Court Opinion

ID: 3202703
Source: CourtListenerOpinion
Date Created: 2016-05-11 20:02:50.878363+00
Date Added: 2024-06-11T07:39:16.127399
License: Public Domain

EFiled: May 11 2016 08:00AM EDT
                                                   Transaction ID 58988315
                                                   Case No. 9322-VCL

      IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                                         )
IN RE: APPRAISAL OF DELL INC.            )    C.A. No. 9322-VCL
                                         )

                                  OPINION

                        Date Submitted: March 18, 2016
                         Date Decided: May 11, 2016

Stuart M. Grant, Michael J. Barry, Christine M. Mackintosh, GRANT & EISENHOFER
P.A., Wilmington, Delaware; Counsel for Petitioners.

Gregory P. Williams, John D. Hendershot, Susan M. Hannigan, Andrew J. Peach,
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; John L. Latham,
Susan E. Hurd, ALSTON & BIRD LLP, Atlanta, Georgia; Gidon M. Caine, ALSTON &
BIRD LLP, East Palo Alto, California; Charles W. Cox, ALSTON & BIRD LLP, Los
Angeles, California; Counsel for Respondent.

LASTER, Vice Chancellor.
       Respondent Dell Inc. completed a merger (the “Merger”) that gave rise to

appraisal rights. A stockholder only can pursue an appraisal if the stockholder “neither

voted in favor of the merger . . . nor consented thereto in writing.” 8 Del. C. § 262(a) (the

“Dissenter Requirement”). The appraisal statute defines the term “stockholder” as “a

holder of record of stock in a corporation.” Id. (the “Record Holder Requirement”).

       Fourteen of the appraisal petitioners are mutual funds sponsored by T. Rowe Price

& Associates, Inc. (“T. Rowe”) or institutions that relied on T. Rowe to direct the voting

of their shares (collectively, the “T. Rowe Petitioners”). The T. Rowe Petitioners were

not holders of record. They held their shares through a custodial bank, State Street Bank

& Trust Company (“State Street”).1 For purposes of Delaware law, State Street was not a

holder of record either. It was a participant member of the Depository Trust Company

(“DTC”). As described in a related opinion, DTC is a depository institution formed in

1973 in response to the federal policy of share immobilization. See In re Appraisal of

Dell Inc. (Dell Ownership), 2015 WL 4313206, at *1-2, 4-7 (Del. Ch. July 13, 2015).

       DTC held the T. Rowe Petitioners’ shares in the name of its nominee, Cede & Co.

For purposes of Delaware law, Cede was the holder of record. As such, Cede had the

legal right under Delaware law to vote the shares and demand appraisal.

       1
         Some of the T. Rowe Petitioners used other custodians, but the parties have
treated this variation as immaterial and briefed the matter as if State Street were the sole
custodian. Their shared premise simplifies one aspect of a complex situation, so this
decision gratefully adopts it.

                                             1
       But Delaware law formed only part of a Byzantine and path-dependent system by

which stockholders voted on the Merger. Federal law, the Uniform Commercial Code,

stock exchange listing standards, and private contracts combined to create an overarching

superstructure of requirements and practices. The resultant legal web constrained Cede to

vote the T. Rowe Petitioners’ shares as T. Rowe directed.

       Cede fulfilled this obligation through a daisy chain of authorizations. First, DTC

transferred Cede’s state law voting authority to the DTC participants by executing an

omnibus proxy in their favor. At that point, voting authority for the T. Rowe Petitioners’

shares rested with State Street.

       Next, State Street outsourced to Broadridge Financial Solutions, Inc. the task of

collecting and implementing voting instructions from its many account holders, including

the T. Rowe Petitioners. To carry out that task, State Street gave Broadridge a power of

attorney which authorized Broadridge to execute proxies on State Street’s behalf. At that

point, voting authority for the T. Rowe Petitioners’ shares rested with Broadridge.

       To fulfill its contractual obligations to State Street, Broadridge communicated

with State Street’s account holders and obtained voting instructions by mail, by

telephone, or over the internet. With T. Rowe, the process involved an additional party:

Institutional Shareholder Services Inc. (“ISS”). To facilitate the submission of voting

instructions in connection with numerous meetings of stockholders each year, T. Rowe

has retained ISS to notify T. Rowe about upcoming votes, provide voting

recommendations, collect T. Rowe’s voting instructions, and convey them to Broadridge.

To make the voting process more efficient, T. Rowe has a computerized system that

                                            2
automatically generates default voting instructions and provides them to ISS. The default

voting instruction for a management-supported merger is to vote in favor.

       Although T. Rowe opposed the Merger, its voting system generated instructions to

vote the T. Rowe Petitioners’ shares in favor of it. ISS received those instructions and

transmitted them to Broadridge. Broadridge received those instructions and included

them when voting the shares that Cede owned. When Broadridge submitted its client

proxies, the proxies voted the T. Rowe Petitioners’ shares “FOR” the Merger. Through

Broadridge, Cede voted the T. Rowe Petitioners’ shares in favor of the Merger.

       Because the holder of record did not dissent as to the shares for which the T. Rowe

Petitioners now seek appraisal, the Dissenter Requirement is not met. The T. Rowe

Petitioners’ shares do not qualify for appraisal. Judgment is entered against them. The T.

Rowe Petitioners remain entitled to the merger consideration without any award of

interest.

                         I.      FACTUAL BACKGROUND

       Dell originally moved for entry of summary judgment against the T. Rowe

Petitioners because of their failure to satisfy the Dissenter Requirement. The parties

agreed to defer briefing until after trial, and the materials that they deemed relevant were

introduced into the trial record. The factual findings in this decision are drawn from the

trial record.

A.     The Merger

       On February 5, 2013, Dell’s board of directors (the “Board”) approved an

agreement and plan of merger (the “Merger Agreement”) between Dell and three

                                             3
counterparties: Denali Holding Inc., Denali Intermediate Inc., and Denali Acquiror Inc.

Dell’s counterparties under the Merger Agreement were affiliates of Dell’s eponymous

founder, Michael Dell, and Silver Lake Management LLC (the “Buyout Group”). The

Merger Agreement contemplated that each share of common stock of Dell not held by a

member of the Buyout Group would be converted into the right to receive $13.75 in cash.

The Merger therefore gave rise to appraisal rights. See 8 Del. C. § 262(b).

       Under Section 251(c) of the Delaware General Corporation Law (the “DGCL”), a

merger agreement “shall be submitted to the stockholders of each constituent corporation

at an annual or special meeting for the purpose of acting on the agreement.” Id. § 251(c).

The Board scheduled a meeting of stockholders for July 18, 2013 (the “July Meeting”).

The Board set a record date of June 3 for the meeting.

       On May 31, 2013, Dell filed its definitive proxy statement for the July Meeting

(including amendments, the “Proxy Statement”). The Proxy Statement announced the

meeting date and the record date, solicited proxies from Dell’s stockholders, and asked

them to vote “FOR” the Merger.

B.     The T. Rowe Petitioners’ Shares

       The T. Rowe Petitioners had invested in Dell common stock.2 They did not,

however, hold legal title to any shares. They were beneficial owners who held through

State Street.

       2
       In the order that they appear on the verified list required by Section 262(f) of the
DGCL, the T. Rowe Petitioners are (i) T. Rowe Price Equity Income Fund, Inc. (Verified

                                             4
      State Street did not hold legal title either. Legal title rested with Cede, the nominee

of DTC. As discussed in a related opinion, DTC’s role in the ownership structure of

publicly traded domestic corporations stems from the federal policy of share

immobilization, adopted in response to a paperwork crisis on Wall Street during the late

1960s and early 1970s. See Dell Ownership, 2015 WL 4313206, at *1-2, 4-7. To achieve

share immobilization, the Securities and Exchange Commission placed a new entity—the

depository institution—at the bottom of the ownership chain. DTC emerged as the only

domestic depository. Today, over 800 custodial banks and brokers are participating

members of DTC and maintain accounts with that institution.

      DTC primarily holds shares on behalf of its participants in fungible bulk, meaning

that all of the shares are issued in the name of Cede “without any subdivision into

separate accounts of the custodian’s customers.” Marcel Kahan & Edward Rock, The

List No. 1); (ii) T. Rowe Price Science and Technology Fund, Inc. (Verified List No. 2);
(iii) John Hancock Variable Insurance Trust - Equity Income Trust (Verified List No. 5);
(iv) John Hancock Funds II - Equity Income Fund (Verified List No. 7); (v) T. Rowe
Price Equity Income Trust, a sub-trust of T. Rowe Price Institutional Common Trust
Fund (Verified List No. 9); (vi) T. Rowe Price Institutional Equity Funds, Inc., on behalf
of T. Rowe Price Institutional Large Cap Value Fund (Verified List No. 10); (vii) John
Hancock Funds II - Science & Technology Fund (Verified List Nos. 13 & 39); (viii) T.
Rowe Price Equity Income Series, Inc., on behalf of T. Rowe Price Equity Income
Portfolio (Verified List No. 15); (ix) John Hancock Variable Insurance Trust - Science &
Technology Trust (Verified List No. 18); (x) T. Rowe Price U.S. Equities Trust (Verified
List Nos. 23 & 24); (xi) Prudential Retirement Insurance and Annuity Co., on behalf of
Separate Account SA-5T2 (Verified List No. 26); (xii) John Hancock Funds II -
Spectrum Income Fund (Verified List No. 42); (xiii) Tyco International Retirement
Savings and Investment Plan Master Trust (Verified List No. 43); and (xiv) The Bureau
of National Affairs, Inc. (Verified List No. 45). This list omits the T. Rowe Petitioners
whose claims to appraisal were addressed in the Dell Ownership decision.

                                             5
Hanging Chads of Corporate Voting, 96 Geo. L.J. 1227, 1239 (2008). Through a Fast

Automated Securities Transfer account (the “FAST Account”), DTC tracks the number of

shares that each participant holds using an electronic book entry system.

       When the Board approved the Merger, the shares of Dell common stock that State

Street held at DTC on behalf of the T. Rowe Petitioners were part of the FAST Account.

Beginning on July 12, 2013, however, T. Rowe caused Cede to send letters demanding

appraisal on behalf of the T. Rowe Petitioners. Cede sent a separate demand letter for

each T. Rowe Petitioner, and each demand letter made clear that Cede was seeking

appraisal on behalf of a specified block of shares owned by a client of one of its

participants. In standardized language, each demand stated that Cede was the record

holder of shares of Dell common stock and was “informed by its Participant” that a

specified number of shares was “beneficially owned by” an identified beneficial owner,

characterized as a “customer of Participant.” E.g., JX 495 at 1. Each demand concluded,

“[i]n accordance with instructions received from Participant on behalf of its customer, we

hereby assert appraisal rights with respect to the Shares.” E.g., id.

       For reasons explained in the Dell Ownership decision, when the T. Rowe

Petitioners caused Cede to demand appraisal, DTC removed the shares covered by the

demand from the FAST Account and requested paper certificates from Dell’s transfer

agent. See 2015 WL 4313206, at *2-3. From that point on, the shares that State Street

held as custodian were maintained in certificated form in DTC’s vault. One can infer that

State Street had contracted with DTC to hold paper stock certificates, thereby avoiding

the problem of re-titled certificates which the Dell Ownership decision addressed.

                                              6
      The following illustration depicts the manner in which the T. Rowe Petitioners

held their shares and the multiple levels of ownership involved. The figure identifying

Cede’s ownership encompasses both shares held in fungible bulk and shares that are

certificated in Cede’s name.

C.    T. Rowe’s Relationship With ISS

      As one of the largest institutional investors in the United States, T. Rowe is called

upon to submit voting instructions at a large number of stockholder meetings. To

facilitate the submission of voting instructions, T. Rowe has adopted a set of default

voting policies. T. Rowe also has entered into an agreement with ISS under which ISS

provides a range of voting-related services (the “ISS Master Agreement”).

                                            7
       As defined in an attachment to the ISS Master Agreement, the services provided

by ISS included an “administrative portion” that encompasses “vote execution” and

“record keeping and reporting services.” JX 8 at 7.

       Under vote execution, ISS tracks User/Subscriber’s holdings by account to
       ensure votes are recorded on time and casts votes based on
       User/Subscriber’s guidelines.

       For record keeping and reporting, ISS records the meeting name, CUSIP,
       meeting date, shares voted, proxy proposals, management recommendation,
       and vote cast. ISS also provides standard reports for each company voted,
       all votes for a single account, and other specialized reports.

Id. Under the heading “PERFORMANCE STANDARDS,” the attachment stated:

“Subscriber/User requires that at least ninety-nine (99%) of all meetings be voted and

voted as instructed.” Id. at 8.

       For the period beginning January 1, 2013, T. Rowe and ISS clarified their

contractual relationship by entering into an addendum to the ISS Master Agreement (the

“Addendum”) and a supplemental service level agreement (the “Supplemental

Agreement”). The Addendum elaborated on how ISS would maintain and provide T.

Rowe with access to records documenting how its shares were voted. It stated that ISS

would provide “[a] web-based search and presentation mechanism for disclosure of any

archived proxy votes cast on behalf of the Subscriber by ISS for the mutual funds and

accounts listed below. Through a link on the Subscriber’s web site, users will be able to

seamlessly access vote records.” JX 246 at 3.

       The Supplemental Agreement specified the manner in which ISS would notify T.

Rowe about upcoming meetings, provide voting recommendations, and carry out T.

                                            8
Rowe’s       voting   instructions.   A   paragraph   entitled   “Delivery   of   Research,

Recommendations and Voting Services” stated:

       ISS will review Subscriber’s holdings file and/or the ballots received for
       the Subscriber and match the holdings and/or the ballots against the
       upcoming shareholders meeting list maintained by ISS. In the event of a
       match, an entry will be created on the electronic web-based delivery
       platform regarding the meeting.

       For each match for Subscriber’s common equity holdings, ISS will prepare
       a research report and make a vote recommendation with respect to each
       item to be voted on the shareholders meeting. The research report and vote
       recommendations will be prepared in accordance with Subscriber’s custom
       voting policy as provided by Subscriber to ISS. . . . Research and
       recommendations will be presented via ISS’ electronic web-based delivery
       system.

