IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ATG CAPITAL OPPORTUNITIES )
FUND LP, )
Plaintiff, )
)
v. ) C.A. No. 2026-0447-LWW
)
RYAN LANE, JOHN KIM, )
JONATHAN P. FOSTER, ADRIAN )
SOLGAARD, ÖRN ÓLASON, )
ROHAN CHAUHAN, MATTHEW )
HOMER, IAN READ, )
)
Defendants, )
)
and )
)
EMPERY DIGITAL, INC. )
)
Nominal Defendant. )
MEMORANDUM OPINION
Date Submitted: August 19, 2026
Date Decided: August 28, 2026
A. Thompson Bayliss, John M. Seaman, Caitlin C. Bozman, Bryan M. Blaylock, ABRAMS & BAYLISS LLP, Wilmington, Delaware; Adrienne M. Ward, Lori
Marks-Esterman, Jacqueline Y. Ma, Daniel M. Stone, Joseph M. Calder, Jr., OLSHAN FROME WOLOSKY LLP, New York, New York; Attorneys for Plaintiff
ATG Capital Opportunities Fund LP
John P. DiTomo, Jacob M. Perrone, Nicholas R. Gottemoller, MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, Delaware; David Livshiz, Andrew
Gladstein, Nicholas Caselli, Alexandra Carlton, Penina Cohen, Jordan McGuffee, FRESHFIELDS US LLP, New York, New York; Attorneys for Defendants Ryan
Lane, John Kim, Jonathan P. Foster, Adrian Solgaard, Örn Ólason, Rohan Chauhan, Matthew Homer and Ian Read and Nominal Defendant Empery Digital, Inc.
WILL, Vice Chancellor
Advance notice bylaws are commonplace and vital tools for Delaware
corporations. They promote orderly meetings and election contests, giving boards
time to evaluate candidates and information to make recommendations to
stockholders. Given the important corporate purposes such bylaws serve, this court
routinely enforces unambiguous provisions. The court cannot, however, enforce a
requirement that a bylaw does not contain.
In this case, an activist investor sought to nominate a full slate of director
candidates to the board of Empery Digital, Inc.—a digital asset treasury company.
The board rejected the nomination, citing suspicions that the investor was
coordinating with another stockholder who had plans to take control of Empery and
liquidate its Bitcoin assets. The board also noted that the investor failed to disclose
a massive short position in Bitcoin exchange-traded funds, which the board felt
misaligned the investor with other Empery stockholders.
During the ensuing expedited trial, evidence came to light that lends credence
to the board’s beliefs. Yet the board’s rejection suffers from a fatal flaw: Empery
had no advance notice bylaw provision requiring disclosure of the information the
board identified as missing. The board instead invokes general bylaw provisions
incorporating federal proxy rules—some of which were not raised until trial, and
others that do not call for the information the board demands.
1
Advance notice bylaws do not authorize incumbent boards to exclude director
candidates based on the incumbents’ views of their unsuitability for office. It is the
fundamental right of the stockholders—not the directors—to select the individuals
who will determine the strategic direction of the company. Empery’s board is free
to raise its views during the proxy contest. But, given the lack of relevant bylaws, it
was both contractually improper and inequitable to reject the nomination notice
entirely.
Separately, the investor seeks a reopening of the nomination window
following Empery’s post-deadline announcement of an AI data-center transaction.
Because the nomination notice is valid and the investor’s slate will stand for election,
no further equitable intervention is required. This decision leaves the choice with
Empery’s stockholders.
I. FACTUAL BACKGROUND
The following were stipulated to by the parties or proven by a preponderance
of the evidence after trial.1
1
See Joint Pre-trial Stipulation and Order (Dkt. 248) (“PTO”). Trial occurred over three days, during which five fact witnesses and five expert witnesses testified live. Testimony of five fact witnesses was presented by deposition. See Trial Tr. Vols. I-III (Dkts. 265-67). Trial testimony is cited as “[Name] Tr. __.” The trial record contains 895 joint exhibits and 28 deposition transcripts. Exhibits are cited by the numbers provided on the parties’ joint exhibit list as “JX __,” unless otherwise defined. Pincites are to pagination on joint exhibits where available, and to the last four digits of Bates stamps where unavailable. See Final Joint Ex. List (Dkt. 220); Deposition transcripts are cited as “[Name] Dep. __.” See Am. Notice of Lodging of Dep. Trs. (Dkt. 237).
