlicht reiterated his threat to resign as a director and to issue

a public statement explaining his reasons for doing so if Hernandez would not step

down as CEO.157 Trujillo, Cooperstone, and Rivera were copied on the message.158

153
      Ex. 225.
154
      Id.
155
      Id.
156
      Ex. 124.
157
      Id.
158
      Id.
                                             27
On March 14, 2023, Sternlicht forwarded the message to Morales, Muney, Aiello,

Guichelaar, and Gold, referring to the Company as a “cesspool.”159 Sternlicht

informed the recipients that, with the help of counsel, he had prepared a public

announcement regarding his departure from the board. Later that day, V&E sent

drafts of board resolutions and a special committee charter to Rivera, Trujillo,

Muney, and Morales.160

            The board met on March 17, 2023. At this meeting, the Defendants proposed

and resolved, over the objection of Sternlicht, Cooperstone, and Gold, that the board

create a special committee consisting of Rivera, Trujillo, Morales, Muney and

Guichelaar “in response to Barry Sternlicht’s plan to publicly disclose his critiques

of the Company” (the “Special Committee”).161 The Special Committee’s charter

authorized it to retain advisers, to respond on the Company’s behalf to any public

statements made by Sternlicht, to make decisions related to communications

between the Company and its stockholders, to negotiate and make recommendations

to the board regarding settlements with stockholders “notwithstanding any such

stockholder’s designation as a member of the Board,” and “all such other actions

159
      Id.
160
      Ex. 126 at 1–2.
161
      Ex. 127 at 1.
                                            28
that the Special Committee may determine are necessary or advisable in connection

with the Purpose of the Committee.”162

            The full board met on March 20, 2023.163 Gold raised an issue with Cano’s

payments to Cano Builders, a company owned by Hernandez’s father, Jose

Hernandez.164 He also alleged that Jose Hernandez received compensation for

marketing services provided through entities named “Imago” and “Immersion,”

which Hernandez denied.165 The board also discussed the Company’s relationship

with Onsite Dental, a company owned in part by Hernandez’s wife.166 The board

moved on to discussing potential asset sales, including the possible divestiture of

Medicaid businesses and non-core assets.167             Sternlicht pointed out that the

Company’s stock was trading below a dollar per share, urging the Company to

announce a sale of assets.168 Hernandez explained that the Company planned to seek

approval of a reverse stock split to address the low stock price.169

162
      Id.
163
      Ex. 131. Guichelaar was not present at this meeting.
164
      Id. at ‘040.
165
      Id. at ‘041.
166
      Id.
167
      Id.
168
      Id.
169
      Id. at ‘042.
                                             29
            On March 21, Gold sent an email to the board relaying what he knew about

potential related party transactions involving Hernandez’s family members.170 Gold

alleged that Hernandez’s father, Jose Hernandez, owned Cano Builders, a company

that Cano paid over $7.8 million in fees the previous year.171 Gold asserted that the

Company had two companies in its system named “Immersion,” one owned by

Hernandez’ father and the other owned by Elizabeth Morales.172 Imago, another

marketing company associated with Hernandez’s father, was paid $1.35 million for

marketing.173 Gold alleged that Hernandez’s father also ran “Cano sports[,] Clav[e]

Guajira, and Viva la vida” and had requested fees from Cano through those

entities.174 Muney replied to Gold, saying that he had just reviewed those allegations

with Hernandez, and explained Hernandez’s view that the allegations were probably

from Charley and not based on fact.175 He also relayed that “[Hernandez] is unaware

of any company named Immersion.”176

            In an email to the Special Committee and its advisers, Rivera wrote that she

wanted to “strongly discourage you from engaging in any further back and forth with

170
      Ex. 135.
171
      Id. at ‘152.
172
      Id. Gold suggested that Elizabeth Morales may have some relation to Angel Morales.
173
      Id. at ‘153.
174
      Id.
175
      Id. at ‘151–52.
176
      Id.
                                             30
Lew or any other board member. We don’t know all the facts. It’s dangerous to

make statements that aren’t underpinned by objective investigation and we should

not be parroting Marlow’s defenses.”177 Also on March 21, Muney finally circulated

the 360 Report to the full board.178

            In the meantime, Weil formulated a plan to focus its investigation on three

areas: (1) transactions between Cano and Hernandez’s father relating to various

marketing vehicles; (2) transactions between Cano and Hernandez’s father relating

to his general contracting company, Cano Builders; and (3) other related party

transactions.179 Weil planned to provide an oral summary of its findings regarding

the first topic on or around March 29–30, with an interim status update on the two

other topics at the same juncture.180

            The full board met on March 30, 2023.181 At the outset of the nearly two-hour

meeting, Trujillo announced there were two purposes for the meeting: for Weil to

present its findings regarding Hernandez’s family’s related party transactions and

for the Special Committee to present recommendations for remediation.182 Weil

177
      Ex. 132.
178
      Ex. 148.
179
      Ex. 142.
180
      Id.
181
      Ex. 158.
182
      Id. at 1.
                                              31
informed the board that there is no evidence to support a conclusion that Jose

Hernandez had a stake in Imago, that it cannot say with certainty that Jose Hernandez

has a stake in Immersion and “remain seriously concerned” regarding that business,

and that it does not believe that Hernandez “made any representations regarding his

father in statements to the Board.”183 Weil also noted that “Jose’s involvement with

Imago and Immersion is troubling, creates appearance of conflict of interest or issues

with related party transactions, and should have been addressed earlier.”184

            The board next turned to the Special Committee’s recommendations. After

questions were raised about the committee’s composition and mandate, Gold

questioned why the Special Committee prepared its recommendations before

receiving Weil’s report.185 Muney replied that “the recommendations would be the

same no matter what the outcome of the investigation is/was.”186 The Special

Committee then presented its four recommendations:            (1) that Hernandez be

removed as chairman of the board, but remain a director; (2) that the Company hire

a new general counsel, chief financial officer, and add an investor relations role; (3)

that the Company create a probationary period for Hernandez to improve Company

183
      Id. at 4.
184
      Id. at 1.
185
      Id. at 5.
186
      Id.
                                           32
performance; and (4) that Hernandez work with an executive coach.187                   Weil

clarified that it had not reviewed the Special Committee’s recommendations in

advance, which was “highly unusual.”188 Aiello said that “Weil may need to

consider whether we can go forward with the representation and whether we can

effectively advise the Board given the circumstances.”189

            During the meeting, Trujillo pushed the board to take a vote, and the Plaintiffs

asked Weil if the board could vote without the full scope of information.190

Ultimately, the board voted. Gold voted no and announced that he would formally

resign from the board. Sternlicht voted no and stated that he would consider

resigning from the board. Cooperstone abstained from the vote.191                 Morales,

Trujillo, Guichelaar, Muney, and Rivera all voted in favor of the Special

Committee’s recommendations.192              In the days that followed, Sternlicht and

187
      Id. at 6.
188
      Id. at 7.
189
      Id.
190
   Plaintiffs contend that Weil’s investigation was terminated at the March 30, 2023
meeting. In late April, Weil finalized a new work plan with the Cano board that focused
on investigating the related party transactions between Cano and Hernandez’s family
members. Ex. 168; Ex. 242. Plaintiffs argue that the “re-start” of the investigation on
April 24, 2023 was due only to Plaintiffs’ noisy resignations. Pls.’ Reply Br. 17 n.8.
191
      Ex. 158 at 7.
192
      Id.
                                               33
Cooperstone also resigned from the Cano board.193 The coordinated resignations

had been part of a plan that had been in the works for weeks.

             H. Plaintiffs’ Scheme
          As the foregoing events played out through March, the Plaintiffs were

 strategizing to convince the board to sell the Company or to buy out their stock.