Id. at 9. The “web-based delivery platform” was part of a computerized voting system

maintained by ISS called Proxy Exchange (the “ISS Voting System”).

       The Supplemental Agreement elaborated on ISS’s obligation to implement T.

Rowe’s voting instructions accurately. A provision titled “Voting Services” stated:

       ISS must accurately vote [REDACTED] of Subscriber’s ballots. If ISS fails
       to meet this target due to an ISS error (including voting ballots contrary to
       Subscribers [sic] instructions received in good order), then ISS shall
       provide the Subscriber with a service credit of [REDACTED] of ballot fees.

Id. at 10.

       Under these agreements, when ISS learned that an issuer had scheduled a meeting

of stockholders, the ISS Voting System would notify T. Rowe by generating a

communication called a meeting record. T. Rowe personnel would view the meeting

record through T. Rowe’s Proxy Recommendation System (the “T. Rowe Voting

System”). The T. Rowe Voting System would pre-populate the meeting record with

                                              9
voting instructions that matched T. Rowe’s standard voting policies. When T. Rowe

received a meeting record, the T. Rowe Voting System would send an email

automatically to the portfolio managers of the T. Rowe funds who were invested in that

issuer so that they could review the meeting record and determine whether to depart from

T. Rowe’s standard voting policies. To vote, a T. Rowe portfolio manager could either

leave the pre-populated voting instructions in place or submit different instructions. Once

finalized, the voting instructions would be sent to ISS.

D.     T. Rowe Provides Voting Instructions For The July Meeting.

       For the July Meeting, the ISS Voting System generated a meeting record on July

9, 2013 (the “July Meeting Record”). It identified three agenda items. Item 1 was the

approval of the Merger Agreement. Item 2 was an advisory vote on golden parachute

compensation payable in connection with the Merger. Item 3 was a proposal giving Dell

authority to adjourn the July Meeting. For a transaction that is supported by management,

the T. Rowe default voting position was to vote “FOR” the transaction and “FOR” the

authority to adjourn. The default voting position was to vote “AGAINST” an advisory

vote on golden parachute compensation.

       The T. Rowe Voting System pre-populated the July Meeting Record with T.

Rowe’s default voting positions and sent an email to all of the T. Rowe portfolio

managers who held Dell stock in actively managed accounts. Six of the portfolio

managers decided to vote against the Merger. They communicated their determinations to

a T. Rowe Vice President and Corporate Governance Specialist.

                                             10
       On July 16, 2013, the Corporate Governance Specialist logged into the T. Rowe

Voting System and changed the voting instructions for the first and third items in the July

Meeting Record to “AGAINST.” As a result, the July Meeting Record contemplated T.

Rowe voting against all three items. The T. Rowe Voting System sent the specialist an

email confirming those instructions.

       That same day, relying on the voting instructions entered into the July Meeting

Record by the Corporate Governance Specialist, a T. Rowe Business Analyst entered the

“AGAINST” instructions into the ISS Voting System. The analyst clicked “submit” on

the web-based portal, transmitting those voting instructions to ISS.

       Also that same day, a T. Rowe Price Assistant Vice President and Senior Manager

emailed ISS to confirm that ISS had received the instructions to vote “AGAINST” all

three proposals. ISS confirmed receipt of the instructions.

E.     Dell Pushes Off The July Meeting Three Times.

       On July 18, 2013, Dell convened the July Meeting for the sole purpose of

adjourning it until July 24. ISS updated the date of the meeting, but did not send out a

new meeting record for the adjourned meeting. The T. Rowe Corporate Governance

Specialist nevertheless confirmed that T. Rowe’s instructions to vote “AGAINST”

remained operative in both the T. Rowe Voting System and the ISS Voting System.

       On July 23, 2013, the Buyout Group delivered a revised proposal that increased

the merger consideration to $13.75. Dell rejected the proposal, but adjourned the

stockholder meeting until August 2. ISS updated the date of the meeting, but did not send

out a new meeting record for the adjourned meeting. The T. Rowe Corporate Governance

                                            11
Specialist reconfirmed that T. Rowe’s instructions to vote “AGAINST” remained

operative in both the T. Rowe Voting System and the ISS Voting System.

       On July 31, 2013, the Buyout Group proposed a one-time special cash dividend

that effectively increased the merger consideration to the final figure of $13.88 per share.

On August 2, Dell accepted the revised proposal. Also on August 2, Dell convened the

adjourned meeting for the sole purpose of adjourning it again until September 12 (the

“September Meeting”). Dell set a new record date of August 13 for the September

Meeting.

       On August 12, 2013, ISS updated the date of the meeting to September 12, but the

ISS Voting System did not generate a new meeting record. The T. Rowe Corporate

Governance Specialist confirmed for a third time that T. Rowe’s instructions to vote

“AGAINST” all three proposals remained operative in both the T. Rowe Voting System

and the ISS Voting System.

F.     The Voting Mix-Up For The September Meeting

       On September 4, 2013, the ISS Voting System generated a new meeting record for

the re-scheduled meeting (the “September Meeting Record”). The T. Rowe Voting

System showed both the July Meeting Record and the September Meeting Record. In the

ISS Voting System, however, the September Meeting Record replaced the July Meeting

Record. This had the effect of deleting the voting instructions that had been entered in the

ISS Voting System.

       The T. Rowe Voting System automatically pre-populated the September Meeting

Record with the default voting instructions called for by T. Rowe’s voting policies. As a

                                            12
result, the T. Rowe Voting System populated the September Meeting Record with

instructions to vote “FOR” the Merger, “AGAINST” the advisory resolution on golden

parachutes, and “FOR” authority to adjourn the meeting.

       No one from T. Rowe’s proxy team logged into the ISS Proxy System to check the

status of T. Rowe’s voting instructions. As part of the routine operation of the two

systems, the default instructions in the September Meeting Record were conveyed

automatically to ISS.

G.     Broadridge Votes The Shares.

       Simply by providing instructions to ISS, the T. Rowe Petitioners had not yet voted

their shares. Getting to the actual voting required three more steps: the transfer of the

voting instructions from ISS to Broadridge, the transfer of voting authority from Cede to

Broadridge, and the execution and delivery by Broadridge of a client proxy that voted the

shares over which it had received voting authority in accordance with the voting

instructions it had received.

       1.     The Sources Of Broadridge’s Authority

       Under Delaware law, the legal authority to vote at a meeting of stockholders rests

with the stockholders of record at the time of the meeting, and for that purpose, the stock

ledger constitutes “the only evidence as to who are the stockholders entitled . . . to vote in

person or by proxy at any meeting of stockholders.” 8 Del. C. § 219(c). The stock ledger

“is a compilation of the transfers by and to each individual stockholder, with each

transaction separately posted to separately maintained stockholder accounts.” 2 David A.

Drexler et al., Delaware Corporation Law and Practice § 25.03, at 25-7 (2015).

                                             13
       Because shares are freely alienable by default, the identity of a corporation’s

stockholder base is typically in flux—and for a public corporation constantly so. It is

therefore necessary to define a specific population of stockholders who are entitled to

receive notice of a meeting of stockholders and vote at the meeting. The DGCL addresses

this need by empowering a board of directors to set either a single record date for both

purposes, or to pick two separate record dates, one for notice and another for voting. See

8 Del. C. § 213. Based on the record date that will control the exercise of voting rights,

the DGCL contemplates that “[t]he officer who has charge of the stock ledger of a

corporation shall prepare and make . . . a complete list of the stockholders entitled to vote

at the meeting.” Id. § 219(a). The resulting list identifies the stockholders of record on the

selected date, “arranged in alphabetical order, and showing the address of each

stockholder and the number of shares registered in the name of each stockholder.” Id. It

thus converts the transactions on the stock ledger into a list of owners with legal authority

to exercise voting rights at the meeting.

       Dell outsourced the obligation to maintain its stock ledger and generate a stock list

to its transfer agent, American Stock Transfer & Trust Company, LLC (“American”).

Using the record date of August 13, 2013, American generated a list of stockholders

showing Dell’s holders of record under state law for purposes of the September Meeting.

The stock list identified Cede as the holder of record for 1,535,558,891 shares, with

240,996,342 shares certificated in its own name and 1,294,562,549 in the FAST Account.

Within the 240,996,342 shares held in Cede’s own name were the T. Rowe Petitioners’

                                             14
shares, which had been certificated when the T. Rowe Petitioners caused Cede to demand

appraisal.

       Under the federal regime that created the depository system, DTC is not a record

holder and cannot simply vote the shares held in Cede’s name. The record holders for

purposes of federal law are the DTC participants. See 17 C.F.R. § 240.14c–1(i). In this

case, State Street was the DTC participant and record holder for purposes of federal law.

To transfer its state-law voting rights to the federal-law record holders, DTC executed an

omnibus proxy in favor of its participants. See generally Kurz v. Holbrook, 989 A.2d 140,

161 (Del. Ch. 2010), aff’d in part, rev’d in part on other grounds sub nom. Crown EMAK

P’rs, LLC v. Kurz, 992 A.2d 377 (Del. 2010).

       The voting rights handoff did not stop there. When a DTC participant holds shares

as a fiduciary for its clients, as State Street did, then the participant is obligated to provide

its clients with proxy cards or voting instruction forms and carry out any instructions it

receives.3 That task is an administrative headache, and many participants have outsourced

it.

       3
        See 17 C.F.R. § 240.14b-1 (brokers); id. § 14b-2 (banks); Kahan & Rock, supra,
at 1247; John C. Wilcox, John J. Purcell III, & Hye-Won Choi, “Street Name”
Registration & The Proxy Solicitation Process, in A Practical Guide to SEC Proxy and
Compensation Rules § 10.03[A], at 10-9,12-8 to 12-10 (Amy L. Goodman et al. eds., 4th
ed. 2007 & 2008 Supp.) [hereinafter Street Name]. Stock exchange rules generally
prohibit a custodian from voting client shares on a non-routine matter except in
accordance with voting instructions from the client. See NASDAQ Stock Market Rule
2251(d); New York Stock Exchange Rules 450 & 452.

                                               15
       For many years, banks and brokers maintained their own proxy
       departments to handle the back-office administrative processes of
       distributing proxy materials and tabulating voting instructions from their
       clients. Today, however, the overwhelming majority have eliminated their
       proxy departments and subcontracted these processes out to the Investor
       Communication Solutions Division of [Broadridge] . . . , which now
       provides these services to most banks and brokers.

Street Name, supra, § 10.03[A][3], at 10-14.

       State Street is one of the custodians that has outsourced a variety of voting-related

functions to Broadridge. In this case, a services agreement between State Street and

Broadridge provided that “Broadridge shall fulfill all annual meeting, proxy voting

(contested and uncontested) and consent gathering communications requested by a

corporate or other issuer (a ‘Registrant’) on behalf of [State Street].” JX 43 at 32. They

agreed that “Broadridge does not transmit signed proxies to beneficial shareholders or

member organizations but uses a standard voting instruction form (a ‘Voting Information

Instruction Form’) in lieu thereof.” Id. at 33.

       As part of the contractual arrangement, Broadridge committed to provide State

Street with the following recordkeeping services:

       (1) In connection with each meeting of a Registrants [sic] with respect to which
           Broadridge provides Services, Broadridge keeps and maintains for a period of
           seven (7) years from the date of such meeting, or such longer period as shall be
           reasonably requested in writing by [State Street]:

          (a) Voting Instruction Forms that are returned with the beneficial shareholders’
          voting instructions;

          (b) a record of all voting instructions received from beneficial shareholders
          verbally or electronically;

          (c) copies of all multiple client proxies sent to Registrants; and

                                              16
             (d) copies of [State Street] voting confirmations which inform [State Street] of
             all the voting results for each proxy job processed by Broadridge on behalf of
             [State Street].

       (2) Broadridge shall, during reasonable business hours, make available to [State
           Street] the above records during such periods.

Id. at 35.

       State Street granted Broadridge a power of attorney that gave Broadridge the

authority to perform the contracted-for services. See id. at 37. The power of attorney in

effect for purposes of the September Meeting appointed three Broadridge representatives

       individually, with full power of substitution, the undersigned’s true and
       lawful attorney in the undersigned’s name, place and stead for the sole
       purpose of executing proxies issued by any and all corporate or other
       issuers with respect to any and all of the securities of any such corporate or
       other issuer registered in the name of the undersigned or its nominee and
       owned by the undersigned, or registered in the name of the undersigned or
       its nominee and beneficially owned by clients of the undersigned . . . .

Id. at 45. The power of attorney limited this broad grant of authority to executing proxies

“only in accordance with the voting instructions of the undersigned or the beneficial

owners of any such securities indicated on the returned proxies or voting instruction

forms,” unless stock exchange rules or SEC rules allowed Broadridge to vote without

instructions from the beneficial owners. Id.

       Through these contractual arrangements, Broadridge ended up with the legal

authority to vote the shares held of record by Cede on behalf of the T. Rowe Petitioners

for which State Street was custodian. The omnibus proxy transferred to State Street the

authority that the DGCL imbued in DTC, and State Street had a standing arrangement

transferring the right to exercise that authority to Broadridge under the power of attorney.

                                               17
      In this case, the T. Rowe Petitioners had demanded appraisal, which caused DTC

to certificate their shares. State Street therefore had to take the additional step of

manually entering the T. Rowe Petitioners’ ownership positions into Broadridge’s

system. When this occurred, Broadridge’s computer system generated an internal control

number for each position. State Street provided the control numbers for twelve of the T.

Rowe Petitioners to ISS so that ISS could submit voting instructions for those positions

to Broadridge. State Street did not provide a control number for the John Hancock Funds

II – Science & Technology Fund or the Bureau of National Affairs, Inc.

