The opinion of the court was delivered by: Pratter, J.
Attacks on the citadel of corporate control frequently foment skirmishes that escalate into battles or full-fledged warfare too unruly for the roundtable of the boardroom. When that happens the competing, self-proclaimed champions of shareholder suffrage rights enter the somewhat more decorous and restrictive lists of the courtroom. Such is the dispute before the Court.
II. PROCEDURAL BACKGROUND
Plaintiff Quigley Corporation ("Quigley") commenced this suit on April 23, 2009 against Defendants Ted Karkus, Mark Burnett, John DeShazo, Louis Gleckel, and Mark Leventhal (collectively, "Karkus Defendants") and John Edmund Ligums, Sr., alleging violations of Sections 13(d) and 14(a) of the Securities and Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §§ 78m(d) and 78n(a). Quigley, a Nevada corporation with its principal place of business in Doylestown, Pennsylvania, manufactures a range of homeopathic and health products, including Cold-Eeze(r). Quigley is trades on the NASAQ and, as of March 27, 2009, had 12,908,383 shares of its common stock outstanding. The Karkus Defendants are a group of Quigley investors who collectively own more than 10 percent of the shares of Quigley. Defendant Ligums owns approximately 546,000 shares of Quigley through his company, Jelco Inc. Pl. Ex. 8. Other adult members of the Ligums' family own 410,683 additional shares. Pl. Ex. 9.
Quigley and the Karkus Defendants are engaged in a proxy contest. Seven members of the Quigley board of directors are up for election in a shareholder vote scheduled to take place at the 2009 Annual Meeting on May 20, 2009. The Karkus Defendants have nominated a competing slate of seven directors (individual defendants Ted Karkus, Mark Burnett, John DeShazo, Louis Gleckel, and Mark Leventhal, as well as non-defendants Mark Frank and James McCubbin) to challenge the incumbent board. Defendant Ligums is not nominated to run on the Karkus Defendants' slate.
The Quigley Complaint alleges that the Defendants are attempting to obtain control of the company by means of materially false statements in proxy materials. In the Complaint Quigley contends that the Karkus Defendants have concealed Mr. Ligums' participation in the proxy contest, failed to disclose the group's true intentions for the company if they are elected to the board of directors, and mischaracterized the details of the sale by Quigley of Darius International and of Gary Quigley's involvement in the sale. In response, the Karkus Defendants and Mr. Ligums filed motions to dismiss the complaint.
The upshot of the Karkus Defendants' motion is that the complaint was rendered moot by a series of amendments to their filings with the SEC in which they disclosed all of Quigley's allegations and furnished point-by-point responses to each assertion. Mr. Ligums' motion argued that the complaint states no cognizable cause of action against him.
Oral argument on the motions to dismiss was held on May 7, 2009, by which time Quigley had made clear its intention to seek a preliminary injunction either to prevent the Karkus Defendants from soliciting proxies or to compel the Karkus Defendants, prior to commencing any solicitation, to amend their proxy materials to acknowledge that Mr. Ligums is part of their Section 13(d) group, to reveal the group's true plans for the company, and to remove allegations that the incumbent board of directors approved the sale of a company asset at a "questionable valuation" to benefit Gary Quigley. The Court has held resolution of the motions to dismiss in abeyance to allow consideration of the motion for preliminary injunction in advance of the fast-approaching shareholders meeting. To that end, the Court has conferred with counsel on an as-needed basis to assist the parties in reaching agreements as to, or, in some instances, resolving expedited discovery scheduling and production matters, the crafting of an appropriate stipulated protective order and otherwise preparing for the preliminary injunction hearing.
In advance of the May 14, 2009 preliminary injunction hearing the Karkus Defendants filed a Motion To Compel The Adoption Of Election Procedures, to which Quigley has responded. During a conference call on the day before the injunction hearing, Quigley informally informed opposing counsel and the Court that Quigley no longer intended to seek preliminary injunctive relief as to the Karkus Defendants filings' statements about the Quigley disposition of Darius International and about Gary Quigley in connection with that disposition or as to the Karkus Defendants' alleged non-disclosure of their plans for Quigley. The only claim for injunctive relief was that the Karkus Defendants' SEC filings were misleading because of the failure to disclose that Mr. Ligums as part of the group soliciting proxies to challenge the incumbent board members standing for election. Accordingly, on the morning of the preliminary injunction hearing the Karkus Defendants filed a Motion to Dismiss Abandoned Claims With Prejudice And For Remedial Relief. Quigley has not yet had the opportunity to file a written response to this motion, but at the commencement of the preliminary injunction hearing Quigley placed on the record that it formally withdrew its application for a preliminary injunction as to the two issues described above but was not withdrawing them from their complaint. Upon inquiry from the Court, counsel for Quigley acknowledged that, given the imminence of the shareholder meeting, there would be no opportunity for Quigley to proceed on those allegations prior to the shareholder meeting, thus necessarily leaving them unproven for all practical intents and purposes.
With this procedural background the preliminary injunction hearing proceeded on Quigley's application that the Court (1) enjoin the Karkus Defendants from continuing to violate Section 13(d) and 14(a) of the Exchange Act; (2) enjoin the Karkus Defendants from participating the proxy contest; and (3) enjoin the counting of any proxies solicited by any Defendant or those acting in concert or participation with them on the basis of misleading proxy materials.
Based on the parties' filings and the evidence presented at the hearing, for the reasons that follow the Court denies Quigley's Motion for a Preliminary Injunction.
"A district court may grant the 'extraordinary remedy' of a preliminary injunction only if '(1) the plaintiff is likely to succeed on the merits; (2) denial will result in irreparable harm to the plaintiff; (3) granting the injunction will not result in irreparable harm to the defendants; and (4) granting the injunction is in the public interest.'" P.C. Yonkers, Inc. v. Celebrations the Party Seasonal Superstore, LLC, 428 F.3d 504, 508 (3d Cir. 2005) (quoting Maldonada v. Houston, 157 F.3d 179, 184 (3d Cir. 1998)). See Charming Shoppes Inc. v. Crescendo Partners II, L.P., 557 F. Supp. 2d 621, 623 (E.D ...