 Sternlicht and Cooperstone in particular had been pushing for a sale since at least

 November and were frustrated with the opposition that they received.194 They

 viewed Hernandez as the biggest obstacle, believing he had told CVS and Humana

 that the Company was not for sale.195

           On March 11, 2023, Cooperstone emailed Sternlicht and Gold his

 “suggestion for how to proceed with the threat of a noisy resignation to secure the

 board votes we need.”196 First, they would demand that the board launch the

 Company into an auction and remove Hernandez as CEO. If asking nicely failed

 to convince the holdouts, Cooperstone would threaten to resign. Cooperstone

 theorized that the threat of a noisy resignation coupled with the prospect of civil

 liability and risks to their personal reputations would force the other directors to

193
      Ex. 156; Ex. 157; Ex. 160.
194
      Ex. 40 at 1; id. at 3; Ex. 115.
195
      Ex. 40 at 3.
196
      Ex. 227.
                                         34
 come around.197 If the board still opposed a short-term sale of the Company,

 Plaintiffs would either launch a proxy contest, coupled with litigation or threat

 thereof, or sell their shares to a third-party who could launch a future proxy

 contest.198 By March 17, 2023, Plaintiffs had engaged counsel and were discussing

 the logistics of a proxy contest.199 Despite their apparent motivation to nominate a

 competing slate, however, they made a calculated decision not to act promptly.

 Cooperstone told his compatriots: “No need to rush here – time is actually building

 some leverage for us.”200 They did wait—resigning about 13 days later and waiting

 28 days before finally demanding that the board allow them to nominate a

 competing slate.

               I. Post-Resignation Events

            On April 4, 2023, Plaintiffs filed a group agreement under Section 13(d) of

the Securities Exchange Act of 1934.201 The filing disclosed that Cooperstone,

Sternlicht, and Gold had each resigned from the Cano board on March 30 and

attached Cooperstone’s resignation letter.202 On April 6, 2023, Hernandez filed a

197
      Id. at ‘391.
198
      Id. at ‘392.
199
      Ex. 197.
200
      Id. at ‘610.
201
      Cano Health, Inc., Beneficial Ownership Report (Schedule 13D) (Apr. 4, 2023).
202
      Id.
                                             35
Schedule 13D/A with the SEC disclosing the Camerlinck Loan and that Hernandez

and his guarantors had agreed to transfer 20 million shares of Cano stock to

Camerlinck to repay the loan, subject to a buyback option.203 On April 7, 2023,

Cano filed an amended annual report disclosing the resignation of the Plaintiffs and

announcing that it had reduced the board’s size to six directors.204

         On April 14, 2023, Plaintiffs sent a letter to Weil explaining that the recent

disclosures by Hernandez and the Company, together with the changes at the

Company that occurred after the February 15 nomination deadline, constituted

material changes that required the board to immediately reopen the nomination

window for thirty days.205 At that time, Plaintiffs did not submit a nomination

proposal or otherwise attempt to comply with any of the requirements of the advance

notice bylaw.206 The Company did not respond to Plaintiffs’ letter.

         On April 17, 2023, the Company announced that Trujillo would replace

Hernandez as chairman of the board.207 On April 24, 2023, Weil provided

Defendants with an updated work plan, which states that Weil will investigate, and

203
      Ex. 162.
204
      Cano Health, Inc., Annual Report Amendment No. 1 (Form 10-K/A) (Apr. 7, 2023).
205
      Ex. 165.
  Cooperstone’s ITC Rumba submitted a formal nomination notice on May 18, 2023. See
206

Ex. 184.
207
      Ex. 166.
                                           36
will hire an adviser to perform background checks, regarding “Hernandez family

related party transaction concerns.”208

                J. Procedural History
            On April 28, 2023, the Plaintiffs filed their complaint in this action, seeking to

enjoin the Company from enforcing the deadline in the advance notice bylaw and

adjourning the 2023 annual meeting.209 The Plaintiffs moved to expedite the

proceedings, initially seeking a one-day trial on their application for a mandatory

injunction prior to June 16, 2023.210             That request was based on Plaintiffs’

understanding that the meeting would be held on June 28. But on April 27, before

Plaintiffs filed their complaint, Cano decided to set the annual meeting date on June

15 and to use a record date of May 8.211 On May 1, Plaintiffs learned that the

Company had scheduled the annual meeting for June 15. On May 3, Plaintiffs filed

a motion for a preliminary injunction seeking to enjoin the meeting until this case is

resolved.212 The court ruled that the case would proceed on an expedited preliminary

injunction motion to enjoin the annual meeting and to order waiver of the advance

208
      Ex. 168.
209
      Dkt. 1 (“Compl.”).
210
      Id.
211
      Ex. 169.
212
      Dkt. 12.
                                                37
notice bylaw.213 The parties conducted expedited discovery and the court held a

half-day preliminary injunction hearing on June 9, 2023.

II.      ANALYSIS
         Plaintiffs ask this court to issue an order (a) enjoining Cano from enforcing

the advance notice bylaw; (b) setting June 21, 2023 as the record date for Cano’s

2023 annual meeting; and (c) setting July 26, 2023 as Cano’s annual meeting date.214

         “The Court of Chancery has broad discretion in granting or denying a

preliminary injunction.” Data Gen. Corp. v. Digit. Comput. Controls, Inc., 297 A.2d

437, 439 (Del. 1972). To obtain a preliminary injunction, Plaintiffs must establish

(1) a reasonable probability of success on the merits, (2) that they will suffer

irreparable harm if an injunction is not granted, and (3) that the harm to Plaintiffs if

the injunction does not issue will exceed the harm to the Defendants if the injunction

does issue. BlackRock Credit Allocation Income Tr. v. Saba Cap. Master Fund, Ltd.,

224 A.3d 964, 976 (Del. 2020).

                 A.    Reasonable Probability of Success on the Merits

         Plaintiffs must establish a reasonable probability that they will succeed on

their claim that the Cano directors have a fiduciary duty to waive the advance notice

bylaw in this circumstance. “This showing ‘falls well short of that which would be

213
      Dkt. 47.
214
      Pls.’ Opening Br. 46.
                                           38
required to secure final relief following trial, since it explicitly requires only that the

record establish a reasonable probability that this greater showing will ultimately be

made.’” In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 830 (Del. Ch.

2011) (quoting Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 579 (Del. Ch.

1998)).

      It is well established that stockholders have a fundamental right to “vote for

the directors that the shareholder[s] want[] to oversee the firm.” EMAK Worldwide,

Inc. v. Kurz, 50 A.3d 429, 433 (Del. 2012). Subsumed within that fundamental right

to vote is the right to nominate a competing slate. Hubbard v. Hollywood Park

Realty Enters., Inc., 1991 WL 3151, at *5 (Del. Ch. Jan. 14, 1991); accord Strategic

Inv. Opportunities LLC v. Lee Enters., Inc., 2022 WL 453607, at *8 (Del. Ch. Feb.

14, 2022); Linton v. Everett, 1997 WL 441189, at *9 (Del. Ch. July 31, 1997).

Beyond the statutory requirement that corporations hold an annual meeting to elect

directors, the Delaware General Corporation Law enables corporations to set

standards and procedures that govern the director nomination process.                  See

8 Del. C. § 211(b); id. § 109(b). It is now common for corporate boards to establish

these procedures in “advance notice bylaws.” Openwave Sys. Inc. v. Harbinger Cap.

P’rs Master Fund I, Ltd., 924 A.2d 228, 239 (Del. Ch. 2007).

      Advance notice bylaws require stockholders to provide the corporation with

prior notice of their intention to make stockholder proposals or to nominate directors

                                            39
and to supply information about their proposals or nominees. Mentor Graphics

Corp. v. Quickturn Design Sys., Inc., 728 A.2d 25, 43 (Del. Ch. 1998), aff’d sub

nom. Quickturn Design Sys., Inc. v. Shapiro, 721 A.2d 1281 (Del. 1998). These

types of bylaws serve dual purposes: marshalling orderly meetings and election

contests where the nominees are fixed in advance of the annual meeting, and

providing fair warning to the corporation so that it can respond to stockholder

nominations. Openwave, 924 A.2d at 239; Lee Enters., 2022 WL 453607, at *9.

Cano’s advance notice bylaw states, in pertinent part:

         To be timely, a stockholder’s written notice shall be received by the
         Secretary at the principal executive offices of the Corporation not later
         than the close of business on the ninetieth (90th) day nor earlier than
         the close of business on the one hundred twentieth (120th) day prior to
         the one-year anniversary of the preceding year’s Annual Meeting.215

The 2022 annual meeting was held on May 16, 2022. Accordingly, under the bylaw,

written notice of nominations or business to be brought at the 2023 annual meeting

was due by February 15, 2023.