      2.     Broadridge Receives Instructions And Votes The Shares.

      On September 9, 2013, ISS transmitted to Broadridge the voting instructions for

the T. Rowe Petitioners’ positions as they appeared in the ISS Voting System. Those

voting instructions were found in the September Meeting Record, matched T. Rowe’s

default voting policies, and called for voting “FOR” the Merger, “AGAINST” the

advisory vote on golden parachute compensation, and “FOR” authority to adjourn the

meeting.

      In the next step in the voting process, Broadridge delivered a series of “Broadridge

Client Proxies” to Dell’s proxy solicitor. The first proxy was dated September 10, 2013,

and revoked all prior proxies. Broadridge delivered supplemental client proxies as it

received additional voting instructions from its broker and custodian clients. Each client

proxy was issued “pursuant to powers of attorney executed by each listed brokerage firm

or nominee which are in full force and effect as of the date hereof” and “on file with the

offices of Broadridge.” JX 694 at 3. Through its client proxy cards, Broadridge voted

                                           18
each of the positions held by the T. Rowe Petitioners “FNF,” meaning “FOR” the

Merger, “AGAINST” the advisory resolution on golden parachute compensation, and

“FOR” authority to adjourn the meeting. Each Broadridge Client Proxy disclosed

aggregate votes by client. None of the Broadridge Client Proxies broke out the shares by

accounts or beneficial owners.

      The following illustration depicts the flow of voting power and instructions.

      In this case, the record establishes how Cede voted the T. Rowe Petitioners’ shares

because the Broadridge internal control numbers serve as a unique identifier for each

position held by a Broadridge client. Although Broadridge does not provide its control

numbers to the issuer or the public, it does make them available upon request to its

clients, such as State Street. The following table identifies the T. Rowe Petitioner, its

unique Broadridge control number, its corresponding identification on the verified list of

appraisal petitioners, and the number of shares voted in favor of the Merger.

                                            19
             T. Rowe Petitioner                  Control No.      Verified       Shares
                                                                  List No.
 T. Rowe Price Equity Income Fund, Inc.          902401246009        1         16,500,000
 T. Rowe Price Science and Technology            902401256207        2          7,045,780
 Fund
 John Hancock Variable Insurance Trust -         902401251707         5         1,271,400
 Equity Income Trust
 John Hancock Funds II - Equity Income           902401258409         7         1,010,600
 Fund
 T. Rowe Price Equity Income Trust, a sub-       902401240403         9           965,100
 trust of T. Rowe Price Institutional
 Common Trust Fund
 T. Rowe Price Institutional Equity Funds,       902401257303        10           954,800
 Inc., on behalf of T. Rowe Price
 Institutional Large Cap Value Fund
 John Hancock Funds II - Science &               344965119305      13 & 39      1,090,800
 Technology Fund
 T. Rowe Price Equity Series, Inc., on           902401249307        15           685,800
 behalf of T. Rowe Price Equity Income
 Series, Inc.
 John Hancock Variable Insurance Trust           902401254005        18           458,900
 Science & Technology Fund
 T. Rowe Price U.S. Equities Trust               902401262001      23 & 24        552,100
 Prudential Retirement Insurance & Annuity       902401281301         26          256,500
 Co., on behalf of Separate Account SA-
 5T2
 John Hancock Funds II - Spectrum Income         902401261905        42            93,900
 Fund
 Tyco International Retirement Savings &         902401276603        43            86,450
 Investment Plan Master Trust
 The Bureau of National Affairs, Inc.            344996356596        45            80,000

H.     The Results Of The September Meeting

       Each Broadridge Client Proxy appointed two Dell representatives to vote the

shares represented by the proxy at the September Meeting in accordance with the

instructions on the proxy. Dell’s proxy solicitor aggregated all of the proxies, and the two

Dell representatives voted them. IVS Associates, Inc., the inspector of the election,

                                            20
counted the votes. IVS reported that stockholders present at the meeting had approved the

Merger, stating:

      At the close of business on August 13, 2013, the record date for
      determination of stockholders entitled to vote at the Meeting, there were
      issued and outstanding 1,758,001,669 shares of the Company’s common
      stock, each share being entitled to one vote at the Meeting and representing
      all of the outstanding voting securities of the Company. . . .

      At the Meeting, the holders of 1,452,545,285 shares of the Company’s
      common stock were represented in person or by proxy, constituting a
      quorum. . . .

      At the Meeting, the vote on a proposal to adopt the Agreement and Plan of
      Merger, dated as of February 5, 2013, as amended on August 2, 2013, by
      and among Denali Holding Inc., Denali Intermediate Inc., Denali Acquiror
      Inc. and the Company, as it may be further amended from time to time
      (“Proposal 1”), was as follows:

                    For                  Against                 Abstain
               1,013,326,409           399,608,525              39,610,350

      Excluding the shares to be voted by the Affiliated Stockholders from the
      total shares voted For above, the vote on Proposal 1 was at least as follows:

                                   For                    Against
                               733,998,074              399,608,525
JX 695 at 1.

      The report that IVS prepared certified that Cede had voted as follows:

                   For                   Against                 Abstain
               803,734,618             397,961,172              39,574,205

The votes recorded on Cede’s behalf included the shares voted pursuant to the

Broadridge Client Proxies, which implemented the instructions that T. Rowe provided to

ISS and ISS conveyed to Broadridge.

I.    Additional Evidence Of How The T. Rowe Petitioners Voted.

                                             21
      Eight of the T. Rowe Petitioners are mutual funds. Federal law requires that they

file a Form N-PX disclosing how they voted their securities during the most recent

twelve-month period ended June 30.4

      In August 2014, the eight T. Rowe Petitioners filed their forms. ISS generated the

forms using data pulled from the ISS Voting System. T. Rowe personnel checked the

forms for accuracy and filed them. The forms stated that the eight T. Rowe Petitioners

had voted “FOR” the Merger.

      Because T. Rowe had opposed the Merger publicly, the disclosure that eight of the

T. Rowe Petitioners had voted “FOR” the Merger generated inquiries. T. Rowe began to

investigate what happened. On October 28, 2014, an ISS representative explained to T.

Rowe personnel by email that it had provided Broadridge with instructions to vote the T.

Rowe Petitioners’ shares in favor of the Merger. The email stated:

      [T]he Dell Inc. meeting situation was very fluid during the July-Sept 2013
      period and delayed several times. Ultimately, the proxy contest (and
      applicable ballots) was canceled and a special meeting was held for

      4
         See 17 C.F.R. § 270.30b1-4 (imposing reporting requirement); id. § 274.129
(prescribing form of report). The record included Form N-PXs filed by eight of the T.
Rowe Petitioners. They include: (i) T. Rowe Price Equity Income Fund, Inc. (Verified
List No. 1; JX 830), (ii) T. Rowe Price Science and Technology Fund, Inc. (Verified List
No. 2; JX 833), (iii) John Hancock Variable Insurance Trust - Equity Income Trust
(Verified List No. 5; JX 827), (iv) John Hancock Funds II - Equity Income Fund
(Verified List No. 7; JX 826), (v) T. Rowe Price Institutional Equity Funds, Inc., on
behalf of T. Rowe Price Institutional Large Cap Value Fund (Verified List No. 10; JX
832), (vi) T. Rowe Price Equity Series, Inc. on behalf of T. Rowe Price Equity Income
Portfolio (Verified List No. 15; JX 831), (vii) John Hancock Variable Insurance Trust -
Science & Technology Trust (Verified List No. 18; JX 825), and (viii) John Hancock
Funds II - Spectrum Income Fund (Verified List No. 42; JX 828).

                                           22
      shareholders to vote on the proposed merger. New ballots were issued for
      the Special meeting which were voted in-line with the [T. Rowe] Policy
      Recommendations; the majority of the ballots being voted 4-6 days prior to
      the meeting.

JX 838 at 1.

      On November 4, 2014, after an extensive email exchange between ISS and T.

Rowe, another ISS representative sent an email to two colleagues which explained that

ISS had provided Broadridge with instructions to vote the T. Rowe Petitioners’ shares in

favor of the Merger. The email stated:

      Today we had a call with [T. Rowe’s] legal counsel regarding the Dell vote
      from last year. As you may recall, the meeting was originally coded as a
      Proxy Contest, but later changed to an EGM [extraordinary general
      meeting]. While the meeting was coded as a PC [proxy contest], [T. Rowe]
      voted AGAINST the merger agreement, but neglected to do so when the
      PC meeting was invalidated, and the EGM ballots were sent through.

      While they are not placing any blame on ISS (this was an oversight on their
      part), they are trying to reconcile the information we are providing them,
      against the information they are receiving from Broadridge. To this point,
      they would like to review the portion of the [Consolidated Data Feed] that
      transmitted their vote information to Broadridge for the EGM. Meeting and
      audit trail details are below.

JX 843 at 10. An earlier email in the chain stated that at least “78 ballots were sent as

FNF [i.e., “FOR” the Merger, “AGAINST” the advisory executive compensation

proposal, and “FOR” adjournment of the Meeting if necessary] to Broadridge on 2013-

09-06 and 2009[sic]-09-09.” JX 841 at 1. The email contained a list of control numbers,

                                           23
nine of which match the control numbers that Broadridge assigned to the T. Rowe

Petitioners.5

       Also on November 4, 2014, a T. Rowe representative emailed State Street to

determine how the shares it held on behalf of the T. Rowe Petitioners were voted. The

email stated:

       I am requesting the vote report from Broadridge indicating how the
       following State Street accounts (T. Rowe Price funds) voted on the
       [Merger]. . . . We have spoken to Broadridge directly, who have confirmed
       that they keep audit records going back 7 years, so this information is
       available, but have been told that the request must come from State Street
       since you are their client. Therefore, please instruct Broadridge to send you
       this information in a report format so that we may receive it once you have
       it.

JX 844 at 5. The request included fourteen account numbers, six of which corresponded

to accounts for the T. Rowe Petitioners. By email dated November 10, State Street sent T.

Rowe a list identifying the fourteen account numbers with a corresponding ballot control

number and reflecting that each position had been voted “FNF,” i.e., “FOR” the Merger,

       5
         The corresponding T. Rowe Petitioners are (i) John Hancock Variable Insurance
Trust - Equity Income Trust (Verified List No. 5), (ii) John Hancock Funds II - Equity
Income Fund (Verified List No. 7), (iii) T. Rowe Price Equity Income Trust, a sub-trust
of T. Rowe Price Institutional Common Trust Fund (Verified List No. 9), (iv) John
Hancock Variable Insurance Trust - Science & Technology Trust (Verified List No. 18),
(v) T. Rowe Price U.S. Equities Trust (Verified List Nos. 23 & 24), (vi) Prudential
Retirement Insurance and Annuity Co., on behalf of Separate Account SA-5T2 (Verified
List No. 26), (vii) John Hancock Funds II - Spectrum Income Fund (Verified List No.
42), (viii) Tyco International Retirement Savings and Investment Plan Master Trust
(Verified List No. 43), and (ix) The Bureau of National Affairs, Inc. (Verified List No.
45).

                                            24
“AGAINST” the executive compensation proposal, and “FOR” adjournment of the

September Meeting.

       Given this factual record, Dell has proven by a preponderance of the evidence that

the T. Rowe Petitioners shares were voted “FOR” the Merger. Broadridge voted those

shares in favor of the Merger through the Broadridge client proxies, which exercised the

voting authority that Broadridge received from State Street through a power of attorney,

and which State Street had received from Cede through the DTC omnibus proxy.

                              II.     LEGAL ANALYSIS

       Delaware cases uniformly place the burden of proof on the petitioner to

demonstrate compliance with the requirements of the appraisal statute. 6 The Dissenter

Requirement is one of those requirements. It therefore might seem intuitive that to satisfy

the Dissenter Requirement, a petitioner would bear the burden of proving that Cede, as

record holder, had not voted the shares for which appraisal was sought in favor of the

merger giving rise to appraisal rights.

       Two Delaware Supreme Court cases support that conclusion. See Olivetti

Underwood Corp. v. Jacques Coe & Co. (Olivetti II), 217 A.2d 683 (Del. 1966);

Reynolds Metals Co. v. Colonial Realty Corp. (Reynolds II), 190 A.2d 752 (Del. 1963).

       6
         See, e.g., Dirienzo v. Steel P’rs Hldgs. L.P., 2009 WL 4652944, at *7 (Del. Ch.
Dec. 8, 2009); Neal v. Ala. By-Products Corp., 1988 WL 105754, at *3 n.1 (Del. Ch. Oct.
11, 1988); In re Engle v. Magnavox Co., 1976 WL 2449, at *1 (Del. Ch. Apr. 21, 1976);
In re Hilton Hotels Corp., 210 A.2d 185, 187 (Del. Ch. 1965), aff’d sub nom. Carl M.
Loeb, Rhoades & Co. v. Hilton Hotels Corp., 222 A.2d 789 (Del. 1966).

                                            25
In three more recent cases, however, this court declined to require a petitioner to make

this showing, which the decisions helpfully labeled a “share-tracing requirement.”7 All

three cases involved situations where investors purchased shares in the open market after

the record date for a merger for the purpose of pursuing appraisal. This practice is known

colloquially as “appraisal arbitrage,” so it is convenient to call them the “Appraisal

Arbitrage Decisions.”

      Although the Delaware Supreme Court has not yet spoken on this issue, I believe

that each of the Appraisal Arbitrage Decisions was decided correctly in light of the

arguments that the parties advanced and the record they presented to the court. In none of

the three cases was there evidence showing how the record holder voted the shares for

which appraisal was sought. To the contrary, in each case, the parties agreed that it was

impossible for either side—the investors or the corporation—to show how Cede voted

particular shares. Imposing a share-tracing requirement therefore implied that no

stockholder who held through Cede could seek appraisal. Investors who bought after the

record date would not be able to trace their shares to a prior beneficial owner with the

legal authority to direct how the shares were voted. More broadly, investors who held on

the record date would not be able to prove how Cede voted the shares for which appraisal

      7
        See In re Appraisal of Ancestry.com, Inc., 2015 WL 66825 (Del. Ch. Jan. 5,
2015); Merion Capital LP v. BMC Software, Inc., 2015 WL 67586 (Del. Ch. Jan. 5,
2015); In re Appraisal of Transkaryotic Therapies, Inc., 2007 WL 1378345 (Del. Ch.
May 2, 2007).