2
A. Empery and its Bitcoin DAT
Empery Digital, Inc. (“Empery” or the “Company”) is a Delaware corporation
headquartered in Texas.2 Its stock is traded on the Nasdaq Global Select Market.3
In July 2025, Empery’s predecessor adopted a digital asset treasury (“DAT”)
strategy to acquire and hold Bitcoin.4 A DAT is a publicly traded company that holds
cryptocurrency as a primary asset.5 At the time, DAT share prices were generally
trading at a premium to the net asset value (“NAV”) of their underlying
cryptocurrency.6
Also in July 2025, Empery announced the closing of a $500 million private
investment in public equity (PIPE), led by defendant Ryan Lane and his hedge fund,
Empery Asset Management.7 The PIPE closed at $10 per share.8 Afterward, Lane
was appointed Co-Chief Executive Officer alongside legacy CEO, defendant John
Kim.9 Empery’s reconstituted Board of Directors (the “Board”) included Chairman
2
PTO ¶ 13.
3
Id. ¶ 14.
4
Id. ¶¶ 16, 25.
5
JX 677 (Expert Report of Angelo Chan (“Chan Report”)) ¶¶ 24-25.
6
Id. ¶ 24 n.7; id. ¶ 25.
7
PTO ¶ 17; Lane Tr. 272-74, 298.
8
PTO ¶ 17.
9
Id. ¶ 18.
3
Lane, Kim, and Jonathan Foster, Adrian Solgaard, Örn Ólason, Ian Read, Rohan
Chauhan, and Matthew Homer.10
B. Empery’s NAV Gap
Empery soon struggled. By the end of 2025, its stock price had fallen to
$4.57.11 Stockholders who held shares since the PIPE “lost a lot of money.”12
Empery’s Chief Operating Officer Tim Silver, who had joined the Company from
EAM, anticipated activist pressure.13
Cryptocurrency prices began to sharply decline in the fall of 2025.14 The
premiums that had incentivized stockholders to invest in DATs began to flip. Rather
than trading at a premium, many DATs began trading at a discount to their
underlying assets.15
Empery was no exception. By January 8, 2026, it was trading at a market-tonet-asset value of 0.73, meaning the market valued the Company at just 73% of the
value of its Bitcoin.16 Thus, to the extent a stockholder could acquire control of
10
Id. ¶¶ 16, 18.
11
Lane Tr. 306; JX 437, “Daily Summary.”
12
Lane Tr. 307.
13
Silver Tr. 550.
14
JX 707 (Rebuttal Expert Report of Angelo Chan) ¶ 31.
15
JX 217.
16
Chan Report ¶ 41.
4
Empery for 73% of the value of its Bitcoin and force a sale of that Bitcoin at market
price, the stockholder could capture the spread.17
C. Brown’s and Gliksberg’s Investments
Tice Brown—a self-described “fundamental value investor”—was one of
Empery’s PIPE investors.18 Brown had invested $2 million alongside his friend
Jacob Ma-Weaver.19 In September 2025, Brown began contacting Lane and Silver
about Empery’s poor performance and advocated for share repurchases.20 To
capitalize on the growing NAV gap, Brown bought more Empery stock throughout
the fall of 2025.21 Brown began to consider whether he could take Empery “private
at 100% nav.”22
Gabi Gliksberg—an activist investor—had also noticed Empery’s “very
significant discount” to NAV.23 Gliksberg had recently launched plaintiff ATG
17
Id. ¶¶ 12, 80.
18
Brown Tr. 160, 171.
19
Id. 160, 194.
20
E.g., JX 225 at 41, 66, 72-79; Brown Tr. 162-63; Lane Tr. 311.
21
See DDX2; Brown Tr. 160-61, 251-52.
22
JX 82; see JX 83; see also JX 81; JX 86; JX 89.
23
Gliksberg Tr. 11; see also id. at 12, 20-22.
5
Capital Opportunities Fund LP.24 His marketing materials touted ATG’s willingness
to use litigation and pursue “liquidations” to force value realization.25
Gliksberg set out to purchase “as much Empery stock as possible.” 26 On the
morning of January 15, ATG placed nineteen limit orders for approximately
1.36 million shares of Empery common stock.27 Later that day, Gliksberg called
Ma-Weaver, with whom he had previously invested, to investigate why Empery was
trading at such a “steep discount.”28
Brown had also called Ma-Weaver on January 15 to discuss Empery. Two
days earlier, Brown had texted Ma-Weaver to “come do empd,” to which MaWeaver—who had previously faced group allegations alongside Gliksberg—
replied: “Not a group!”29 Ma-Weaver had no interest in taking an activist position
and did not “want to inadvertently trigger a 13D.”30 He put Brown and Gliksberg in
touch by email, writing: “You both called me on the same topic today, and you
should get to know one another regardless.”31
24
Id. at 5-6.