         A stockholder challenge to the application of an advance notice bylaw

presents a series of questions. First, is the bylaw valid on its face? Second, did the

stockholder’s nomination comply with the terms of the bylaws? Third, if the first

two criteria are met, is there some basis in equity to excuse strict compliance with

215
      Ex. 15 § 2(a)(2).
                                            40
the bylaw? See Lee Enters., 2022 WL 453607, at *9. It is this third question that

animates this case.

             1.       The Schnell Doctrine
      In Schnell v. Chris-Craft Industries, Inc., 285 A.2d 437 (Del. 1971), the

Delaware Supreme Court reaffirmed the long-standing principle that “inequitable

action does not become permissible simply because it is legally possible.” Id. at

439. In Schnell, the board, knowing of an impending proxy contest, advanced the

date of the annual stockholders’ meeting by approximately one month and moved

the location of the meeting to upstate New York. Id. The board’s conduct was held

to be inequitable because the dissidents had already geared their campaign to the

announced meeting date, and the board’s actions gave the dissidents little chance to

prepare a proxy contest. Id. The Delaware Supreme Court accepted this court’s

finding that management had attempted to militarize the corporate machinery and

Delaware law to entrench itself by “obstructing the legitimate efforts of dissident

stockholders in the exercise of their rights to undertake a proxy contest against

management.” Id.

      The Delaware Supreme Court has repeatedly upheld the principles of Schnell.

See, e.g., Coster v. UIP Cos., Inc., 255 A.3d 952, 960 (Del. 2021) (invoking Schnell

in the context of a dilutive stock issuance); MM Cos., Inc. v. Liquid Audio, Inc., 813

A.2d 1118, 1132 (Del. 2003) (describing the Schnell doctrine as “[o]ne of the most

                                         41
venerable precepts of Delaware’s common law corporate jurisprudence”); Bäcker v.

Palisades Growth Cap. II, LP, 246 A.3d 81, 96 (Del. 2021) (applying Schnell to hold

that certain boardroom deceptions were inequitable, even though defendants may

have complied with the company’s governing documents). Schnell embodies the

fundamental power of equity. But that power should not be invoked lightly. The

flexibility of equity, as delineated in Schnell, “should be reserved for those instances

that threaten the fabric of the law, or which by an improper manipulation of the law,

would deprive a person of a clear right.” Alabama By-Products Corp. v. Neal, 588

A.2d 255, 256 n.1 (Del. 1991);216 see In re WeWork Litig., 250 A.3d 976, 996 (Del.

Ch. 2020) (“‘[C]ase law is indicative of a healthy inclination on the part of the

judiciary to employ the Schnell principle of ‘legal but inequitable’ only sparingly’”

(citation omitted)); Accipiter Life Scis. Fund, L.P. v. Helfer, 905 A.2d 115, 127 (Del.

Ch. 2006) (noting that “extraordinary facts” must underly a Schnell claim); Coster

v. UIP Cos., Inc., 2022 WL 1299127, at *7 (Del. Ch. May 2, 2022) (“The elusive

nature of Schnell as a standard and potentially harsh consequences of its application

216
    This statement in Alabama By-Products was issued just a few weeks after the Hubbard
decision, which had been the subject of an appeal, but was settled after the filing of the
appellants’ opening brief. See 2 David A. Drexler et al., Delaware Corporate Law and
Practice § 25.10[1][a] (2023). The Drexler treatise suggests that the footnote in Alabama
By-Products was directed to the Hubbard decision and some of the points raised in the
appeal brief, leading the authors of the treatise to conclude that “the significance of the
Hubbard precedent is, perhaps, suspect.” Id. On a related note, the parties here did not
cite and the court did not identify any published decision of the Delaware Supreme Court
citing Hubbard.
                                            42
provide good reasons to limit Schnell’s application.”); Leo E. Strine, Jr., If

Corporate Action Is Lawful, Presumably There Are Circumstances in Which It Is

Equitable to Take That Action: The Implicit Corollary to the Rule of Schnell v.

Chris–Craft, 60 Bus. Law. 877, 893 n.68 (2005) (“Schnell’s tradition cautions

against a literal reading of the quoted language, which is better read as manifesting

a recognition that equity should not lightly impede actions authorized by law.”).

      Cases challenging the application of an otherwise valid advance notice bylaw

present a context-specific application of Schnell. AB Value P’rs, LP v. Kreisler Mfg.

Corp., 2014 WL 7150465, at *5 (Del. Ch. Dec. 16, 2014); Aprahamian v. HBO &

Co., 531 A.2d 1204, 1208 (Del. Ch. 1987) (enjoining further postponement of the

company’s annual meeting where the company learned that management’s slate was

likely to lose to the dissident slate); Lerman v. Diagnostic Data, Inc., 421 A.2d 906,

914 (Del. Ch. 1980) (holding that bylaw requiring 70-days’ notice for nominations

was inequitable because it was not announced until 63 days before the meeting was

to occur, making compliance impossible); Linton v. Everett, 1997 WL 441189, at

*9–10 (Del. Ch. July 31, 1997) (setting aside election of directors where an annual

meeting had not been held in three years and the board announced a meeting on 30-

days’ notice, triggering a ten-day window to propose nominees).

                                         43
      Plaintiffs have framed their claim within the context-specific application of

the Schnell doctrine recognized in Hubbard.217 In Hubbard, the court held that the

board had a duty to waive an advance notice bylaw provision under the principles of

Schnell where a “radical shift in position, or a material change in circumstances” had

occurred after the deadline for nominations had passed. Hubbard, 1991 WL 3151,

at *12. Neither the court nor the parties have been able to identify any decision of

this court in the ensuing 32 years enjoining the application of an advance notice

bylaw in reliance on Hubbard. Before applying its principles to the facts and

circumstances of this case, it is important to review Hubbard within the Schnell

framework.

      In Hubbard, an insurgent stockholder brought suit to enjoin an advance notice

bylaw. Id. at *3. He then reached a settlement agreement with the company that

217
   In Blasius Industries, Inc. v. Atlas Corp., 564 A.2d 651 (Del. Ch. 1988), Chancellor
Allen held that not all board action which impedes the effective exercise of a stockholder
vote is per se invalid. Rather, when a board acts “for the primary purpose of impeding the
exercise of stockholder voting power,” the board “bears the heavy burden of demonstrating
a compelling justification for such action.” Id. at 661. The Delaware Supreme Court
adopted Blasius in MM Cos., Inc. v. Liquid Audio, Inc., 813 A.2d 1118 (Del. 2003). “For
the Blasius standard to be invoked, the challenged action had to be taken for the sole or
primary purpose of thwarting a shareholder vote.” Kallick v. Sandridge Energy, Inc., 68
A.3d 242, 258 (Del. Ch. 2013) (citing Blasius, 564 A.2d at 662); accord Rosenbaum v.
CytoDyn Inc., 2021 WL 4775140, at *14 (Del. Ch. Oct. 13, 2021). Neither side has
presented this expedited injunction action through that lens. Indeed, Hubbard found that
Blasius was not the appropriate framework in that case. Hubbard, 1991 WL 3151, at *10
n.11; see also Rosenbaum, 2021 WL 4775140, at *14 (“[T]he Court will not draw upon
Blasius unless the evidence reveals the Board engaged in ‘manipulative conduct’ in
responding to the Nomination Notice.”). The court, therefore, addresses the claims here as
the parties have presented them.
                                           44
added him to the board and prevented the board from amending or waiving its

advance notice requirement. Id. Hubbard quickly obtained the support of a majority

of the other directors to take the company in his proposed new direction. The other

board members, now the minority faction, sought to run their own slate of directors

and filed an action to enjoin the company from enforcing the agreement and the

advance notice bylaw. Id. at *4. The court noted that:

      This is not a case where the shareholders, unprovoked by any board
      action, unilaterally and belatedly changed their minds and decided to
      nominate a slate of candidates for director. In such a situation, relief
      should clearly be denied. Rather, this is a case where the . . . board
      itself took certain action, after the by-law nomination deadline had
      passed, that involved an unanticipated change of allegiance of a
      majority of its members. It was foreseeable that that shift in allegiance
      would result in potentially significant changes in the corporation’s
      management personnel and operational changes in its business policy
      and direction. Such material, post-deadline changes would also
      foreseeably generate controversy and shareholder opposition. Under
      those circumstances, considerations of fairness and the fundamental
      importance of the shareholder franchise dictated that the shareholders
      be afforded a fair opportunity to nominate an opposing slate, thus
      imposing upon the board the duty to waive the advance notice
      requirement of the by-law.
Id. at *12. Under Hubbard, where the key facts upon which a stockholder would

decide to nominate candidates or make proposals are “inherently unknowable until

after the nomination deadline had expired” and the board’s actions cause this

significant change in circumstances, it is inequitable for the board to continue to bar

stockholder nominations under the advance notice bylaw. Id. at *11–12.