                                           26
was sought. As the parties presented it, a share-tracing requirement would foreclose

street-name holders from seeking appraisal.

       Not surprisingly, the Appraisal Arbitrage Decisions rejected a share-tracing

requirement. They did so by stressing that the Record Holder Requirement called for

considering only Cede’s actions. But the decisions then took the additional step of

seemingly equating the analysis of Cede’s voting behavior with an exclusive focus on the

aggregate voting totals provided at the meeting. In a case where everyone agreed that no

one could show anything more, stopping there made sense. Before this case, the

Delaware courts had never confronted a situation in which the evidence showed that

Cede in fact voted the shares for which appraisal was sought in favor of the merger

giving rise to appraisal rights.

       The existence of evidence showing how Cede voted the T. Rowe Petitioners’

shares warrants distinguishing the Appraisal Arbitrage Decisions as addressing situations

in which there was an evidentiary vacuum. That scenario necessarily prevails at the

pleading stage, and it may persist after discovery, as it did in those cases. The holdings of

the Appraisal Arbitrage Decisions mean that a petitioner can establish a prima facie case

that the Dissenter Requirement was met by showing that Cede held a sufficient number of

shares that were not voted in favor of a merger to cover the appraisal class. At that point,

the burden shifts to the respondent corporation to adduce evidence showing how Cede

actually voted the shares for which appraisal was sought. If the corporation can rebut the

petitioner’s prima facie case and demonstrate that Cede actually voted the particular

                                              27
shares in favor of the merger, then the appraisal petitioner cannot satisfy the Dissenter

Requirement for those shares.

       In my view, distinguishing the Appraisal Arbitrage Decisions on this ground is

necessary to avoid an absurd result. If a court cannot examine evidence regarding how

Cede actually voted, then the combination of that evidentiary limitation and the Record

Holder Requirement will permit an appraisal petitioner who holds in street name to give

instructions to vote its shares in favor of a merger, have those instructions carried out by

the record holder, and then nevertheless seek an appraisal for the very same shares, as

long as there were sufficient shares that Cede had not voted in favor of the merger to

cover the appraisal class. Under that scenario, a non-dissenter can pursue dissenters’

rights. It seems absurd to interpret one statutory provision (the Record Holder

Requirement) so broadly that investors can act directly contrary to a second statutory

provision (the Dissenter Requirement).

       In this case, Dell proved that Cede (through Broadridge) voted the shares for

which the T. Rowe Petitioners now seek appraisal in favor of the Merger. The Dissenter

Requirement was not met for these shares, so no one can seek appraisal for them.

A.     The Statute And Delaware Supreme Court Precedent

       Section 262(a) of the DGCL confers appraisal rights upon

       [a]ny stockholder of a corporation of this State [1] who holds shares of
       stock on the date of the making of a demand pursuant to subsection (d) of
       this section with respect to such shares, [2] who continuously holds such
       shares through the effective date of the merger or consolidation, [3] who
       has otherwise complied with subsection (d) of this section and [4] who has
       neither voted in favor of the merger or consolidation nor consented thereto
       in writing pursuant to § 228 of this title . . . .

                                            28
8 Del. C. § 262(a) (enumeration added). This decision has referred to the fourth

prerequisite as the Dissenter Requirement. Section 262(a) also contains the Record

Holder Requirement, which defines “stockholder” for purposes of the appraisal statute as

“a holder of record of stock in a corporation.” Id.

       As written, the prerequisites of Section 262(a) can be read as all-or-nothing

propositions that require a stockholder to act uniformly as to all of its shares. For the

Dissenter Requirement, this would mean that a stockholder would be foreclosed from

seeking appraisal if it voted a single share in favor of the merger.8 But that is not how the

Delaware Supreme Court interpreted the statute in Reynolds II and Olivetti II, the seminal

precedents in this area. Motivated in large part by the likelihood that a record holder was

a broker or other nominee that owned shares on behalf of multiple clients, and that those

clients might differ about whether to seek appraisal, both Reynolds II and Olivetti II

permitted a stockholder of record to split its vote and seek appraisal for shares that were

not voted in favor of the merger. Writing while a Vice Chancellor, Chief Justice Strine

summarized the rule from the decisions as follows:

       8
         See Union Ill. 1995 Inv. Ltd. P’ship v. Union Fin. Gp. Ltd., 847 A.2d 340, 365
(Del. Ch. 2004) (Strine, V.C.) (observing that statute can be read in this “hyper-literal”
manner); see also BMC, 2015 WL 67586, at *3 n.23 (confirming that none of the parties
were arguing for this reading and that everyone in the case agreed that “the statute means
the stockholder has not voted in favor of the merger or consented to it with respect to the
shares it seeks to have appraised”). In this case, Dell observed that the statute could be
read literally to “disqualify any stockholder of record who votes even a single share in
favor of a merger,” but stated that it “does not advocate that approach, which would be
inconsistent with decades of practice.” Dkt. 306 at 28-29 n.24.

                                             29
       It is understood by now that an entity like Cede & Co. that is record holder
       (but not beneficial holder) of a company’s shares can vote certain of those
       shares against a merger, and others in favor, and seek appraisal as to the
       dissenting shares. This makes sense, of course, because Cede often
       represents a large number of beneficial holders in the same company,
       holders whose views on the advisability of a merger might diverge.

Union Ill., 847 A.2d at 365 (footnote omitted).

       The concept of vote splitting has relevance to this case, because one consequence

of permitting vote splitting is that a record holder only can seek appraisal for the specific

shares that were not voted in favor of the merger. Both Reynolds II and Olivetti II

therefore shed light on the degree to which the appraisal statute requires linking the

record holder’s actions to the specific shares for which appraisal is sought. Given the

importance of these decisions, it is worth considering them at greater length.

              1.     Reynolds

       The Delaware courts first addressed vote splitting (and implicitly the need for

share tracing) in the Reynolds litigation. The petitioner was a broker, Bache & Co., who

was the holder of record for 81,384 shares of stock of Reynolds Metals Company. Two

days before a meeting of stockholders at which a merger would be considered, Bache &

Co. submitted a proxy to Reynolds that voted 29,475 shares “FOR” the merger and 612

shares “AGAINST” the merger. One day before the meeting, Bache & Co. gave

Reynolds a second proxy that voted 29,728 shares “AGAINST” the merger. Bache & Co.

contemporaneously sent a letter objecting to the merger and indicating that appraisal

                                             30
would be sought for the 29,728 shares, as required by the appraisal statute at that time.9

After the meeting, as the appraisal statute then contemplated, Bache & Co. demanded

appraisal as to those 29,728 shares. When the demand was rejected, Bache & Co. sought

appraisal for the 29,728 shares. See Colonial Realty Corp. v. Reynolds Metals Co.

(Reynolds I), 185 A.2d 754, 754-55 (Del. Ch. 1962), aff’d, 190 A.2d 752 (Del. 1963).

       Reynolds moved for summary judgment, contending that Bache & Co. could not

seek appraisal because it had voted some of its shares in favor of the merger. On the facts

presented, the Court of Chancery framed the legal issue as “whether a stockholder who

has voted some of the shares registered in his name for a proposed merger may dissent as

to other shares not so voted and obtain an appraisal therefor.” Id. at 757 (emphasis

added). This court observed that the operative language of the Dissenter Requirement as

it existed at the time did not expressly authorize vote splitting, but also did not

“expressly, or by unavoidable intendment, disqualif[y]” a stockholder from doing so. 10

       9
         Before 1976, a stockholder who wanted to exercise appraisal rights had to send a
written objection to the corporation before the merger vote, then submit a written demand
for appraisal after the merger vote. See 2 R. Franklin Balotti & Jesse A. Finkelstein, The
Delaware Law of Corporations & Business Organizations § 262, at IX-159 (3d ed.
2014). Since 1976, a stockholder seeking appraisal no longer has to make a separate
objection. If the merger will be considered at a meeting of stockholders, the stockholder
need only submit a demand for appraisal before the vote takes place. See 8 Del. C. §
262(d)(1).
       10
          Id. at 758. The operative language was framed in the passive voice and
authorized appraisal for a stockholder “whose shares were not voted in favor of such
consolidation or merger.” Id. at 757. In 1976, the General Assembly changed the
language from passive to active, resulting in the current form of the Dissenter
Requirement. See 60 Del. Laws ch. 371 (1976). The parties have not identified (and the

                                            31
       Turning to the realm of policy, the Court of Chancery perceived nothing that

weighed for or against vote splitting and no harm from permitting the practice. This court

also saw no disadvantage to the corporation because the record holder complied with all

of the statutory requirements as to the pertinent shares.

       The stockholder here gave the required written notice of objection to the
       merger with respect to the very shares for which an appraisal is sought. . . .
       The objection stated the number of shares as to which dissent was
       made. . . . Therefore, not only was [the] corporation . . . fully informed of
       the dissent, but Bache & Co., the registered holder of the shares involved,
       voted the same against the merger.

Reynolds I, 185 A.2d at 758.

       Finally, the Court of Chancery took into account “the realities of the market place

in security transactions” and the fact that “brokers such as Bache & Co. hold many blocks

of stock in ‘street name’ for numerous beneficial holders.” Id. This court recognized that

“[t]o say that the broker should be denied the right to object to a merger and seek

appraisal of shares held for one beneficial owner because other beneficial owners insist

upon voting in favor of the merger is to ignore the reality of a recognized practice.” Id.

The court reasoned that “[s]ince the holding of shares in ‘street name’ is a wide-spread

practice and undoubtedly serves legitimate and useful purposes, the true owner should

not be penalized for following the practice.” Id. at 748-59. The court concluded that

court has not otherwise located) legislative history or contemporaneous commentary
suggesting that the amendment sought to foreclose vote splitting or restrict the ability of a
stockholder to seek appraisal for particular shares, as long as the stockholder met the
requirements of the appraisal statute for those shares. As previously noted, Dell eschews
that line of argument.

                                             32
      [p]ractical considerations suggest the desirability of permitting a
      stockholder to split his stock in merger proceedings. Where this can be
      done without disadvantage to the majority stockholders and without
      contravening applicable statutory provisions, the right of the stockholders
      to so proceed should be recognized.

Id. at 759. The Court of Chancery therefore denied Reynolds’ motion for summary

judgment.

      On appeal, the Delaware Supreme Court affirmed. Like the Court of Chancery, the

Delaware Supreme Court focused on how the record holder voted the particular shares

for which appraisal was sought, framing “the sole question in the case” as “whether the

vote in favor of the merger cast by the broker as the registered holder of certain shares

makes the broker ineligible under the law to demand appraisal in respect of other shares.”

Reynolds II, 190 A.2d at 753 (emphasis added). The high court noted that if the

corporation was right, then “all of the customers of a broker who wish to exercise the

right of appraisal are without remedy if one other customer holding a single share insists

that the broker vote it in favor of the merger.” Id. at 754. The opinion described that

conclusion as “not an appealing one” and later referred to “the unjust consequences of

defendant’s contention.” Id.

      After distinguishing the cases that Reynolds claimed required a ruling in its favor,

the Delaware Supreme Court discussed a concession that Reynolds had made and its

implications:

      Defendant concedes that a trustee holding shares for the benefit of two
      beneficiaries under a trust could vote one beneficiary’s shares in favor of
      the merger and demand appraisal of the remaining shares. This, says
      defendant, is because there are two entities voting, a trustee for A and a
      trustee for B. For the matter of that, so are there really two entities in cases

                                            33
       such as the one before us: Bache & Co., agent for Colonial [who sought
       appraisal], and Bache & Co. agent for other customers—or, perhaps, Bache
       & Co. in its own right [who did not seek appraisal].

Id. at 755. As the analogy demonstrates, the Delaware Supreme Court focused not only

on the record holder doing the voting, but also on the specific shares being voted. As in

the lower court decision, what mattered in the Delaware Supreme Court’s decision was

how the stockholder of record voted the particular shares for which appraisal was sought.

       In a related part of Reynolds II, the Delaware Supreme Court observed that if a

corporation was concerned about whether a record holder had authority to seek appraisal

as the agent of a beneficial holder, then “it may inquire into the facts.” Id. That

observation has salience for this case because in Olivetti II, just three years later, the

Delaware Supreme Court backed away from this language and rejected a corporation’s

ability to explore the extent of the record holder’s authority. The T. Rowe Petitioners

stress this aspect of Olivetti II, claiming that it overruled any suggestion of share tracing

from Reynolds II, but as will be seen when this decision discusses Olivetti II, that

decision did not alter the focus on how the record holder voted particular shares.

       The Delaware Supreme Court also confronted in Reynolds II an argument that

Bache & Co. held its shares as “fungible goods” that were not allocated to particular

customers and thus “[t]he shares which Bache & Co. voted against the merger, and in

respect of which it demanded appraisal, are not identifiable; i.e. cannot be distinguished

from the shares voted for the merger.” Id. at 756. Anticipating the concept of share

tracing, Reynolds contended that because the shares were not identifiable, it was

                                             34
impossible to identify the particular shares that were not voted in favor of the merger.

The Delaware Supreme Court made short work of that ostensible problem:

       This argument seems inconsistent with defendant’s admission that Bache &
       Co. could properly split its vote. In any event, what difference does it make
       that at the time of voting the shares were not represented by identified
       certificates? After the appraisal is made, certificates representing the shares
       will be surrendered. Defendant is really repeating in another form its
       contention that a vote by a broker of one share in favor of the merger
       disqualifies all the other shares from appraisal. For the reasons heretofore
       given, we disagree.

Id. In other words, as the Delaware Supreme Court saw it, if there was evidence about

how the record holder actually voted the specific shares, it did not matter that the shares

themselves were held in fungible bulk.

       Finally, the Delaware Supreme Court agreed with the Court of Chancery about the

need for “recognition of the realities of modern stock practices and the necessity to afford

such protection to stock beneficially owned as is not inconsistent with protection of the

corporation’s rights.” Id. These realities counseled in favor of permitting a record holder

that was acting on behalf of clients to split its vote. The opinion confined its ruling “to the

facts of this case—the case of a beneficial owner and nominee.” Id.