25
JX 117 at 8-10; Gliksberg Tr. 101-03.
26
Gliksberg Tr. 90-91, 117-18.
27
JX 825 at ‘0554.
28
Gliksberg Tr. 26-27; see Brown Tr. 171.
29
JX 109; see Brown Tr. 211-12.
30
JX 940; see JX 58; JX 59.
31
JX 169; see PTO ¶ 28.
6
D. Brown and Gliksberg Meet
Within minutes of Ma-Weaver’s introduction, Brown called Gliksberg—the
first of several phone calls that afternoon that totaled over an hour.32 Brown and
Gliksberg testified that they spoke about everything from religion, to their children,
to Brown’s fine art trading, and current events.33 They also spoke about Empery.34
Brown and Gliksberg testified that their discussion of Empery was minimal and did
not include their respective investment theses, positions, or hedges.35 The weight of
the evidence suggests otherwise.
Less than an hour after Gliksberg’s first call with Brown, ATG submitted
multiple orders for Empery stock, bringing ATG’s total January 15 purchases to
1,686,245 shares.36 In between his calls with Brown on January 15, Gliksberg called
his longtime counsel on activism-related matters and investments—Aaron Morris—
whom ATG later named as a candidate for nomination to Empery’s Board.37
Gliksberg also instructed his broker to move 1,000 Empery shares into record
32
JX 169 (Ma-Weaver’s introductory email at 1:36 p.m. on January 15); JX 108 (call log showing the first call between Gliksberg and Brown at 1:39 p.m.); see Brown Tr. 164-66. 33
Gliksberg Tr. 28-30, 31-32, 79; Brown Tr. 170-72, 180-81.
34
Gliksberg Tr. 28; Brown Tr. 171.
35
Gliksberg Tr. 29; Brown Tr. 172.
36
JX 868; Gliksberg Tr. 87-88, 123; JX 825 at ‘0554.
37
JX 111.
7
name.38 Shortly afterward, Brown consulted with his analyst to see if he had the
funds to “buy up to 9.9%” of Empery.39
Brown and Gliksberg’s calls resumed the next morning, on January 16.40 Just
before that call, Gliksberg texted Ronald Davies—one of ATG’s Board nominees—
to tell him that he “might have a proxy fight coming up” and would “need to
nominate directors.”41 Brown and Gliksberg spoke over the phone twice more that
afternoon.42 During the day, Brown requested the transfer of 1,000 Empery shares
to record name.43 Brown also pressed his broker and analyst on freeing up cash to
make a large purchase of Empery shares.44
E. Schedule 13 Filings
Gliksberg and Brown continued to speak over the ensuing days, while
Gliksberg planned for a proxy contest.
38
JX 961; Gliksberg Tr. 76, 82-83.
39
JX 114; Boshans Tr. 260.
40
JX 108.
41
JX 118.
42
JX 108.
43
JX 960.
44
See JX 120; JX 121.
8
On January 18, Gliksberg asked ChatGPT for a “full timeline on all the
important tasks” to “do a shareholder activist campaign against Empery Digital.”45
He then spoke to two other future nominees: James Elbaor and Christopher Novak.46
On January 19, Gliksberg and Brown spoke on the phone twice.47 One of their
calls lasted 34 minutes.48
By January 20, Brown wired $2 million to his broker to purchase Empery
shares.49 One hour after Brown’s first purchase of the day, Gliksberg attempted to
call him, but the call did not go through.50 Brown purchased a total of 813,779 shares
of Empery stock that day.51
Gliksberg’s attempted call to Brown on January 20 is the last in the record.
From then on, Gliksberg and Brown communicated solely by Signal.52 Both testified
that they did so due to poor cellular reception.53 Brown was at his home in
Manhattan; Gliksberg was at his home in Miami.54 The auto-delete feature was
45
JX 124 at ‘1246.
46
JX 123; JX 125.
47
JX 108.
48
Id.
49
JX 120 at ‘3194; JX 133 at ‘3218.