                                          45
      Twenty-three years later, in AB Value, a stockholder sought a temporary

restraining order to enjoin an advance notice bylaw and run a competing slate. 2014

WL 7150465. Relying on Hubbard, the plaintiff argued that after the advance notice

deadline had passed, the company had distributed a 37.2% voting bloc previously

held in trust to four trust beneficiaries, had unanimously approved salary increases

for the co-presidents of the company, and had included errors in its meeting notice.

Id. at *2. The court noted that the standard for invoking Hubbard, a context-specific

application of Schnell, was high and required the plaintiff to provide compelling

facts indicating that enforcement of the bylaw was inequitable. Id. at *5. The court

distilled the Hubbard framework to three questions: “First, did the change in

circumstances occur after the advance notice deadline? Second, was the change

‘unanticipated’ and ‘material’? Third, was the change caused by the board of

directors?” Id. at *5.

      Applying a preliminary injunction standard, the court denied the motion. The

court rejected plaintiff’s argument as to the trust distribution, noting that the board

had nothing to do with the dissolution of the trust. While such a change may, in fact,

radically alter the playing field for a proxy context, stockholder composition changes

frequently and “the Court’s focus is on the board and material actions taken by the

board that substantially alter the direction of the company.” Id. at *6. The court

found the pay increases for management insufficient to satisfy Hubbard because

                                          46
they did not “constitute a radical shift in corporate direction” as they neither changed

the operations nor the business direction of the company. Id. at *7. The court

likewise rejected the plaintiff’s argument regarding inaccurate disclosures, noting

that the information came to light before the notice deadline and “[fell] short of

Hubbard’s material or radical change standard.” Id.

       Plaintiffs rely on two other decisions where this court granted motions to

expedite claims to enjoin the enforcement of advance notice bylaws. In Healthcor

Management, L.P. v. Allscripts Healthcare Solutions, Inc., C.A. No. 7557-CS (Del.

Ch. May 25, 2012) (TRANSCRIPT), the CEO and four out of nine directors resigned

after the deadline for nominations had closed. The court noted that such a change

was extraordinary and was not a typical circumstance in the life of a company. Id.

at *4. The court found that the events, which the board itself acknowledged would

result in the board proposing to seat a very different board, “raise[d] a colorable

equitable question about whether the board can hide behind the advance notice by-

law and retain for itself the flexibility to change the shape of the board in a

fundamental way shortly before the meeting and deny the other stockholders the

ability to react to it.” Id.

       In Icahn Partners LP v. Amylin Pharmaceuticals, Inc., 2012 WL 1526814

(Del. Ch. Apr. 20, 2012), the board inexplicably refused to engage with a potential

acquirer that offered a substantial premium at a time when the board and

                                          47
stockholders were contemplating a sale of the company. Id. at *3. The court granted

the motion to expedite, explaining that the plaintiffs had adequately alleged that the

rejection of the offer evinced the board’s radical change of plans for the

company. Id.

                 2.        The Hubbard Standard

         The parties disagree on what a plaintiff must prove to establish a claim under

Hubbard. Plaintiffs point to AB Value, which “read[s] Hubbard as requiring a

material change in circumstances, which the case alternatively describes as a ‘radical

shift in position,’ caused by the directors that occurs after the advance notice

deadline.” AB Value, 2014 WL 7150465, at *5. Plaintiffs equate the terms “radical”

and “material,” and conclude that materiality under Hubbard is the same as the

materiality standard governing proxy disclosures to stockholders.218            In the

disclosure context, “An omitted fact is material if there is a substantial likelihood

that a reasonable shareholder would consider it important in deciding how to vote.”

Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc.

v. Northway, Inc., 426 U.S. 438, 499 (1976)).          There must be a “substantial

likelihood that the disclosure of the omitted fact would have been viewed by the

reasonable investor as having significantly altered the total mix of information made

available.” Id. (internal quotations omitted). Thus, Plaintiffs seem to argue that they

218
      Pls.’ Reply Br. 8.
                                            48
can succeed on the motion if there is a substantial likelihood that a stockholder would

consider any of the board’s conduct after February 15 important to know in deciding

whether to run a proxy contest.

      Plaintiffs’ attempt to import the disclosure standard of materiality into

Hubbard relies on Sherwood v. Ngon, 2011 WL 6355209 (Del. Ch. Dec. 20, 2011).

That reliance is misplaced. In Sherwood, plaintiff stockholders sought a temporary

restraining order to enjoin an annual meeting where three days before the then-

scheduled meeting, the board removed an agitating director from the company’s

previously disclosed slate of directors. Id. at *4. The company did not immediately

announce the director’s removal from the slate, but it did announce an approximately

two-week delay in the annual meeting. Id. The director’s removal from the slate

was not announced until nine days before the new meeting date. Id. The plaintiff

stockholders argued that the company’s disclosure regarding the removal of the

director from the slate was materially misleading and moved to enjoin the annual

meeting to provide stockholders with sufficient time to consider corrective

disclosures. Id. at *5.

      Although the Sherwood court discussed certain factual similarities between

that case and Hubbard, the question in Sherwood was not whether the board had a

duty to waive enforcement of its advance notice bylaw. The plaintiffs argued, and

the court agreed, that defendants’ deferral of the meeting reopened a ten-day window

                                          49
for nominations, with which the plaintiffs complied. Id. at *11. The question before

the court in Sherwood was whether the plaintiffs had adequately stated a colorable

disclosure claim. Id. at *15.

      To the extent Plaintiffs argue that they need only establish that there has been

a post-deadline disclosure or discovery of an omission about the company or a

nominee that would satisfy a preliminary injunction, they are mistaken. Neither

Hubbard nor AB Value stands for that proposition.219 Rather, “the Court’s focus is

on the board and material actions taken by the board that substantially alter the

direction of the company.” AB Value, 2014 WL 7150465, at *6 (emphasis added);

see Icahn, 2012 WL 1526814, at *3 (indicating that plaintiffs might prevail if they

could show that the board “radically changed its plans for the Company” by refusing

to engage with a potential acquirer in light of the company’s previously stated

investment thesis).220

219
   One of the grounds for the plaintiff’s claim in AB Value was an error in the meeting
notice. The court observed that the information came to light before the nomination
deadline “and falls well short of Hubbard’s material or radical change standard.” 2014
WL 7150465, at *7. The court did not indicate that it was applying a disclosure standard.
220
   In Hubbard, the court was persuaded that the “material, post-deadline changes would
also foreseeably generate controversy and shareholder opposition.” 1991 WL 3151, at *12.
That quotation must be assessed within the overall context of the case, and understood
within the court’s finding that the allegiances of a board majority had shifted to take the
company in a different direction after the nomination deadline, coupled with the board’s
having contractually prohibited the company from waiving the bylaw.
                                            50
      As the court cautioned in AB Value, “Delaware jurisprudence that makes clear

that compelling circumstances must exist before the equitable powers invoked in

Hubbard (based on Schnell) will be applied.” 2014 WL 7150465, at *5. In Hubbard,

the compelling circumstances that justified waiving the advance notice bylaw

included a shift in board-level allegiance that “would result in potentially significant

changes in the corporation’s management personnel and operational changes in its

business policy and direction,” and a contractual agreement not to waive the bylaw.

1991 WL 3151, at *12. In Icahn, under the colorable claim standard of review, the

compelling circumstance that warranted expedition was the board’s unexpected

decision to reject, without consideration, a company-altering buyout offer. 2012 WL

1526814, at *2–3. In Healthcor Management, the resignation of four out of nine

directors after the deadline for nominations had closed warranted expedited

treatment of a claim to require waiver of the bylaw. C.A. No. 7557-CS, at *4. The

court in Healthcor stated:

      When there’s an extraordinary change like this, and the board itself
      feels a board majority is essentially going to propose to seat a very
      different board, that, in my mind, raises a colorable equitable questions
      about whether the board can hide behind the advance notice by-law and
      retain for itself the flexibility to change the shape of the board in a
      fundamental way shortly before the meeting and deny the other
      stockholders the ability to react to it.
Id. (emphasis added).