              2.     Olivetti

       Three years after Reynolds II, the Delaware Supreme Court revisited the question

of vote splitting (and the implicit concept of share tracing) in Olivetti II. The petitioners

were brokers who were holders of record of shares of Olivetti Underwood Corporation.

The brokers made appraisal demands in which they notified Olivetti that they were

holders of record but did not beneficially own the stock registered in their names. They

                                              35
did not submit proof of their authority to act for the beneficial owners. When the brokers

subsequently filed appraisal petitions, Olivetti argued that the absence of proof of

authority to act on behalf of the beneficial owner was a fatal defect under Reynolds II.

       The Court of Chancery disagreed and permitted the petitioners to seek appraisal.

See Abraham & Co. v. Olivetti Underwood Corp. (Olivetti I), 204 A.2d 740, 741 (Del.

Ch. 1964) (Seitz, C.), aff’d sub nom. Olivetti II, 217 A.2d at 688. Chancellor Seitz

distinguished between two questions of law. The first was whether a broker that was a

holder of record could split its position, vote shares held for certain customers in favor of

the merger, vote other shares held for different customers against the merger, and then

seek appraisal for the latter group of shares. The second and distinct issue was whether a

holder of record had to provide the corporation with evidence of its authority to seek

appraisal on behalf of the beneficial owner, such that a record holder that did not provide

evidence of authority from the beneficial holder could not pursue an appraisal.

       Chancellor Seitz explained that only the first question was actually at issue in

Reynolds II, which “dealt with the right of a broker registered owner to vote certain of

such shares for a merger and then seek an appraisal as to other shares so held.” Id. at 741.

He conceded that the Reynolds II decision “did say that the corporation could inquire into

the authority of the registered stockholder to act as agent,” but he explained why that

comment was not controlling:

       The [Reynolds II] court cited Zeeb v. Atlas Power Co., [87 A.2d 123 (Del.
       Ch. 1952)], as being applicable by analogy. In that case the corporation was
       held to have the burden of showing lack of authority in challenging a
       stockholder’s right to an appraisal and in that connection was said to have
       the right to inquire.

                                             36
       The Reynolds case involved the right of the corporation to question whether
       a stockholder had complied with statutory prerequisites to an appraisal. No
       such issue is here involved. The Zeeb case involved action by a purported
       agent of a registered stockholder and the issue was whether evidence of the
       agent’s authority had to be presented by the agent. There is no question of
       any purported agent’s authority here insofar as compliance with the
       appraisal statute is concerned. I conclude that neither the Reynolds nor the
       Zeeb case is applicable here.

Id. at 741. Chancellor Seitz thus treated the discussion of the second question in Reynolds

II as dictum that was not relevant to the opinion’s holding on vote splitting.

       Having concluded that Reynolds II was not controlling, the Chancellor considered

the merits of the corporation’s argument independently. He rejected the contention that a

corporation who learns that a record holder is seeking appraisal for a beneficial owner has

“a duty to seek proof of his authority to act,” observing that such a duty would “inject the

corporation into one of the very problems from which it is insulated by being able to rely

on the stock ledger.” Id. He observed that the absence of any duty of inquiry was

“particularly true where, as here, the corporation has no evidence that the registered

owners may be acting contrary to the wishes of the beneficial owners.” Id. He then held

that “in this posture of the case at least, the corporation has no right to raise any issue as

to the right of a registered owner to seek a statutory appraisal and such a stockholder has

no duty to supply proof as to that issue.” Id.

       Olivetti appealed, and the Delaware Supreme Court affirmed. Like Chancellor

Seitz, the Delaware Supreme Court distinguished two separate questions. The first was

the issue of vote splitting from Reynolds II. The second was whether the corporation had

“the right to require each broker-petitioner to prove, as a prerequisite to the statutory right

                                              37
of appraisal, that it was duly authorized by the beneficial owner of the stock, registered in

its name, to seek the appraisal.” Olivetti II, 217 A.2d at 684.

       The Delaware Supreme Court dealt with the second question first. Foreshadowing

its view of the language from Reynolds II on which the corporation relied, the high court

cited In re Northeastern Water Co., 38 A.2d 918 (Del. Ch. 1944), not Reynolds II, as

“[t]he Delaware case most nearly in point.” Olivetti II, 217 A.2d at 684. After observing

that the Northeastern case addressed whether a holder of record must provide evidence of

his authority to seek appraisal on behalf of a beneficial holder, the Olivetti II court quoted

the following passage:

       No sufficient reason appears why the corporation should be permitted to
       challenge the action of the present registered holders. A liberal construction
       of the appraisal statute requires the avoidance of complexities in
       proceedings under it, particularly where the corporation will not be
       subjected to risks of liability. Since the registered holders are entitled to
       proceed under the statute, proof that they have complied with its
       requirements should be enough to establish their right to an appraisal.
       Accordingly, the claimants need not furnish evidence of their authority to
       act.11

       11
          Olivetti II, 217 A.2d at 685 (quoting Northeastern, 38 A.2d at 925). The
reference in Northeastern to the “liberal construction of the appraisal statute” referred to
the procedure for making objections under the version of the appraisal statute that existed
before 1976. See supra note 9. The Delaware Supreme Court construed the objection
requirement more liberally than the demand requirement because “[t]he purpose of the
objection [was] of lesser importance than the demand for payment.” Raab v. Villager
Indus., Inc., 355 A.2d 888, 891 (Del. 1976). Stockholders seeking appraisal no longer
have to make a separate objection, and Delaware decisions have not generally construed
other aspects of the appraisal statute liberally in favor of stockholders. See generally
Jesse A. Finkelstein & John D. Hendershot, Appraisal Rights in Mergers &
Consolidations § VIII, at A-97 (2012) (collecting cases). The Delaware Supreme Court
has endorsed a principle of strict construction, explaining that “[b]y exacting strict

                                             38
The high court next turned to the passage from Reynolds II on which Olivetti relied and

which suggested that a corporation could inquire into the record holder’s authority. After

quoting the passage, the high court dismissed it as “clearly obiter dicta,” thus reaching

the same conclusion as Chancellor Seitz. Olivetti II, 217 A.2d at 685.

       Like the Chancellor, the Delaware Supreme Court next considered whether the

dicta from Reynolds II nevertheless should “be given the force and effect of law.” Id. The

high court rejected the corporation’s argument that a record holder should have to

provide evidence of its authority to act on behalf of a beneficial owner. But where the

Court of Chancery limited its ruling to the facts presented, in which the corporation had

no indication that the record holder was acting contrary to the wishes of the beneficial

holder, the Delaware Supreme Court went further and held broadly that a corporation

should not inquire into the record holder’s authority:

       The corporation is entitled to confine itself to dealing with registered
       stockholders in intracorporate affairs such as mergers; it should avoid
       becoming involved in the affairs of registered stockholders vis-a-vis
       beneficial owners; and, in so doing, in the best interests of all stockholders,
       the corporation should avoid becoming involved in the expensive and time-
       consuming trial of such collateral issues in merger appraisal proceedings.

compliance . . . , the appraisal statute ensures the expedient and certain appraisal of
stock.” Ala. By-Products Corp. v. Cede & Co., 657 A.2d 254, 263 (Del. 1995). In
subsequently re-affirming its adherence to the principle, the Delaware Supreme Court
cautioned that strict construction should be applied “even-handedly, not as a one-way
street.” Berger v. Pubco Corp., 976 A.2d 132, 144 (Del. 2009). In other words, both
petitioners and the corporation must adhere strictly to the appraisal statute’s
requirements; neither gets the benefit of the doubt under more a lenient rule of “liberal
construction.”

                                             39
       We hold that insofar as the dicta in the Reynolds case may be contrary to
       the foregoing, it will be disregarded.

Id. at 686. This holding answered the second question presented in Olivetti II: whether a

corporation could question a record holder’s authority to seek appraisal. The answer to

that question was “no.”

       This left the first of the Delaware Supreme Court’s two questions: the propriety of

vote splitting (and the implicit concept of share tracing). As its final argument in favor of

requiring the record holder to demonstrate authority to seek appraisal, the corporation

argued that “unless the [respondent] is permitted to inquire into the identity and authority

of the beneficial owners, it will be unable to determine whether a beneficial owner is

seeking to take inconsistent positions by accepting the $10 per share, offered under the

merger plan, for a portion of his stock, and demanding appraisal as to the balance.” Id. at

687. The Olivetti II court noted that Reynolds II involved two different beneficial holders,

so “it was unnecessary to rule on the right of a registered stockholder holding the

beneficial ownership to split his demand for appraisal, and we limited the holding of that

case to the ruling that a broker as nominee may do so.” Id. The Olivetti II court also noted

that the facts before it similarly involved multiple beneficial holders, so the question of

vote splitting by the same beneficial owner was not presented. Moreover, the case

involved a short-form merger in which stockholders were not given the opportunity to

vote, so the concept of voting in favor of the merger was not present. But as to the

question of whether a single beneficial holder following a short-form merger could seek

appraisal for only part of its shares, the high court held as follows:

                                              40
       [W]e find no valid reason in the letter or spirit of the Statute, in the cases,
       or in consideration of fairness, which would bar a stockholder from
       “hedging” his position by electing to accept the offered price as to some of
       his stock and demanding appraisal as to the rest. We think that stockholders
       should have such flexibility and freedom of choice; and we so hold.

Id. In other words, as long as the record holder complied with the requirements of the

appraisal statute for the portion of the beneficial holder’s shares for which appraisal was

sought, the record holder could seek appraisal as to those shares.

       Contrary to the position taken by the T. Rowe Petitioners, Olivetti II did not

overrule Reynolds II on the issue of vote splitting. The Olivetti II ruling instead expanded

that aspect of Reynolds II by permitting a single beneficial holder to split its position

following a short-form merger. What remained was the need for the record holder to

satisfy the requirements of the appraisal statute for those shares for which appraisal was

sought.

              3.     The Implications of Reynolds II and Olivetti II

       Based on Reynolds II and Olivetti II, it would seem that satisfying the

requirements of Section 262(a) involves a two part inquiry: Did the (i) specific record

holder meet the statutory prerequisites with respect to the (ii) specific shares for which

appraisal is being sought? Both aspects—the record holder and the specific shares—are

central. After these decisions, a particular record holder could split its position and seek

appraisal for part of its shares as long as it had not voted in favor of the merger with

regard to the particular shares for which appraisal was sought. The record holder could

not seek appraisal for shares voted in favor of the merger, but the fact that it split its vote

                                              41
would not preclude the record holder from satisfying the Dissenter Requirement for other

shares.

          The decisions in Reynolds II and Olivetti II do not suggest that a court should limit

the types of evidence it considers in determining how a record holder voted particular

shares. In Reynolds II, for example, the record holder delivered separate proxies for the

two blocks of shares it held on behalf of different groups of clients. The proxy provided

evidence that the record holder in fact voted against the merger with respect to the block

of 29,728 shares for which appraisal was sought. The Court of Chancery noted

specifically that Bache & Co., “the registered holder of the shares involved, voted the

same against the merger.” Reynolds I, 185 A.2d at 758. On appeal, the Delaware

Supreme Court used its analogy of a trustee voting differently on behalf of two

beneficiaries to emphasize the link between the shares for which appraisal was sought

and how they were voted. Reynolds II, 190 A.2d at 755. Perhaps more importantly, the

Delaware Supreme Court rejected the corporation’s argument that the shares Bache &

Co. held were fungible goods such that it was impossible to identify any shares that were

not voted in favor of the merger. The Delaware Supreme Court instead linked the holder

of record’s voting of particular shares to its ability to pursue appraisal for those shares by

affirming this court’s holding that a broker-as-record-holder could split its shares and

vote differently on behalf of different clients without losing the ability to pursue appraisal

on behalf of the dissenting client. Subsequently in Olivetti II, the Delaware Supreme

Court expanded its holding in Reynolds II on vote splitting by permitting a holder of

record after a short-form merger to seek appraisal as to part of its position but not

                                               42
another, as long as the holder of record complied with the requirements of the appraisal

statute as to the shares for which appraisal was sought. Rather than undermining

Reynolds II on that issue, Olivetti II reinforced it.

B.     The Appraisal Arbitrage Decisions

       The development of the law did not stop with Reynolds II and Olivetti II. The most

recent learning comes from the Appraisal Arbitrage Decisions. Because of their

importance to the outcome of this case, it is worth discussing each decision.

              1.      Transkaryotic

       The first of the Appraisal Arbitrage Decisions was In re Appraisal of

Transkaryotic Therapies, Inc., 2007 WL 1378345 (Del. Ch. May 2, 2007). On the record

date for the merger giving rise to appraisal rights, five investment funds beneficially

owned 2,901,433 shares. After the record date but before the effective date, they

purchased another 8,071,217 shares in the open market. They sought appraisal for all

10,972,650 shares. The respondent corporation (“TKT”) moved for partial summary

judgment, contending that the petitioners could not seek appraisal for the shares acquired

after the record date because they could not prove that a previous beneficial owner had

not voted the shares in favor of the merger. Id. at *1.

       The Transkaryotic court rejected this contention:

       The question presented in this case can be stated thusly: Must a beneficial
       shareholder who purchased shares after the record date but before the
       merger vote, prove, by documentation, that each newly acquired share (i.e.,
       after the record date) is a share not voted in favor of the merger by the
       previous beneficial shareholder? The answer seems simple. No. Under the
       literal terms of the statutory text and under longstanding Delaware Supreme
       Court precedent, only a record holder, as defined in the DGCL, may claim

                                               43
       and perfect appraisal rights. Thus, it necessarily follows that the record
       holder’s actions determine perfection of the right to appraisal.

Id. at *3.

       This aspect of Transkaryotic seems straightforward and non-controversial. The

Record Holder Requirement dictates that the record holder’s actions determine perfection

of the right to appraisal. The more difficult questions are (i) whether a petitioner must

show how the record holder (not the beneficial holder) voted particular shares, and (ii)

what evidence can be used to demonstrate how the record holder voted.