50
JX 108.
51
JX 821.
52
Gliksberg Tr. 31; Brown Tr. 166-67.
53
Gliksberg Tr. 31; Brown Tr. 166-67.
54
Brown Tr. 185.
9
enabled on both of their Signal accounts, ensuring that their subsequent
communications were destroyed.55
On January 23, Brown filed a Schedule 13G disclosing his 9.7% ownership
of Empery.56 Later that evening, Brown requested an in-person meeting with Lane
and Silver, which was set for January 28 at Empery’s offices.57
ATG also continued to purchase Empery shares, amassing another 934,822
shares by January 26.58 On January 26, ATG filed a Schedule 13D disclosing a 5.6%
ownership stake in Empery.59 Its Form 13D stated that ATG “may in the future”
engage “in short selling” or “hedging[.]”60 At the time of the filing, however, ATG
had already hedged over 80% of its Empery position by shorting Bitcoin exchangetraded funds (ETFs).61
F. Brown’s Meeting and Bloomberg Story
On January 28, Brown and his analyst met with Lane and Silver at Empery’s
offices.62 The meeting quickly grew contentious. Brown demanded that Empery
55
Gliksberg Tr. 31; Brown Tr. 167-69.
56
JX 151.
57
JX 162; JX 164.
58
JX 825 at ‘0554.
59
JX 158 at 2.
60
Id. at 7.
61
See Grundfest Tr. 606-08; see also Chan Report ¶ 45.
62
See Silver Tr. 551.
10
immediately liquidate its Bitcoin to maximize returns.63 During the meeting, Brown
claimed that other stockholders shared his views and maintained similar hedges. The
only stockholder Brown named was ATG, referring to Gliksberg informally as
“Gabi.”64 Unprompted, Brown volunteered: “I am not working with ATG.”65 To
Lane and Silver, this unsolicited denial—coupled with Brown’s shifting stories
about how he met Gliksberg—suggested the opposite.66 After Brown refused to
leave, Lane called security to escort him out.67
On February 3, Brown sent a letter to the Board demanding Lane’s
resignation, the replacement of the entire Board, and the “immediate sale of all
Bitcoin” with the proceeds returned to stockholders.68 Brown attached this letter to
a Schedule 13D filed the same day, which disclosed a roughly 9% stake in the
Company.69
That evening, Brown emailed Bloomberg columnist Matt Levine, writing:
“I’d like to liquidate a bitcoin treasury company. I’d like to speak publicly about
63
Id. at 551-52; Lane Tr. 284.
64
Silver Tr. 554-55.
65
Id. at 555; Lane Tr. 285.
66
Lane Tr. 285; Silver Tr. 555.
67
Silver Tr. 553; Boshans Tr. 266.
68
JX 215.
69
JX 211; see PTO ¶ 35.
11
it[.]”70 The next day, Levine published an article titled “Cracking Open the DATs,”
which named both Brown and ATG.71 It described an arbitrage and liquidation
strategy whereby an investor buys a stake in a DAT company that is trading at a
discount to its NAV, and agitates for the company to liquidate its cryptocurrency to
return the money to its stockholders.72 Shortly after publication, Gliksberg texted a
link to the article to one of his Board nominees, instructing him: “Read it now! And
then don’t text me about it.”73
G. The Rights Plan and the Competing Nominations
On January 28, ATG filed an amended Schedule 13D, disclosing that it had
nearly doubled its ownership from 5.6% to 10.4%.74 In response, on February 2, the
Board adopted a limited duration stockholder rights plan (the “Rights Plan”) that
would be triggered if a stockholder acquired 12.5% or more of the Company’s
stock.75
The official minutes reflect the Board’s conclusion that the Rights Plan would
protect stockholders while the Company “continu[ed] to execute on its plan to close
70
JX 234.
71
JX 217.
72
Id.
73
JX 219; see Gliksberg Tr. 139-40.
74
JX 177.
75
JX 202; JX 210.