                                          51
         Plaintiffs do not argue that the revelations regarding Hernandez and his

family’s related party transactions constitute fundamental changes to Cano so as to

trigger Hubbard. Indeed, they cannot, because they do not involve action of the

board. AB Value, 2014 WL 7150465, at *6. Instead, Plaintiffs frame their claim

around the board’s response to Hernandez’s conduct and the fissure between

Plaintiffs and the other outside directors.

                3.       The Alleged Radical Shift

         Plaintiffs have asserted a moving target of post-deadline “material” changes

as supporting their claim. They first asserted in discovery that there are 17 different

bases for their claim.221 They next cited five distinct events in their opening brief

and then provided a list of seven “material facts” at oral argument.222 For the reasons

that follow, Plaintiffs fail to establish a reasonable probability of success on their

Hubbard claim.

                         a.   The August 27, 2022 Meeting of Committee Chairs

         Plaintiffs first point to the August 27, 2022 meeting of committee chairs over

the Camerlinck Loan. Plaintiffs insist that this meeting was concealed from them

until after February 15, 2023. Plaintiffs admit that they learned about the loans

221
      Ex. 245 at 8–17.
222
      Pls.’ Opening Br. 2; Tr. 12:16–14:10; id. at 16:7–18:24.
                                              52
before the February 15 close of the nomination window and do not base their claims

on the loans’ existence.223

          Plaintiffs also received information regarding the August 27 meeting of

committee chairs prior to the close of the nomination window. Minutes of the Audit

Committee’s February 8, 2023 meeting reflect a discussion of the Camerlinck Loan

and other Hernandez loans.224 Gold is listed as present at the meeting.225 At the

February 8, 2023 meeting, Armstrong recounted that the August meeting of board

chairs had occurred and described the meeting’s participants and its outcome: that

no further action was required.226 “There was no disagreement by the Committee

223
   Tr. 12:11–20. Both Cooperstone and Gold had reason to know about the Camerlinck
Loan in August 2022. Cooperstone testified that he was generally aware of the loan.
Cooperstone Dep. at 87:8–15. Gold was a member of the Audit Committee and would
have access to Armstrong’s detailed memo regarding the Camerlinck Loan which was
shared with the Audit Committee on August 22, 2022. Ex. 36.
224
      Ex. 223 at ‘112–13.
225
      Id. at ‘111.
226
      The meeting minutes describe this disclosure as follows:
          David Armstrong reminded the Committee the record shows between August
          17, 2022 and August 27, 2022 multiple Board disclosures were made
          including reports to both the Chairs of the Audit Committee and the
          Nominating and Corporate Governance Committee and a memorandum was
          posted to Diligent for the entire Audit [C]ommittee on the issue. Following
          these disclosures, the Chair of the Nominating and Governance Committee
          convened a special meeting of all Committee Chairs to discuss the personal
          loan from Bob Camerlinck. . . . During an hour-long meeting the personal
          loan from Bob Camerlinck was discussed in detail, all Committee chairs
          asked questions, Board counsel asked questions, Hernandez answered all
          questions and the Board was informed that Audrey Leigh, Company

                                              53
that these events as described did in fact transpire in August 2022.”227 Aiello advised

the Audit Committee on February 8 that “following Weil’s investigation they

determined that the personal loans did not constitute related party transactions, are

not disclosable, and” should not be disclosed in the upcoming 10-K.228

            In an email to the Audit Committee on February 9, 2023, Armstrong discussed

the prior retention of Weil in August 2022 in connection with the Camerlinck Loan

and that Weil was handling the matter for the board “when we held a special Board

call (of Committee Chairs) to review this matter . . . on August 27, 2022.”229 Gold

was copied on this email.230 These documents refute Plaintiffs’ argument that they

did not know and could not have known about the August 27 meeting prior to the

February 15 nomination deadline.              Gold’s failure to read or remember these

communications is no excuse. In any event, Plaintiffs fail to show that a meeting

among committee chairs in August 2022 constituted board action that radically

            disclosure counsel (Goodwin Proctor) had advised no disclosure was
            required including no 8-K. At the conclusion of the August 27, 2022 meeting
            the Committee Chairs accepted management’s presentation, excused
            management to conduct an executive session, and thereafter took no further
            action.
Id. at ‘112–13.
227
      Id. at ‘113.
228
      Id.
229
      Ex. 224 at ‘038.
230
      Id. at ‘037.
                                                54
changed the direction of the Company. Indeed, as Cooperstone reminded Gold and

Sternlicht on February 6, 2023, even if the loans violated internal corporate policy,

three law firms advised that Hernandez’s loans did not need to be publicly

reported.231

                      b.     The “Shadow Board”

         Plaintiffs claim that Trujillo, Morales, Muney, and Rivera formed a “Shadow

Board” in January 2023 through which they decided not to renominate Cooperstone

and concealed the results of Hernandez’s 360 Report.232 As an initial matter, a

conversation that took place between individual directors is not board action as

required by Hubbard and AB Value. See Hubbard, 1991 WL 3151, at *12 (“[T]his

is a case where the . . . board itself took certain action, after the by-law nomination

deadline had passed, that involved an unanticipated change of allegiance of a

majority of its members.”); AB Value, 2014 WL 7150465, at *6 (“[T]he Court’s

focus is on the board and material actions taken by the board that substantially alter

the direction of the company.”). The Cano board took no action to conceal the results

of the 360 Report. Admittedly, it was not delivered to the full board until after

February 15, but that did not reflect a board decision that materially altered the

231
    Ex. 83 (“I’ve heard directly from Goodwin that they agree with Weil that no disclosure
is required. That was the original advice from McDermott [Will & Emery]. So three law
firms agree on this.”).
232
      Pls.’ Opening Br. 17–19, 50–51.
                                           55
direction of the Company. In any event, Plaintiffs were aware well before February

15 that some members of management had concerns about Hernandez, having been

privately contacted by multiple members of management.233

         Plaintiffs’ assertion that the board secretly agreed not to nominate

Cooperstone on management’s 2023 slate is also unfounded. Cooperstone resigned

before the board decided on the 2023 slate. Plaintiffs point to private email and text

conversations among certain directors showing that Morales, Muney, and Rivera

decided not to support Cooperstone’s nomination.234 Yet Plaintiffs concede that

there was no board-level, or even committee-level, action resolving not to include

Cooperstone on the slate.235 What might have happened had Cooperstone not

resigned is conjecture. See AB Value, 2014 WL 7150465, at *7 & n.40 (“This Court

cannot grant the extraordinary relief of enjoining a Company’s facially valid

advance notice bylaw on the basis of hypothetical future events.” (citing Openwave,

924 A.2d at 240 (“Because Delaware law does not permit challenges to bylaws based

on hypothetical abuses, the court will not consider those scenarios.”)).236 Plaintiffs’

233
   Ex. 78 (Cooperstone email on February 4, 2023 noting “the fact that the faith of multiple
members of [Hernandez’s] management team is I think irretrievably lost.”); Ex. 73
(Sternlicht February 1, 2023 email: “Our two moles are reaching out every day.”); Ex. 40
at 9; Ex. 55; Ex. 149.
234
      Ex. 86; Ex. 94.
235
      Tr. at 15:1–6.
236
   Plaintiffs have cited no evidence that the Governance Committee or any subset of the
board had suggested an alternative nominee to Cooperstone.
                                            56
allegations are speculative and do not concern board action and therefore cannot

support a Hubbard claim.237

                         c.   Creation of a Special Committee
         Plaintiffs next contend that the board’s creation of the Special Committee on

March 17 “fundamentally changed the composition of the Board.”238 Defendants

concede that the board created the Special Committee after the notice deadline, but

they argue that its formation does not constitute the type of change sufficient to

require a waiver of the advance notice bylaw. Defendants point to the fact that the

Special Committee took no action binding the Company, but rather only made

recommendations to the board, which it could then vote to approve or reject.