       As the centerpiece of its analysis, the Transkaryotic decision summarized Olivetti

II, noting that the decision had addressed “whether a respondent corporation had a right

to require each broker-petitioner to prove, as a prerequisite to the statutory right of

appraisal, that it was duly authorized by the beneficial owner of the stock to seek

appraisal.” Id. at *4. The Transkaryotic opinion drew from Olivetti II the following

principles:

      “‘[T]here must be order and certainty, and a sure source of information, so that the
       corporation may know who its members are and with whom it must treat.’” Id.
       (quoting Olivetti II, 217 A.2d at 685).

      “‘[C]orporations ought not to be involved in possible misunderstandings or clashes
       of opinion between non-registered and registered holders of stock.’” Id. (quoting
       Olivetti II, 217 A.2d at 686).

      “A corporation ‘may rightfully look to the corporate books as the sole evidence of
       membership’ because under Delaware law, ‘there is no recognizable stockowner
       under § 262 except a registered stockholder.’” Id. (quoting Olivetti II, 217 A.2d at
       686).

      “‘The relationship between, and the rights and obligations of, a registered
       stockholder and his beneficial owner are not relevant issues in a proceeding of this
       kind.” Id. (quoting Olivetti II, 217 A.2d at 687).

                                            44
      “A beneficial owner must ‘establish his rights and pursue his remedy through the
       nominee of his own selection.’” Id. (quoting Olivetti II, 217 A.2d at 686).

Based on these statements from Olivetti II and the record before it, the court again

reached the non-controversial conclusion that “the determinative record regarding

compliance with § 262 requirements is that of the record holder.” Id.

       These passages from Olivetti II notably addressed only whether the record holder

needed to establish that it had authority from the beneficial holder to seek appraisal. With

the following explanation, the Transkaryotic opinion applied them to the issue of how the

record holder voted the shares for which appraisal was sought:

       The issue here mirrors that in Olivetti Underwood Corp. Respondent
       corporation, TKT, seeks to examine relationships between Cede (the record
       holder) and certain non-registered, beneficial holders in order to determine
       the existence of appraisal rights. But the Supreme Court has already
       deemed this relationship to be an improper and impermissible subject of
       inquiry in the context of an appraisal. The law is unequivocal. A
       corporation need not and should not delve into the intricacies of the
       relationship between the record holder and the beneficial holder and,
       instead, must rely on its records as the sole determinant of membership in
       the context of appraisal. Thus, following the clear teachings of Olivetti
       Underwood Corp., I conclude, in the circumstances here, that only Cede’s
       actions, as the record holder, are relevant.

Id. at *4. Again, the conclusion that “only Cede’s actions, as the record holder are

relevant,” was straightforward. The significant move was to equate how Cede voted the

specific shares for which the beneficial holder later sought appraisal with “the

relationship between the record holder and the beneficial holder.” One could just as easily

view how Cede voted as a factual issue reflecting the record holder’s actions and not

involving a “relationship” with the beneficial holder.

                                            45
      Having concluded that only Cede’s actions were relevant, Transkaryotic made a

second and equally significant move by restricting its analysis to the documents presented

at the meeting of stockholders that showed how Cede voted in the aggregate:

      It is uncontested that Cede voted 12,882,000 shares in favor of the merger
      and 16,838,074 against, abstained, or not voted in connection with the
      merger. It is further uncontested that Cede otherwise properly perfected
      appraisal rights as to all of the 10,972,650 shares that petitioners own and
      for which appraisal is now sought. Thus, because the actions of the
      beneficial holders are irrelevant in appraisal matters, the inquiry ends here.

Id. at *4. The key step was to hold that “the inquiry ends here,” thereby appearing to

foreclose inquiry into how Cede voted particular blocks of shares.

      The parties in Transkaryotic do not appear to have argued, and the court did not

consider, whether other readily available documents might show how Cede voted

particular shares. No one appears to have mentioned the federal requirement that mutual

funds must file a Form N-PX disclosing how they voted their shares (although that

regulation may not have applied to the investment funds in Transkaryotic). No one seems

to have discussed Broadridge’s role or the voting authentication documents that

Broadridge maintains.12 Nor does anyone appear to have argued that these documents

could be used not for the purpose of challenging aspects of the relationship between the

      12
         Referring to Broadridge in this context is admittedly anachronistic. At the time
of the merger that gave rise to the Transkaryotic decision, the business that became
Broadridge was the proxy services division of Automatic Data Processing, Inc., better
known as ADP. The entity now known as Broadridge was incorporated in March 2007 in
connection with its spin-off from ADP. See History, Broadridge Fin. Sols.
http://www.broadridge-ir.com/investor-overview/history.aspx (last visited May 8, 2016).

                                           46
record holder and the beneficial holder, like the authority question raised in Olivetti II,

but to show how the record holder qua record holder voted the shares for which appraisal

was sought.

       In a final turn to public policy, the Transkaryotic court acknowledged the

corporation’s argument that its ruling could “encourage appraisal litigation initiated by

arbitrageurs who buy into appraisal suits by free-riding on Cede’s votes on behalf of

other beneficial holders.” Id. at *5. The court admonished that

       [t]o the extent that this concern has validity, relief more properly lies with
       the Legislature. Section 262, as currently drafted, dictates the conclusion
       reached here. Only the record holder possesses and may perfect appraisal
       rights. The statute simply does not allow consideration of the beneficial
       owner in this context. The Legislature, not this Court, possesses the power
       to modify § 262 to avoid the evil, if it is an evil, that purportedly concerns
       respondents.

Id.

              2.     BMC

       Eight years later, this court rendered its decision in Merion Capital LP v. BMC

Software, Inc., 2015 WL 67586 (Del. Ch. Jan. 5, 2015). The petitioners there were two

investment funds—Merion Capital LP and Merion Capital II LP—that specialized in

appraisal arbitrage. After the announcement of a merger giving rise to appraisal rights,

the Merion funds purchased 7,629,100 shares of stock in the open market. The shares

they bought were held by DTC in fungible bulk within the FAST Account, but when the

Merion funds asked their DTC-participant broker to cause Cede to demand appraisal, the

broker declined. The Merion funds responded by withdrawing their shares from the

                                            47
FAST Account, having them certificated, and demanding appraisal. After the merger

closed, the Merion funds petitioned for appraisal.

       As in Transkaryotic, the respondent corporation argued that “Merion, as the record

holder, bears the burden of proving that each share it seeks to have appraised was not

voted by any previous owner in favor of the merger—a burden, if it exists, that Merion

concededly has not met.” Id. at *3. The corporation felt it had grounds to distinguish

Transkaryotic because Merion was a record holder, not the beneficial holder of shares

held in fungible bulk.

       As in Transkaryotic, the record evidence before the court suggested that it would

be impossible for an appraisal petitioner who held in street name or through Cede or had

acquired shares in the open market to meet the burden that the corporation sought to

impose. One of the principals of the Merion funds testified that

       because Merion purchased its shares on the open market, it cannot identify
       the entities from which it purchased its shares. In addition, because
       Merion’s shares were transferred from the “fungible mass at DTC/Cede,”
       Merion is not able to say how the specific shares it came to hold on record
       were voted in the transaction . . . .

Id. at *3 n.21 (citation omitted). Notably, the second obstacle would affect any beneficial

holder who had an entitlement on the record date or gained an entitlement after the record

date to shares held in fungible bulk in the FAST Account, then moved into record

position. Based on the Merion witness’s testimony, no such holder would be “able to say

how the specific shares it came to hold on record were voted in the transaction.” And the

same would be true for any investor who did not move into record position and thus

chose to continue holding a proportionate entitlement to the fungible bulk. Such an

                                            48
investor would not be able to say how specific shares were voted either. Consequently, if

the court accepted the respondent corporation’s argument on the record presented, no one

holding through Cede would be able to satisfy the requirements for an appraisal. Like the

corporation’s argument against a record holder splitting its vote in Reynolds II, the

respondent’s position in BMC threatened “unjust consequences” and was therefore “not

an appealing one.” Reynolds II, 190 A.2d at 754.

       As had the Transkaryotic court, the BMC decision treated the Record Holder

Requirement as dictating the answer:

       The statute’s requirements are directed to the stockholder—expressly
       defined as the record holder—and whether it has owned the stock at the
       appropriate times, whether it has made a sufficient demand, and whether it
       has voted the shares it seeks to have appraised in favor of the merger. My
       interpretation of Section 262(a) as clear in that regard is consistent with
       Transkaryotic. In that case, then-Chancellor Chandler determined that Cede
       did not have to demonstrate that each individual share it sought to have
       appraised was a share it did not vote in favor of the merger, but was only
       required to show that it held a quantity of shares it had not voted in favor of
       the merger equal to or greater than the quantity of shares for which it
       sought appraisal. The Court’s focus was on the petitioner/record holder,
       not on the shares—in other words, on whether Cede had sufficient shares it
       had not voted in favor of the merger to satisfy the demand, not on whether
       those specific shares were shares Cede had voted in favor of the merger.

BMC, 2015 WL 67586, at *6 (footnote omitted). On the facts presented in BMC, as in

Transkaryotic, Cede held enough shares that were not voted in favor of the merger to

cover the appraisal class.

       The corporation argued that looking only at Cede’s aggregate voting totals could

produce an absurd result, but the corporation did not make the straightforward argument

(presented by this case) that looking no further than Cede’s aggregate voting totals could

                                             49
permit an investor to submit instructions that shares be voted in favor of a merger and yet

still pursue appraisal rights for those shares. Instead, the corporation pointed to a less

realistic, more academic scenario,

       namely that a failure of this Court to read a share-tracing requirement into
       the statue could allow a majority, or even all of a corporation’s shares [to
       seek] appraisal, notwithstanding the fact that for a transaction to have been
       approved, at least a majority of the shares would have had to have been
       voted in favor of it.

Id. at *7 (quotation marks omitted). This hypothetical situation was not presented on the

facts of the case, and the BMC decision understandably declined to construe the appraisal

statute to anticipate a problem that seemed unlikely to occur.

       Interestingly, although the BMC decision ultimately held that only Cede’s

aggregate votes counted, other language in the decision linked a petitioner’s ability to

seek appraisal to how the record holder acted as to the specific shares for which appraisal

was sought. At the outset, when framing the statutory requirements, the BMC decision

stressed both compliance by the record holder and the need to demonstrate compliance as

to particular shares:

       [I]n order for a petitioner to perfect the appraisal remedy according to the
       plain language of Section 262(a), the petitioner need only show that the
       record holder of the stock for which appraisal is sought: (1) held those
       shares on the date it made a statutorily compliant demand for appraisal on
       the corporation; (2) continuously held those shares through the effective
       date of the merger; (3) has otherwise complied with subsection (d) of the
       statute, concerning the form and timeliness of the appraisal demand; and (4)
       has not voted in favor of or consented to the merger with regard to those
       shares.

Id. at *3 (first emphasis in original). The references to “those shares” in the enumerated

subsections (1), (2) and (4) suggested a link between the record holder’s actions and the

                                            50
specific shares for which the petitioner was pursuing appraisal. In a footnote, the decision

emphasized the connection to specific shares, noting that everyone in the case agreed that

“the statute means the stockholder has not voted in favor of the merger or consented to it

with respect to the shares it seeks to have appraised.” Id. at *3 n.23 (emphasis added).

       Later, the BMC opinion similarly identified a link between the statutory

prerequisites and particular shares:

       As mentioned above, in order to properly perfect the appraisal remedy
       under the plain language of Section 262(a), a petitioner need only show that
       the record holder of the stock for which appraisal is sought: (1) “[held such]
       shares of stock on the date of the making of a demand pursuant to
       subsection (d) of this section with respect to such shares;” (2)
       “continuously [held] such shares through the effective date of the merger or
       consolidation;” (3) has otherwise complied with subsection (d) of this
       section;” and (4) “has neither voted [such shares] in favor of the merger or
       consolidation nor consented thereto in writing.”

Id. at *6 (quoting 8 Del. C. § 262(a)) (alterations in original). The decision thus added the

words “such shares” to clarify the implication of the Dissenter Requirement (i.e. that the

record holder not have voted the specific shares for which appraisal is sought in favor of

the merger).

       Despite these formulations, the BMC decision declined to recognize the implied

linkage, stating: “Noticeably absent from [Section 262(a)], or any language in the statute,

is an explicit requirement that the stockholder seeking appraisal prove that the specific

shares it seeks to have appraised were not voted in favor of the merger.” Id. at *4. The

decision also looked only to Cede’s voting totals in the aggregate. To reiterate, there was

no evidence in BMC as to how the record holder voted the specific shares, and the parties

depicted a factual world in which it was impossible ever to develop that evidence.

                                             51
       It seems to me that the sections of the BMC decision that imply a necessary

connection between the record holder’s actions and the specific shares for which

appraisal is sought reflect the soundness of the approach taken in Reynolds II and Olivetti

II and the intuitive logic that a petitioner should only be able to seek appraisal for shares

that the record holder did not vote in favor of the merger. But in BMC, as in

Transkaryotic, the factual scenario that the parties presented meant that placing the

burden on the petitioner to establish the connection would cut off appraisal rights for

investors who held through Cede. An observation from five decades earlier in Reynolds I

would seem to explain the outcome: “Since the holding of shares in ‘street name’ is a

common and wide-spread practice and undoubtedly serves legitimate and useful

purposes, the true owner should not be penalized for following the practice.” 185 A.2d at

758-59. Presented with these stark choices, the BMC opinion appropriately followed

Transkaryotic, looked only to Cede’s aggregate voting totals, and permitted the Merion

funds to seek appraisal.

              3.     Ancestry

       On the same day that this court issued its opinion in BMC, it also released an

opinion in In re Appraisal of Ancestry.com, Inc., 2015 WL 66825 (Del. Ch. Jan. 5, 2015).