12
the NAV gap.”76 AI-generated transcripts of the meeting show Lane told the Board
that capping ATG’s ownership at 12.5% would limit its financial upside, making it
“not worth it to put up [a] slate to go through the proxy solicitation process.” 77 He
further advised that the Rights Plan was “necessary in order for the board to remain
in its position.”78 The Board terminated the Rights Plan in July 2026.79
Meanwhile, Gliksberg solidified his slate of directors. The candidates he
selected lacked cryptocurrency experience.80 Gliksberg enabled auto-deleting
message settings when discussing the proxy contest with several of his nominees.81
In mid-February, he introduced his prospective slate to his counsel at Olshan Frome
Wolosky LLP.82
On February 26—just days before the nomination window closed—ATG
nominated Gliksberg, Arati Batta, Aaron Morris, Christopher Novak, Evan Ratner,
Heather Powers, James Elbaor, Meredith Kirshenbaum, and Ron Davies for election
to the Board (the “Nomination Notice”).83 The exact same day, after having
76
JX 202 at ‘0425-28.
77
JX 203 at ‘0373; see Lane Tr. 330-31.
78
JX 203 at ‘0371; see Lane Tr. 327-28.
79
PTO ¶ 68(h).
80
See Gliksberg Tr. 52-53; JX 263.
81
Id. at 42-43, 50-51.
82
JX 285; JX 287; JX 292; JX 294; JX 296; JX 298; JX 299; JX 300.
83
JX 359.
13
requested the nomination materials just two days prior, Brown submitted his own—
partially handwritten—notice nominating himself.84
H. The Board’s Rejection
The Board met on March 16 to discuss the activist stockholders. During that
meeting, the directors conferred about their “understanding that ATG had a short
position on Bitcoin”—a fact that concerned them.85 The Board members were “very
suspicious” that Gliksberg and Brown were “acting together” and attempting “to
hide it.”86
On March 25, Empery’s Chief Financial Officer circulated counsel’s draft
deficiency letters.87 The Board and the Nominating and Corporate Governance
Committee convened the next day, on March 26.88 At the meeting, they discussed
their concerns with respect to Brown and ATG’s nominations. The directors focused
on what they perceived as an undisclosed relationship between Brown and ATG, as
well as ATG’s failure to disclose its Bitcoin short, which they felt was “important
84
JX 381; see Brown Tr. 249-50.
85
JX 417; see Read Dep. 147.
86
Lane Dep. 371; see also JX 416 at ‘1403 (AI-generated notes indicating Lane’s belief that “T[i]ce and ATG were acting together . . . as a group”).
87
JX 490.
88
JX 496.
14
for shareholders to know.”89 The directors also considered the “sheer volume of
deficiencies” in the nominees’ questionnaires.90
The Nominating and Corporate Governance Committee recommended that
the Board reject the nominations.91 The Board unanimously agreed.92 Empery,
through counsel, subsequently issued substantially identical letters to ATG (the
“Rejection Letter”) and Brown informing them that their nominations were
deficient.93
The Rejection Letter cited three primary grounds for the Board’s decision,
tied to provisions of Empery’s advance notice bylaws (the “Bylaws”).94 First, ATG
did not disclose Brown as a “participant” in its solicitation, and omitted required
participant disclosures about Brown—including his stock ownership and
arrangements.95 Second, ATG did not disclose its short position in a Bitcoin ETF,
which the Board contended misaligned ATG’s interests with other stockholders and
was required to be disclosed under Schedule 14A.96 And third, ATG’s nominees’
89
Homer Tr. 535-37; see also Solgaard Dep. 91-92.
90
JX 496; see JX 495 (AI-generated notes of the March 26 meeting).
91
JX 496.
92
Id.
93
JX 496; JX 497 (“Rejection Letter”); JX 494.
94
See JX 52 (“Bylaws”).
95
Rejection Letter 3-4, 8-10.
96
Id. at 5.
15
questionnaires contained biographical omissions and inaccuracies regarding their
employment histories and outside directorships.97
I. The Litigation and the Strategic Pivot
On April 2, ATG filed this suit against the Board to invalidate the rejection of
its Nomination Notice and seat its nominees.98 While this litigation proceeded,
Empery’s annual meeting was delayed. During that delay, on June 30, Empery
announced a $65 million investment to acquire a 25% stake in an AI data center.99
Concurrently, the Company took its online treasury dashboard offline, declaring that
reporting NAV based on Bitcoin holdings “no longer fully reflect[ed] the total NAV
of the Company” and was no longer a useful tool for investors.100 In July, Empery
sold approximately half of its remaining Bitcoin.101 On July 23, the Company
announced an additional $20 million strategic investment in another data center
affiliate.102 After Empery announced the AI data center investment, ATG
supplemented its complaint to demand that the nomination window be reopened.103
97
Id. at 10-12.