         Plaintiffs, and particularly Sternlicht, were the impetus for creation of the

Special Committee. Sternlicht had become increasingly aggressive in his pursuit of

a sale of the Company, and on March 2, sent an email to the board threatening to

resign and issue a public statement if Hernandez were not removed as CEO.239

237
   This case is readily distinguishable from Sherwood, which, while not a Hubbard case,
involved a circumstance in which a board removed a nominee from its slate and advanced
the meeting date just before the annual meeting was meant to take place. Sherwood, 2011
WL 6355209, at *5 (focusing on the misleading nature of a disclosure describing why a
director was removed from the slate). Had Cooperstone remained on the board and not
been renominated after the deadline, his claim might be much stronger. See Hubbard, 1991
WL 3151, at *11 (indicating that minority directors should not be compelled to nominate
a dissident slate to protect against a potential “electoral coup” by the majority after the
nomination deadline).
238
      Pls.’ Reply Br. 17.
239
      Ex. 107 at ‘656.
                                            57
Defendants viewed Sternlicht’s potential public statement as a threat to the

Company, and they sought counsel familiar with activist investors and formed a

Special Committee to address it.240 Between the Special Committee’s formation on

March 17 and March 25, the Special Committee held four meetings to discuss how

to address the public relations risk posed by Sternlicht’s threats and paths forward

as to Hernandez’s conduct.241 While Plaintiffs label the Special Committee as a

strategic ploy to silence them, placing Sternlicht or his cohort on a special committee

designed to address the negative effects of Sternlicht’s public condemnation of the

Company would be like “putting a fox on the special committee for henhouse

security.”242

         In arguing that the formation and function of the Special Committee

constitutes a radical change in the direction of the Company, Plaintiffs focus on

240
   Ex. 106; Rivera Dep. 195:20–196:4 (“[T]here was a real concern about whether or not
we needed to take steps to make sure that the board and the company were doing the right
things to protect themselves.”); Ex. 4 (“Muney Dep.”) at 113:14–114:2 (“[W]e acted as a
Special Committee on behalf of the shareholders to lay out all the options on a number of
issues to bring to the full board for discussion, as I stated earlier, because of Barry’s letter
and because the prior attempts at board meetings to have discussions on issues such as
assets, we couldn’t have a discussion because the three board members were adamant and
not willing to discuss other options with facts.”).
241
    Ex. 232 at ‘709 (“[T]he Committee’s main concern is not about Mr. Sternlicht’s
message, but rather his behavior and the manner in which he is choosing to convey his
message.”); Ex. 233 (discussing the potential retention of a public relations firm); Ex. 234
(deliberating about which public relations firm to hire and reporting on discussions with
Sternlicht’s counsel); Ex. 236 (discussing public relations concerns and formulating
recommendations for the full board regarding Hernandez’s infractions).
242
      Tr. 97:15–16.
                                              58
language in the Special Committee’s charter which they claim gave the committee

“unfettered plenary power” and eliminated any “dissenting voices.”243 The Special

Committee’s charter is admittedly broad, giving the committee full authority to take

actions that it “may determine are necessary or advisable in connection with the

Purpose of the Committee.”244 The committee’s authority is not plenary, but cabined

by the scope of its purpose. The “Purpose” of the committee was multifold,

including to evaluate how to strategically position the Company and to investigate

relationships between directors and management and potential conflicts of interest

by the board, all of which were “in response to . . . Sternlicht’s plan to publicly

disclose his critiques of the Company.”245 And in actual function, the Special

Committee did not independently act to bind the Company. Rather, it made

recommendations to the board, which it then discussed and voted upon.246

          The creation of the Special Committee did not constitute a “significant change

in corporate direction or policy.” Hubbard, 1991 WL 3151, at *12. Unlike in

Hubbard, where a subset of the board, constituting a majority, switched from

opposing a dissident stockholder’s proposals to supporting them, the creation of the

243
      Pls.’ Opening Br. 32.
244
      Ex. 127 at ‘830.
245
      Id. at ‘829.
246
    See, e.g., Ex. 158 at 5 (“[Rivera] informed the Board that the Special Committee has a
broad charter and that the Committee is simply making recommendations to the Board at
this time to discuss together”).
                                            59
Special Committee did not represent a radical shift in position or material change in

the direction of the Company. Plaintiffs were a three-member minority of the board.

They took a strong view that the Company should be sold promptly and that

Hernandez should be terminated. They never had a majority of the board in their

camp who suddenly switched allegiances and radically changed the direction of the

Company. In that regard, the formation of the Special Committee did not even

change the status quo, let alone radically shift board allegiances like in Hubbard.

                     d.     The March 30 Decision

       Plaintiffs next argue that the Special Committee’s recommendations and the

board’s adoption of those recommendations proves that the board was unwilling to

remediate Hernandez’s misconduct. The evidence does not reflect board inaction.

See Hubbard, 1991 WL 3151, at *10 (observing that from a legal viewpoint

“‘inaction’ and ‘action’ may be substantive equivalents, different only in form”).

Rather, the board members were attuned to the issues raised about the CEO and

acted.247 The board, upon recommendation of the Special Committee, held a one-

247
   See Ex. 132 (“I believe we need to ask Weil to investigate immediately and thoroughly
today’s list. Whatever the inquiry shows we will have to deal with it.”); Ex. 234
(“Committee members noted that the undisclosed margin loan and related party
transactions have been thoroughly investigated and resolved at significant cost to the
Company. It was agreed that the Board should confirm that the proper controls are in place
and vote on a resolution to close out this investigation.”); Ex. 236 (discussing, at length,
the pros and cons of retaining Hernandez as CEO, including Hernandez’s key relationships
with providers and patients, stockholder perception of Hernandez, the lack of suitable
public company CEO replacements, and Hernandez’s suitability in the short-term).
                                            60
hour and forty-five-minute board meeting on March 30, with Plaintiffs present. The

board majority did not radically change the direction of the Company, but rather

favored a less radical approach than what Plaintiffs had been advocating. The

majority did so after concluding that Hernandez’s removal as CEO at that time, with

no successor in place, would not be in the Company’s best interest.248 This court

expresses no view as to whether the board’s decision was “good” or “bad” in a

business sense. See Hubbard, 1991 WL 3151, at *12. What matters is that the

Special Committee made recommendations, the full board was presented with those

recommendations, and the board voted. Plaintiffs’ dismay at having been outvoted

in these circumstances does not create a radical shift in the fundamental operation of

the Company as contemplated in Hubbard.

       Notably, what Plaintiffs frame as an abdication actually reflects the adoption

of many of Weil’s suggestions from February 5.249                The idea of separating

248
    See Ex. 247 at ‘501 (“[T]he Special Committee noted that the believe it is in the
Company’s best interest to allow Dr. Hernandez additional time to make adjustments in
response to the action items presented in connection with the recommendations during the
next few quarters, in particular given the critical role he plays with the physicians and the
human capital-centric business model of the Company’s business.”); Ex. 158 at ‘356 (“The
Committee members feel that they can give [Hernandez] more time to make adjustments
and, in the meantime, the Board can consider alternatives in the even the is unable to make
those adjustments.”); id. at ‘358 (“There is also a consensus that the [Special Committee’s]
recommendations are not permanent and can always be changed in new
circumstances/findings arise.”).
249
    See Ex. 218 (recommending that the board address Hernandez’s failure to abide by the
Conflict of Interest Policy, consider strengthening compliance procedures, engage an

                                             61
Hernandez’s roles as CEO and chairman had long been on the table. Sternlicht had

expressed his distaste for this approach in a February 27 email to his fellow

directors.250 The directors included a potential separation of these roles as among

potential remedial actions discussed in a meeting on March 7.251 Ultimately, the

Special Committee, after discussion, decided to recommend that Hernandez be

removed as board chair and presented that proposal to the full board.252

         The Special Committee’s professed predetermination of its recommendations

regardless of the outcome of Weil’s investigation at the March 30 meeting is

troubling. When asked why the Special Committee made recommendations without

hearing the entirety of Weil’s report, Muney responded that “the recommendations

would have been the same no matter what the outcome of the investigation

is/was.”253 On the other hand, Trujillo had informed the board on March 27, 2023

that, although they needed to take action urgently, “[i]f Weil’s report ultimately

includes information that sheds new light on the topic of the CEO or anyone else,

outside consultant for training on board and corporate communications, consider enacting
policies related to personal loans to executive officers).
250
    Ex. 107 at ‘657 (“Bringing in a Chairman will not have the same impact on the stock
and if the stock were to rise $1 because Marlowe is not CEO, he will benefit immensely
by being able to hold on to some of his shares. Id like to vote on the issue shortly. I have
stated my position clearly and I will reserve all my rights as a substantial stockholder and
in the street’s eye, the sponsor of this debacle.”).
251
      Ex. 114 at 2.
252
      Ex. 234 at ‘715.
253
      Ex. 158 at 5.
                                            62
we can consider it then, but I don’t believe that would change any of our minds with

respect to decisions in other critical areas.”254 He confirmed this in the board

meeting, explaining that the Special Committee was not dismissing the findings of

any report, but was of the view that “they are not willing to terminate the CEO

without a plan to keep the Company going.”255 In another meeting of the Special

Committee on March 30, 2023, the committee noted that it “would likely have later

changed its recommendation if evidence of wrongdoing was found.”256 While

Muney appeared to be defensive of Hernandez, other directors, such as Trujillo and

Rivera, were much more open minded.257

         Plaintiffs’ disagreement with the Defendants’ chosen remediation plan does

not make that moderate course of action a radical shift in the business or

management of the Company. As a result, it does not support a Hubbard claim.