The petitioner in Ancestry was Merion Capital L.P., one of two appraisal arbitrage

specialists from BMC. Merion again did not own any shares on the record date for the

merger. After the record date, Merion purchased 1,255,000 shares in the open market and

sought appraisal for those shares.

                                             52
       As in BMC, the respondent corporation made the same argument advanced in

Transkaryotic, namely that a petitioner had to demonstrate that the shares for which it

sought appraisal had not been voted in favor of the merger by a prior owner. In Ancestry,

the corporation felt it had grounds to re-argue this aspect of Transkaryotic because in

2007, the General Assembly had amended the appraisal statute to permit a beneficial

holder to act in its own name (i) when requesting a statement identifying the aggregate

number of shares not voted in favor of the merger for which demands for appraisal had

been received and (ii) when filing an appraisal petition. The new language stated:

       Notwithstanding subsection (a) of this section, a person who is the
       beneficial owner of shares of such stock held either in a voting trust or by a
       nominee on behalf of such person may, in such person’s own name, file a
       petition or request from the corporation the statement described in this
       subsection.

8 Del. C. § 262(e). The corporation argued that the reference to “shares of such stock”

and the phrase “held . . . on behalf of such person” referred back to the specific shares not

voted in favor of the merger and demonstrated a need for the appraisal petitioner to

satisfy the Dissenter Requirement as to the particular shares for which appraisal was

sought. The court made short work of this argument, noting that the statutory amendment

was intended to simplify the procedure for pursuing appraisal and not to effect

substantive change.

       Having rejected the corporation’s basis for reconsidering Transkaryotic, the court

not surprisingly adhered to that precedent. As in Transkaryotic, the court held that Cede

was the entity with the burden to establish compliance with Section 262(a). Summarizing

Transkaryotic, the court stated that for purposes of the Dissenter Requirement, a

                                             53
petitioner “need only show that the number of shares that [Cede] did not vote in favor of

the merger is equal to or greater than the number of shares of stock for which it perfected

appraisal on behalf of petitioning owners.” Ancestry.com, 2015 WL 66825, at *6. On the

facts presented, “Cede had at least as many shares not voted in favor of the merger as the

number for which demand was made.” Id. at *7. Consequently, the Dissenter

Requirement was satisfied. Merion did not have to show more.

       As in BMC, the corporation in Ancestry contended that a vote-tracing requirement

was necessary to prevent the risk of “over-appraisal,” which the court described as “a

theoretical concern where the appraisal arbitrageur acquires stock after a record date,

which stock may have been voted in favor of the merger by the seller,” such that more

shares seek appraisal than could possibly have voted against, abstained, or not voted at all

with respect to the merger. Id. at *8. As in BMC, the Ancestry decision rejected that

argument as “a theoretical problem which is not present in the case.” Id. The corporation

did not raise the more straightforward concern, present in this case, that stopping with

Cede’s aggregate voting totals would permit investors who had given instructions to vote

their shares in favor of the merger to seek appraisal, as long as Cede had failed to vote

sufficient shares in favor of the transaction to cover the appraisal class.

       Interestingly, like BMC, the Ancestry decision contained language which appeared

to recognize that an appraisal petitioner should meet the requirements of Section 262(a)

for the specific shares for which appraisal was sought. In text that closely resembled a

passage from BMC, the court framed the requirements for pursuing appraisal as follows:

                                              54
       [I]n order for a petitioner to perfect the appraisal remedy according to the
       plain language of Section 262(a), the petitioner need only show that the
       record holder of the stock for which appraisal is sought: (1) held those
       shares on the date it made a statutorily compliant demand for appraisal on
       the corporation; (2) continuously held those shares through the effective
       date of the merger; (3) has otherwise complied with subsection (d) of the
       statute, concerning the form and timeliness of the appraisal demand; and (4)
       has not voted in favor of or consented to the merger with regard to those
       shares.

Id. at *4 (first emphasis in original). For the Dissenter Requirement, this passage

envisioned that the record holder “must not have voted the stock for which appraisal is

sought in favor of the merger.” Id. at *1 (emphasis added). Elsewhere, the opinion

reiterated this point: “A stockholder may seek appraisal only for shares it has not voted in

favor of a merger.” Id. The decision also remarked that “a plain reading of the statute

discloses that, for standing purposes, it remains the record holder who must not have

voted the shares for which it seeks appraisal.” Id. (emphasis added).

       As with the comparable passages in BMC, these passages reveal the deep and

intuitive logic of limiting a petitioner to pursuing an appraisal only for those shares where

the record holder satisfied the requirements of Section 262(a). But as in BMC and

Transkaryotic, the Ancestry case involved a factual scenario where allocating to the

petitioner the burden of showing compliance appeared to eliminate appraisal rights for

investors who held through Cede, which was not a viable position.

              4.     Distinguishing The Appraisal Arbitrage Decisions

       There is language in the Appraisal Arbitrage Decisions which, if applied literally

to this case, would preclude the court from considering anything other than Cede’s

aggregated votes on the Merger. That language suggests that as long as Cede did not vote

                                             55
a quantity of shares in favor of the Merger sufficient to cover the appraisal class, then the

Dissenter Requirement is satisfied. The jurists who wrote those passages, however, were

deciding cases in which the record did not contain any evidence regarding how Cede

voted particular shares and where the parties told the court it was impossible to develop

any. In this case, there is evidence about how Cede actually voted particular shares.

       Importantly, the Appraisal Arbitrage Decisions did not take the next step and hold

that when an investor actually directs that its shares be voted in favor of the merger, and

when Cede actually votes shares in accordance with the investor’s instructions, then the

investor can avoid the implications of the Dissenter Requirement by invoking Cede’s

aggregate votes on behalf of other investors. Permitting the investor to do so would

authorize a non-dissenter to pursue dissenter’s rights by “hijack[ing] the ownership

rights” of other investors who happened to hold through the same nominee. Sutter

Opportunity Fund 2 LLC v. Cede & Co., 838 A.2d 1123, 1129 (Del. Ch. 2003). Nothing

in the Appraisal Arbitrage Decisions speaks to that factual scenario.

       In my view, the Appraisal Arbitrage Decisions address a situation in which there is

an absence of proof. In each of those cases, no evidence was available to show how Cede

voted the particular shares for which appraisal was sought, and the record suggested that

no one who held shares in street name would be able to satisfy Section 262(a) if it

required establishing how Cede voted specific shares.

       It does not necessarily follow that just because in some cases there is no evidence

regarding how Cede voted, then in other cases where it does exist the parties cannot

introduce it and the court cannot consider it. Indeed, interpreting the Record Holder

                                             56
Requirement in that fashion would run contrary to the core policies that led to its

adoption. See Salt Dome Oil Corp. v. Schenck, 41 A.2d 583 (Del. 1945). In Olivetti II, the

Delaware Supreme Court quoted the following passage from Salt Dome, the case in

which the high court imposed the Record Holder Requirement (which was later codified)

as a matter of common law:

      With respect to matters intracorporate affecting the internal economy of the
      corporation, or involving a change in the relationship which the members
      bear to the corporation, there must be order and certainty, and a sure source
      of information, so that the corporation may know who its members are and
      with whom it must treat, and that the members may know, in a proper case,
      who their associates are. Especially is this true in a merger proceeding
      which is essentially an intracorporate affair. The merging corporations are
      entitled to know who the objecting stockholders are so that the amount of
      money to be paid to them may be provided. The stockholders in general are
      entitled to know the dissentients and the extent of the dissent. The
      corporation ought not to be involved in possible misunderstandings or
      clashes of opinion between the non-registered and registered holder of
      shares. It may rightfully look to the corporate books as the sole evidence of
      membership.

Olivetti II, 217 A.2d at 685-86 (quoting Salt Dome, 41 A.2d at 588-89). But if the Record

Holder Requirement prevents the parties and the court from looking beyond Cede’s

aggregate voting totals, then neither can know “the dissentients and the extent of the

dissent.” In lieu of “order and certainty, and a sure source of information,” the voting

process is hidden behind a depository veil of ignorance.

      The solution, in my view, is to emulate the Reynolds II court and give “recognition

of the realities of modern stock practices.” 190 A.2d at 756. For present purposes, the

“realities of modern stock practices” encompass a first-level transfer of voting authority

from Cede to the DTC participants through the omnibus proxy, a second-level transfer of

                                           57
voting authority from the DTC participants to Broadridge through powers of attorney,

and a third-level role for Broadridge in collecting voting instructions and carrying them

out by voting Cede’s shares through the Broadridge Client Proxies. By using

Broadridge’s internal control numbers and other voting authentication materials, it is

possible to determine how Cede voted particular blocks of shares.

       In my view, the fact that Cede outsourced these parts of the voting process does

not mean an iron curtain has descended to isolate the resulting evidence from the legal

system. It simply means that the litigants must obtain the information from Broadridge,

and they readily can.

       The evidence showing how Cede voted particular blocks of shares provides a basis

for distinguishing the Appraisal Arbitrage Decisions. Under those opinions, an appraisal

petitioner that held in street name can establish a prima facie case that the Dissenter

Requirement was met by showing that there were sufficient shares at Cede that were not

voted in favor of the merger to cover the appraisal class. This showing satisfies the

petitioner’s initial burden and enables the case to proceed. If there is no other evidence,

then as in the Appraisal Arbitrage Decisions, the prima facie showing is dispositive.

       The analysis, however, need not stop there. Once the appraisal petitioner has made

out a prima facie case, the burden shifts to the corporation to show that Cede actually

voted the shares for which the petitioner seeks appraisal in favor of the merger. The

corporation can do this by pointing to documents that are publicly available, such as a

Form N-PX. Or the corporation can introduce evidence from Broadridge, ISS, and other

providers of voting services, such as internal control numbers and voting authentication

                                            58
records. If the evidence that the corporation adduces is not sufficient to demonstrate that

Cede actually voted the shares for which the petitioner seeks appraisal in favor of the

merger, then the petitioner can continue to maintain an appraisal action. But if the

corporation demonstrates that Cede actually voted the shares for which the petitioner

seeks appraisal in favor of the merger, then the Dissenter Requirement is no longer met,

and the petitioner cannot obtain seek appraisal for those shares.

              5.     Statutory Limitations On What Inspectors Of Elections Can
                     Consider

       Perhaps recognizing that the Appraisal Arbitrage Decisions can be distinguished

on the basis that they did not address a situation in which the record showed how Cede

had voted the shares for which appraisal was sought, the T. Rowe Petitioners advance a

statutory fallback argument to foreclose consideration of the dispositive evidence. They

observe that under Section 231 of the DGCL, inspectors of election cannot consider

evidence such as voting instructions when counting votes at a meeting of stockholders.

See 8 Del. C. § 231. They further point out that the documents available at the September

Meeting, including the Broadridge Client Proxies, did not identify how Cede voted

particular shares.

       Although the T. Rowe Petitioners have described accurately what inspectors of

election can consider, the same limitations do not necessarily apply in a judicial

proceeding. Delaware case law limits the court to considering what inspectors of election

could consider when the question at issue is whether the inspectors did their job correctly.

See Williams v. Sterling Oil of Okla., Inc., 273 A.2d 264, 265 (Del. 1971); Mainiero v.

                                            59
Microbyx Corp., 699 A.2d 320, 323 (Del. Ch. 1996). The court is not so limited when

addressing other issues that may touch on the validity or outcome of an election or how

shares were voted.13

       Equally important, Section 231 does not speak to appraisal rights, which are

governed by Section 262. When interpreting distinct statutory provisions, Delaware

       13
          See 8 Del. C. § 225 (directing court to determine validity of any contested
election); Crown EMAK P’rs, LLC v. Kurz, 992 A.2d 377, 388-90 (Del. 2010) (analyzing
whether vote buying occurred in corporate election); Len v. Fuller, 1997 WL 305833, at
*4 (Del. Ch. May 30, 1997) (Allen, C.) (analyzing judicial enforcement of equitable
rights in the voting context and looking at contractual relationship between beneficial
holder and record holder, trial testimony, and economic factors to resolve voting dispute);
Testa v. Jarvis, 1994 WL 30517, at *6 n.9 (Del. Ch. Jan. 12, 1994) (Allen, C.)
(“Notwithstanding the corporation’s proper reliance on its ledgers, as between a record
owner and a transferee of shares, or a record owner and a beneficial owner, Delaware
courts have often looked beyond the stock ledger to determine shareholder status,
particularly with regard to voting rights.”); In re Giant Portland Cement Co., 21 A.2d
697, 702 (Del. Ch. 1941) (explaining that the court has authority to “reject votes cast by
the record owners” because of “inequitable circumstances” and considering the beneficial
owners’ true “wishes”); In re Canal Constr. Co., 182 A. 545, 548-49 (Del. 1936)
(Wolcott, J., C.) (declining to count votes cast by registered owner when the beneficial
owner had indicated a desire to have the stock voted differently); Italo Petroleum Corp.
of Am. v. Producers’ Oil Corp. of Am., 174 A. 276, 278-280 (Del. Ch. 1934) (Wolcott, J.,
C.) (looking beyond corporate records and holding that beneficial holder “should be
regarded as a stockholder of record” on facts presented). Similarly this court has the
power to recognize and enforce the equitable right of a subsequent owner to vote shares,
even though an inspector of elections would be forced to recognize the legal right of the
prior owner. See Commonwealth Assocs. v. Providence Health Care, Inc., 641 A.2d 155,
158 (Del. Ch. 1993) (Allen, C.) (explaining presumption under Delaware law that “upon
request the seller will, in good faith, take such ministerial steps as are necessary (e.g.,
granting proxies) to effectuate the transfer [of voting rights to a post-record date buyer]”);
Fuller, 1997 WL 305833, at *5 (barring record holder from voting shares by written
consent after corporation exercised option to acquire shares); Freeman v. Fabiniak, 1985
WL 11583, at *7 (Del. Ch. Aug. 15, 1985) (“[I]t would be inequitable to allow a holder
of record who holds mere legal title to stock to act by consent in a manner contrary to the
wishes of the true owner.”).