254
      Ex. 238.
255
      Ex. 158 at 7.
256
      Ex. 239 at ‘722.
257
   See Rivera Dep. 217:19–218:16 (“[W]e knew the recommendation, but we were waiting
to hear what people had to say and whether or not there was any other reasonable alternative
for a thoughtful solution that was going to be proposed. The point was to anchor the
discussion on the problem, what needed to be resolved, what we thought was the most
viable path. But anyone in that meeting was welcome to put forward alternate proposals,
talk about, you know, why certain things made sense or didn’t make sense and it was
always supposed to be a full board vote. If there is one thing that I do know about this
board, there are several members of this board who you cannot predict what their vote is
going to be until they’ve heard all the discussion and debate. So it was not a foregone
conclusion.”).
                                            63
                     e.    Appointment of Trujillo as Chairman

         Plaintiffs next allege that the board’s appointment of Trujillo as chairman

constituted a material change the operation and management of Cano. Plaintiffs do

not attempt to explain how the appointment of Trujillo as chairman requires waiver

of the advance notice bylaw under Hubbard. Rather, they focus on attacking

Trujillo’s alleged lack of independence from Hernandez. The logical flaw in

Plaintiffs’ argument is that if, under their theory, Trujillo is in Hernandez’s pocket,

his appointment would not substantially change the allegiances of the board or the

Company’s trajectory. Rather, a loyal Trujillo would continue to steer the company

in the same direction advanced by Hernandez. Further, the Plaintiffs’ newly minted

challenge to Trujillo’s independence is undermined by the fact that they signed off

on Cano’s SEC disclosures representing that Trujillo is independent258 and that they

voted in favor of his appointment as Lead Independent Director.259 In any event,

Sternlicht admitted that there was no fundamental change as a result of Trujillo’s

installation as chairman: “He acted as the chairman of the board when he was lead

258
      Ex. 27 at 1.
259
   Trujillo Dep. 24:25–25:5 (noting that the board unanimously voted to appoint Trujillo
as Lead Independent Director).
                                          64
director. Nothing changed.”260 Trujillo’s appointment as chairman does not support

Plaintiffs’ claim.261

                         f.   The Abandoned Onsite Dental Stock Sale
         Plaintiffs argue that the circumstances surrounding Hernandez’s wife’s

possible sale of Onsite Dental support their theory of a radical change in allegiances.

They do not. Stephanie Hernandez acquired her stake in Onsite Dental after Onsite

Dental acquired her business, Dental Excellence Partners, in April 2022.262 In

connection with that transaction, Cano entered into a dental services administration

agreement with Onsite Dental.263 At a March 20 board meeting, Gold raised an issue

as to the transaction, alleging that the board had not been informed of Hernandez’s

wife’s involvement in the transaction or the terms of the resulting agreement.264 As

Gold was later reminded, the acquisition of Dental Excellence Partners, the

subsequent agreement with Onsite Dental, and the involvement of Hernandez’s wife

260
      Sternlicht Dep. 203:20–22.
261
   Plaintiffs’ counsel conceded at argument that removal of Hernandez as CEO would not
constitute a fundamental change in the operation and management of Cano warranting
waiver of the bylaw under Hubbard. Tr. 60:10–61:11. If his removal as CEO would not
constitute a Hubbard change, the court is hard pressed to see how his removal as chairman
and replacement with the Lead Independent Director would satisfy Plaintiffs’ burden.
262
      Ex. 28; Ex. 35.
263
      Ex. 35.
264
      Ex. 131 at ‘041.
                                           65
were disclosed to the board and were approved two separate times.265 They were

also publicly disclosed.266

         Plaintiffs argue that in April 2023, Kiran Patel, an individual who wanted to

become involved with Cano, sought to purchase Stephanie Hernandez’s interest in

Onsite Dental for $20 million.267 This transaction did not receive all necessary

approvals from Onsite Dental, and accordingly, was not consummated.268 The

transaction did not involve Cano and the board was not asked to approve it. This

unexecuted transaction could not have caused a material or radical change in Cano’s

circumstances.

                4.     The Plaintiffs’ Conduct

         Plaintiffs accept that the court must evaluate their claims in light of the

circumstances of these particular plaintiffs.269 The record here demonstrates that the

Plaintiffs sought to nominate a competing slate before the occurrence of the changes

they allege here. In pursuit of that aim, they schemed to delay pressing their proxy

265
    Ex. 199 at ‘486 (“The Onsite Dental/Stephanie Hernandez/Pedro Cordero issues were
all raised to this Board and approved at least twice – first November 29, 2021 and second
on March 15, 2022. During this time the full proposed terms of the agreement were
provided, and the related party transaction was approved with full understanding of the
exclusive terms of the agreement, Stephanie Hernandez’s ownership and Pedro Cordero’s
Board seat were all approved.”).
266
      Ex. 35.
267
      Pls.’ Opening Br. 44.
268
      Hernandez Dep. 153:18–154:2.
269
      Tr. 110:9–13.
                                           66
contest in the hopes that the board would unwittingly reopen the nomination

window.

          On March 11, Cooperstone sent Sternlicht and Gold an email mapping out a

plan.270 Their goal? Force the Company to either buy them out or to sell the

Company entirely. Cooperstone wrote, “This is my suggestion for how to proceed

with the threat of a noisy resignation to secure the board votes we need.”271 They

would demand that the board authorize a banker to immediately conduct an auction

for Company and to remove Hernandez as CEO, replaced by Gold as interim

CEO.272 If this did not occur, Cooperstone would threaten to resign.273 Cooperstone

wrote:

          The threat of this noisy resignation may move the Board to act. We
          should use that threat as other board members then have a risk of
          damage to their reputations (Kim, Alan) as well as increased potential
          for additional class actions. My goal would be to a negotiated outcome
          that enables the company to be sold.
          However, if we were to proceed [in] this manner it would further
          devalue company stock causing injury to all remaining shareholders
          including our investors and friends/family supporters. If the board [sic]
          vote does not go our way, as a fallback, I suggest we pursue the sale of
          our collective position. . . . The new investors’ plan would be to take
          our board seats and then they would acquire their way to 50% and take

270
      Ex. 227.
271
      Id. at ‘390.
272
      Id. at ‘391.
273
      Id. at ‘392.
                                             67
            the company private or use the 2024 proxy season . . . to take full
            control.274
            The next day, Sternlicht forwarded a letter designed “to scare the holdouts” to

Cooperstone and Gold.275            The Plaintiffs planned to deliver their “scathing

condemnation[s]” to the board and to make clear that they will “consider resignation

if the vote goes the wrong way.”276 “If the board does not go our way, we can

regroup and consider next steps.”277 Sternlicht, Cooperstone, and Gold discussed

running a proxy contest to fill Muney and Rivera’s seats with candidates of their

choice.278 Each of the Plaintiffs were aware that the period for stockholder proposals

had closed on February 15, 2023. Yet the Plaintiffs did not then demand that the

board reopen the nomination period. Rather, they intentionally remained silent,

hoping that the board would overlook the terms of the advance notice bylaw and set

the annual meeting date after July 16, which would reopen the nomination period by

default.279 That bet did not pan out.