                                             60
corporate law generally adheres to the “bedrock doctrine of independent legal

significance,” under which an outcome under one statutory section does not necessary

govern the result under a different statutory section.14 Once again, the statutory limitation

on what inspectors of election can consider need not extend to appraisal rights.

       Nor is the DGCL the only Delaware statute that governs this area. Cede is a

securities intermediary for purposes of Article 8 of the Uniform Commercial Code. See 6

Del. C. § 8-102(a)(14)(i). Cede’s participant banks and brokers are likewise securities

intermediaries. See id. § 8-102(a)(14)(ii). A street-name investor that corporate law calls

a beneficial holder is technically an entitlement holder, defined under Delaware’s version

of Article 8 as a “person identified in the records of a securities intermediary as the

person having a security entitlement against the securities intermediary.” Id. § 8-

102(a)(7). Cede and other securities intermediaries in the ownership chain have a

statutory duty to exercise voting rights as instructed by the entitlement holder. See id. § 8-

506. This statutory framework brings the beneficial holder into the picture and reinforces

the viability of considering how Cede actually voted particular shares.

       Under the Appraisal Arbitrage Decisions, the aggregate totals showing how Cede

voted are sufficient to establish a prima facie case that the Dissenter Requirement is

satisfied. But Reynolds II and Olivetti II indicate that a corporation can obtain and

       14
         Warner Commc’ns Inc. v. Chris–Craft Indus., Inc., 583 A.2d 962, 970 (Del. Ch.
1989) (Allen, C.) (applying doctrine), aff’d, 567 A.2d 419 (Del. 1989) (TABLE). See
generally C. Stephen Bigler & Blake Rohrbacher, Form or Substance? The Past, Present,
and Future of the Doctrine of Independent Legal Significance, 63 Bus. Law. 1 (2007).

                                             61
introduce evidence to rebut that showing and demonstrate that Cede actually voted the

shares for which appraisal was sought. The fact that an inspector of election could not

consider that information under Section 231 does not mean that this court cannot examine

it in the context of an appraisal proceeding.

E.     The T. Rowe Petitioners Do Not Have Appraisal Rights.

       In this case, Cede exercised its voting rights by granting an omnibus proxy to its

participants that authorized them to vote Cede’s shares. State Street was one of those

participants. State Street in turn exercised the voting rights it received through the

omnibus proxy in accordance with instructions specified by its clients, including the T.

Rowe Petitioners. State Street did not obtain or execute those voting instructions itself.

State Street contracted with Broadridge to carry out those tasks and gave Broadridge a

power of attorney that empowered Broadridge to execute proxies on State Street’s behalf.

       Meanwhile, the T. Rowe Petitioners contracted with ISS to collect and submit

their voting instructions to Broadridge. In this case, the T. Rowe Voting System provided

instructions to ISS to vote in favor of the Merger. ISS conveyed those instructions to

Broadridge, and Broadridge carried them out by executing the Broadridge Client Proxies.

Through this daisy chain, Cede voted the shares for which the T. Rowe Petitioners seek

appraisal in favor of the Merger.

       Broadridge’s records make this clear. For the T. Rowe Petitioners that were

mutual funds, so do their disclosures on Form N-PX.

       It simply is not true that it is impossible to determine how Cede voted the shares

over which the T. Rowe Petitioners exercised voting authority. When questions arose

                                                62
about how the shares were voted, T. Rowe, ISS, and Broadridge all acted as if they could

identify the shares and how they were voted, and they came to the conclusion that

Broadridge voted the shares “FOR” the Merger. The linkage to specific shares also

appears in the form of demand that Cede delivered on behalf of the T. Rowe Petitioners,

in which Cede stated that it was acting on behalf of its participating member and the

member’s customer as to a specifically identified block of shares that the customer

beneficially owned.

       The T. Rowe Petitioners made out a prima facie case sufficient to satisfy the

Dissenter Requirement, but discovery has shown that Cede, the stockholder of record,

actually voted the shares of stock for which appraisal was sought in favor of the Merger.

The Dissenter Requirement was not met. The T. Rowe Petitioners therefore do not have

appraisal rights.

F.     The T. Rowe Petitioners’ Other Arguments

       To avoid the implications of the Dissenter Requirement, the T. Rowe Petitioners

seek to shift the focus elsewhere, away from the voting instructions that the T. Rowe

Voting System submitted to ISS, which ISS provided to Broadridge, and which

Broadridge carried out. First, the T. Rowe Petitioners argue that they submitted the voting

instructions mistakenly, which they did, and that they should not lose their appraisal

rights because of an inadvertent error. Second, they point to language in the Proxy

Statement which they interpret as saying that earlier votes would remain effective, and

they argue that Dell should be estopped from treating Broadridge’s later votes in favor of

the Merger as Cede’s actual votes. Third, they argue that because of the ruling that this

                                            63
court reached in the Dell Ownership decision, the voting instructions that they provided

should not matter. None of these arguments carries the day.

              1.     ISS

       The T. Rowe Petitioners contend that although they submitted voting instructions

against the Merger, they did so inadvertently because of ISS and should not lose their

appraisal rights as a result. When an investor elects to use intermediaries, the investor

assumes the risk that the intermediaries will err or otherwise fail to act in accordance with

the investor’s wishes.15 That general rule applies to the appraisal statute.16 Ironically, by

       15
           See, e.g., Preston v. Allison, 650 A.2d 646, 649 (Del. 1994) (“If a beneficial
stockholder is disenfranchised because of the record stockholder’s failure to follow
instructions, no relief is afforded in the usual case. . . . Implicit in [that rule] is the
recognition that [the beneficial holder] was free to choose its method of voting and the
person in whom it would entrust that responsibility. As a result, a careless mistake by [the
person selected] was not allowed to overturn and delay the election results.”); Am.
Hardware Corp. v. Savage Arms Corp., 136 A.2d 690, 692 (Del. 1957) (“If an owner of
stock chooses to register his shares in the name of a nominee, he takes the risks attendant
upon such an arrangement . . . .”); Scott v. Arden Farms Co., 28 A.2d 81, 84 (Del. Ch.
1942) (holding that where trustees had voted shares in voting trust for a merger, trust
certificate holders were “manifestly bound by the acts of the voting trustees, done in good
faith and within the scope of their authority, in carrying out purposes of the trust”).
       16
          See, e.g., Enstar Corp. v. Senouf, 535 A.2d 1351, 1354-55 (Del. 1987)
(disqualifying shares from appraisal remedy where broker failed to deliver demand
signed by or on behalf of stockholder of record); Salt Dome Oil Corp. v. Schenck, 41
A.2d 583, 589 (Del. 1945) (“If, for any reason, [an investor] chooses to allow his shares
to be registered on the corporate books in the name of another, it is not a denial of his
right of actual ownership to require him to establish his rights and pursue his remedy
through the nominee of his own selection.”); see also Dirienzo v. Steel P’rs Hldgs., L.P.,
2009 WL 4652944, at *4 (Del. Ch. Dec. 8, 2009) (collecting cases and noting that
“Delaware courts have held appraisal demands to be invalid where they were made by a
beneficial owner even in instances where the identity of the record holder was known by
the respondent corporation”).

                                             64
making this argument, the T. Rowe Petitioners are effectively contending that Broadridge

acted without actual authority (albeit with apparent authority) because of the mistaken

conveyance of voting instructions by ISS. Both Reynolds II and Olivetti II prohibit any

inquiry into whether the beneficial holder authorized the actions taken by the record

holder. The actions that the record holder took are dispositive.

       In the Dell Ownership decision, I argued for modifying this principle for purposes

of actions taken at the depository level, because that level of ownership resulted from

federal policy and not investor choice. See 2015 WL 4313206, at *11. Under my

modified approach, which I did not actually apply and which the Delaware Supreme

Court may choose not to adopt, a mistake that resulted from interactions between DTC

and its participants would not lead to the automatic forfeiture of appraisal rights. See id.

at *24; cf. Preston, 650 A.2d at 649 (declining to impose consequences of mistake by

record holder on plan participants who were required by law to hold through the plan). To

implement my modified approach, I suggested treating the DTC participants (in this case

State Street) as the record holders for purposes of Delaware law, just as they are record

holders for purposes of federal law and just as they were record holders under Delaware

law before the federal depository intervention.

       Neither suggestion would change in the outcome here. The mistake in this case did

not arise at the DTC level as a consequence of the federal policy of share immobilization.

It arose because T. Rowe has to vote in a large number of corporate elections and wanted

to rely on ISS to ease that burden. By choosing to rely on ISS to transmit its voting

                                             65
instructions, T. Rowe accepted the risk that ISS might transmit voting instructions

inconsistent with T. Rowe’s true intentions.

       Nor would the mistake disappear if the court treated State Street as the record

holder. Through the power of attorney in its services agreement with Broadridge, State

Street granted Broadridge authority to vote its shares in accordance with instructions

received from the beneficial holders. In this case, the T. Rowe Voting System

communicated instructions to ISS, which communicated them to Broadridge, which

carried them out. For purposes of this case, the outcome remains the same if the analysis

were to focus on State Street rather than on Cede.

              2.    Dell’s Proxy Statement

       Alternatively, the T. Rowe Petitioners contend that they should not be bound by

the instructions that were submitted for the September Meeting because they previously

gave ISS instructions to vote “AGAINST” the Merger in connection with the July

Meeting. They cite the Proxy Statement for the September Meeting, which they say

promised that earlier voting instructions would remain in effect. The language in question

reads as follows:

       If you have already voted by proxy in favor of the proposals contained on
       the proxy card using a properly executed WHITE proxy card or otherwise
       voted by proxy in favor of such proposals over the Internet or by telephone,
       you will be considered to have voted in favor of such proposals and do not
       need to take any action, unless you wish to revoke or change your proxy. If
       you have already voted by proxy against the proposals contained on the
       proxy card, you will be considered to have voted against such proposals
       and do not need to take any action, unless you wish to revoke or change
       your proxy.

                                               66
JX 651 at 4 (emphasis removed). T. Rowe says it took comfort in this language, which it

interprets as a representation that if a stockholder previously submitted instructions to

vote against the Merger in connection with the July Meeting, then its shares would be

“considered to have voted against” the Merger for the September Meeting.

       The T. Rowe Petitioners read the language of the Proxy Statement too broadly.

The language effectively said that a proxy would remain in effect unless changed. It did

not say that votes from the July Meeting would remain in effect if an authorized agent

delivered a later and inconsistent proxy card. To the contrary, under operative principles

of law, a later proxy card displaces an earlier and inconsistent card.17 Consistent with this

rule, language appearing later in the same paragraph of the Proxy Statement advised

investors that this was the method they should use to change their votes: “If you have not

previously voted by proxy or if you wish to revoke or change your proxy, please vote by

proxy over the Internet or by telephone, or complete, date, sign and return you WHITE

proxy card as soon as possible.” JX 651 at 4 (emphasis removed).

       Whether T. Rowe intended to change its voting instructions or not, T. Rowe’s

authorized agent (ISS) in fact changed the voting instructions for the T. Rowe Petitioner’s

       17
         See, e.g., Standard Power & Light Corp. v. Inv. Assocs., 51 A.2d 572, 580 (Del.
1947) (“[W]hen two proxies are offered bearing the same name, then the proxy that
appears from the evidence to have been last executed will be accepted and counted under
the theory that the latter—that is, more recent—proxy constitutes a revocation of the
former.”); Parshalle v. Roy, 567 A.2d 19, 23 (Del. Ch. 1989) (“Faced with two identical
proxies having differing dates, the Inspectors correctly gave effect to the later-dated
proxy—a result mandated . . . by Delaware case law . . . .”).

                                             67
shares. Broadridge then revoked the client proxies it submitted for the July Meeting by

issuing entirely new client proxies for the September Meeting. The later client proxies not

only voted the shares held at Cede for which the T. Rowe Petitioners now seek appraisal,

but voted them in favor of the Merger. The language in the Proxy Statement places no

limitation on the effectiveness of a later and inconsistent proxy.

              3.     The Dell Ownership Decision

       The T. Rowe Petitioners last contend that even if proof regarding how Cede

actually voted might carry the day in another case, it cannot do so here because the Dell

Ownership decision is law of the case. That decision held that certain other petitioners

affiliated with T. Rowe lost their appraisal rights because they failed to satisfy the

continuous ownership requirement imposed by Section 262(a) when their custodial banks

had Dell’s transfer agent re-issue and re-title shares previously held in the name of Cede

in the names of their own nominees. See Dell Ownership, 2015 WL 4313206, at *2-3.

The T. Rowe Petitioners read the Dell Ownership decision as recognizing that a court

cannot look beyond the formal record holder, and they believe that this rule forecloses a

court from examining any evidence beyond Cede’s aggregate voting totals.

       Accepting that the Dell Ownership decision is law of the case (albeit only for

purposes of proceedings at this level of the judicial system), there is no inconsistency.

Both that ruling and this one focus on the actions of the record holder. In the Dell

Ownership decision, the record holder changed from Cede to other nominees, thereby

contravening the continuous holder requirement. See 8 Del. C. § 262(a). In this decision,

the record holder in fact voted the particular shares for which the T. Rowe Petitioners are

                                             68
pursuing an appraisal in favor of the Merger. The critical evidence that reveals how the

record holder voted its shares comes from parties other than the record holder, but the

dispositive analysis operates at the record holder level. Because the record holder voted

those shares in favor of the Merger, the record holder cannot satisfy the Dissenter

Requirement, and the T. Rowe Petitioners cannot pursue an appraisal for those shares. In

both cases, the actions of the record holder control the outcome under the appraisal

statute.

G.     The Proposal To Substitute Cede As Petitioner

       The T. Rowe Petitioners creatively propose to amend their petitions to substitute

Cede as the petitioner. That would not matter. Cede cannot obtain appraisal of shares it

voted in favor of the Merger. No one can seek appraisal for those shares.

                               III.     CONCLUSION

       The T. Rowe Petitioners cannot pursue an appraisal of shares that Cede, as record

holder, voted in favor of the Merger. They do not possess appraisal rights, and judgment

is entered against them. They remain entitled to the merger consideration without any

award of interest.

                                           69