274
      Id. (cleaned up).
275
      Ex. 228 at ‘361.
276
      Id. at ‘360.
277
      Id.
278
   Ex. 230 (inclosing an email from Sternlicht in which he states, “we could launch a proxy
fight to oust Kim and Alan. That would give us me, you [(Cooperstone)], lew and our two
people.”).
279
    Ex. 231 (noting that the nomination period would reopen if the annual meeting is held
after July 16 and stating: “What is critical now is that we not ask the Cano people or other
board members any questions around the proxy or the annual meeting. I think they are
oblivious to the implications of the timing.”).
                                              68
         Plaintiffs saw the writing on the wall. Cooperstone’s company retained

counsel on March 17, 2023 “in connection with [its] investment in Cano Health” and

Sternlicht followed along four days later.280 But the Plaintiffs were in no hurry to

take action. In a WhatsApp message on March 17, 2023, Cooperstone told Gold and

Sternlicht that there is “No need to rush here - time is actually building some leverage

for us.”281 On March 21, Plaintiffs hatched their current strategy to resign and run a

slate against the 2023 nominees.282

         Plaintiffs exploited their leverage-building lethargy. Following the board

meeting on March 30, 2023, Plaintiffs continued to delay. By April 5, 2023, the

Plaintiffs had a proxy adviser and had received notice that the Company intended to

hold its annual meeting on June 28, 2023.283 But despite having just under 84 days

until the annual meeting, Plaintiffs waited nine days to send a letter demanding that

the Company reopen the nomination period.284 Even then, they did not deliver a

nomination proposal. Plaintiffs then waited an additional fourteen days before filing

280
      Ex. 181 at 22.
281
      Ex. 197 at ‘610.
282
   Ex. 134 at ‘655 (Sternlicht text exchange with Gold and Cooperstone: “And we have
one other strategy to deploy gents. Wilkie [sic] Farr said [redacted.] It’s a fascinating idea
but the three of us opposing these dumb dumbs might work!”).
283
      Dkt. 12 at Ex. B.
284
      Ex. 165.
                                             69
a complaint in this court, dwindling an 84-day head start to around 60 days.285 They

did this based on the quickly approaching provisional annual meeting date of June

28, 2023, which was not yet publicly announced. That date could have been

changed, and it was here, cutting an additional 13 days off of Plaintiffs’ already tight

timeline. In light of these circumstances, the strategy of delay that Plaintiffs

undertook here was not a reasonable one.

      When the board did not cave to their demands, Plaintiffs took their alternative

path—framing the board’s decisions and responses to Plaintiffs’ demands as

“material changes” worthy of reopening the nomination window. Plaintiffs’ actions

bring two venerable maxims of equity to mind. First, “equity aids the vigilant, not

those who slumber on their rights.” Adams v. Jankouskas, 452 A.2d 148, 157 (Del.

1982). Second, “[a]ll plaintiffs seeking the aid of equity’s extraordinary remedies

do so subject to the maxim that he who seeks equity must do equity.” Richard Paul,

Inc. v. Union Imp. Co., 91 A.2d 49, 54 (Del. 1952). Taking the Plaintiffs’ allegations

together, they do not constitute fundamental changes in the operation and

management of Cano to compel waiver of the advance notice bylaw under

285
   Cf. Schnell, 285 A.2d at 439 (holding that plaintiffs did not unreasonably delay when
they filed suit five days after unofficially learning of management’s changes to the date
and location of the meeting).
                                           70
Hubbard.286 The powerful tool of Schnell is “reserved for those instances that

threaten the fabric of the law, or which by an improper manipulation of the law,

would deprive a person of a clear right.” Alabama By-Products Corp. v. Neal, 588

A.2d 255, 256 n.1 (Del. 1991).

       Plaintiffs decided to nominate a competing slate in early March, and in

furtherance of that goal, launched a ploy to strategically delay and ultimately, to

assert claims of material post-deadline change that are both pretextual and

insufficiently radical under in Hubbard and Schnell. In these circumstances, relief

must be denied. Plaintiffs cannot establish a reasonable probability of success on

their claim.

          B. Irreparable Harm

       An essential condition of preliminary injunctive relief is the threat that

irreparable harm will befall the plaintiffs between now and trial unless an injunction

issues. Kingsbridge Cap. Gp. v. Dunkin’ Donuts, Inc., 1989 WL 89449, at *4 (Del.

Ch. Aug. 7, 1989). “‘Courts have consistently found that corporate management

subjects shareholders to irreparable harm by denying them the right to vote their

286
    Plaintiffs also suffer from credibility problems. For example, they alleged in their
verified complaint that they did not learn of the Camerlinck Loan until March 7. Compl.
¶ 52. While the other two plaintiffs were quicker to admit the statement’s falsity, Sternlicht
doubled down on the allegation, arguing that despite board minutes marking him present
for a discussion of the loan, he must have “left the room” or “wasn’t there.” Sternlicht
Dep. 61:19–62:14.
                                             71
shares or unnecessarily frustrating them in their attempt to obtain representation on

the board of directors.’” Hubbard, 1991 WL 3151, at *5 (quoting Int’l Banknote

Co., Inc. v. Muller, 713 F. Supp. 612, 623 (S.D.N.Y. 1989)); see Icahn, 2012 WL

1526814, at *3. However, where a plaintiff’s imminent, irreparable injury is self-

inflicted, equity will not come to her rescue. See Rosenbaum v. CytoDyn Inc., 2021

WL 4890876, at *2 (Del. Ch. Oct. 20, 2021) (“While I recognize that prohibiting a

stockholder from exercising her franchise rights can amount to irreparable harm, in

this case, any such harm is, in large measure, self-inflicted.”).

       Plaintiffs’ decision to resign from the board after they knew that the

nomination deadline had passed was part of a strategic plan to pressure the board to

agree to a buyout or to replace the CEO with someone aligned with Plaintiffs’

strategy. They intentionally delayed in seeking to waive the bylaw and to assert their

claims until their strategy played out and the board did not accede to their demands

on March 30. Any harm to these Plaintiffs, who chose to leave the board and to sit

on their claims, is self-inflicted.

          C. Balance of the Equities

       The final element of the preliminary injunction framework is the balance of

harms. Even assuming that Plaintiffs will suffer irreparable harm if they are unable

to run their slate, the balance of equities favors Defendants. Plaintiffs’ admitted

strategy of delay and orchestrated pressure campaign were designed to create a

                                          72
burdensome exigency. Louisiana Mun. Police Emps.’ Ret. Sys. v. Crawford, 2007

WL 625006, at *1 (Del. Ch. Feb. 13, 2007) (considering the self-inflicted nature of

the harm in the court’s evaluation of the court’s balancing of the equities).

       Plaintiffs strategically delayed in pursuing a proxy contest and bringing suit,

forcing Defendants to litigate this case on a burdensome, expedited basis and

increasing the costs to Cano in connection with its annual meeting.287 Plaintiffs here

failed to timely nominate directors to replace the directors up for election in 2023

despite their significant concerns about the management of the Company. Plaintiffs

were not strangers to this Company, but rather were directors with a long-established

familiarity with Cano’s structure and policies. As their concerns continued to build,

they chose to sit back in the hope that time would increase their leverage over the

board. Plaintiffs must be forced to live with the consequences of their actions. The

balance of equities tips in favor of the Defendants and counsels against the entry of

a preliminary injunction.

287
    Defs.’ Answering Br. 56–57, 59. The policy behind enforcing unambiguous advance
notice bylaws is well established. See, e.g., Saba Cap., 224 A.3d at 980 (“A rule that would
permit election-contest participants to ignore a clear deadline and then, without having
raised any objection, proffer after-the-fact reasons for their non-compliance with it, would
create uncertainty in the electoral setting. Encouraging such after-the-fact factual inquiries
into missed deadlines could potentially frustrate the purpose of advance notice bylaws,
which ‘are designed and function to permit orderly meetings and election contests and to
provide fair warning to the corporation so that it may have sufficient time to respond to
shareholder nominations.’” (quoting Openwave, 924 A.2d at 239)).
                                             73
III.   CONCLUSION

       For the foregoing reasons, the Plaintiffs’ motion for a preliminary injunction

is denied.

                                         74