98
See Verified Compl. (Dkt. 1).
99
JX 658; JX 856.
100
JX 856; JX 857.
101
See Lane Tr. 429, 436.
102
Id. at 429-30.
103
Verified Suppl. Compl. (Dkt. 207).
16
ATG advances a multitude of claims arising from this proxy contest. Beyond
the core electoral dispute, ATG challenges a series of allegedly entrenching
defensive measures. It asserts that the Board breached its fiduciary duties by
adopting a direct offering transaction and a share repurchase program, and by issuing
materially misleading disclosures.104 ATG also seeks a mootness fee for the Board’s
post-filing termination of the Rights Plan.105
Given the impending annual meeting on October 14, the parties proceeded to
an expedited trial to resolve the immediate threat to the stockholder franchise. This
post-trial decision addresses only those expedited claims: whether the Board
breached the Company’s bylaws or its fiduciary duties by rejecting ATG’s
Nomination Notice, and whether the Company’s strategic pivot requires reopening
the nomination window in equity. The plaintiff’s remaining claims were bifurcated
to ensure the timely resolution of the electoral dispute. They will be addressed in a
subsequent decision.
II. ANALYSIS
ATG contends the Board interfered with the stockholder franchise when it
rejected its Nomination Notice and refused to extend the nomination deadline. It
104
See PTO ¶¶ 63(b)-(d), 68(b)-(c), 68(g).
105
Id. ¶ 68(h).
17
has the burden to prove its claims by a preponderance of the evidence. “Proof by a
preponderance of the evidence means proof that something is more likely than not.”
My analysis of these claims proceeds in two parts. First, I evaluate whether
the Board’s rejection of ATG’s Nomination Notice was contractually and equitably
permissible. Second, I address whether the Company’s post-deadline strategic pivot
required the Board to reopen the nomination window.
A. The Nomination Notice Rejection
Under Delaware law, corporate actions touching upon the stockholder
franchise are “twice-tested”—once by the law and again in equity.106 I begin with
the legal question of whether ATG complied with the Bylaws, and whether the
Board’s rejection breached the Bylaws.107 I then proceed to an equitable review of
whether the Board inequitably impaired ATG’s nomination right.108
106
Strategic Inv. Opportunities LLC v. Lee Enters., Inc., 2022 WL 453607, at *14 (Del. Ch. Feb. 14, 2022) (“Put simply, directors’ inequitable acts towards stockholders do not become permissible because they are legally possible.” (citing Schnell v. Chris-Craft Indus., Inc., 285 A.2d 437, 439 (Del. 1971))).
107
See, e.g., id. at *9 (“Because bylaws are part of a flexible contract between corporations and stockholders, consideration of an advance notice bylaw’s application begins with a contractual analysis.” (citation omitted)); Jorgl v. AIM ImmunoTech Inc., 2022 WL 16543834, at *10 (Del. Ch. Oct. 28, 2022) (beginning the analysis of an advance notice bylaw by determining “whether the notice complied with the bylaws”).
108
See Kellner v. AIM ImmunoTech Inc., 320 A.3d 239, 259 (Del. 2024) (noting that advance notice bylaws “can be misused to thwart stockholder choice and entrench the existing board of directors,” requiring courts to “scrutinize closely corporate acts that affect stockholder voting”); see also Coster v. UIP Cos., Inc., 300 A.3d 656, 672-73 (Del. 2023) (outlining the equitable standard of review for board action that interferes with a corporate election or a stockholder’s voting rights).
18
1. The Contractual Review
ATG seeks a declaration that the Board breached the Bylaws by rejecting its
Nomination Notice. It claims that it timely submitted a compliant notice on
February 26 to replace the full Board with nine qualified nominees, and that the
Board’s stated grounds for rejecting the nomination were pretextual.109
The defendants respond that the Board properly rejected the Nomination
Notice because it violated the Bylaws. The thirteen-page Rejection Letter detailed
a litany of purported violations.110 At trial, the defendants winnowed their focus to
two main justifications for the Board’s rejection: (1) that ATG failed to disclose
Brown as a “participant” in its proxy solicitation; and (2) that ATG failed to disclose
its short position in Bitcoin ETFs.111
As the party seeking to enforce its nomination, ATG bears the burden of
demonstrating that its notice fulfilled the Bylaws’ requirements.112 “[A]dvance
notice bylaw conditions act, in some respects, as conditions precedent to companies
being contractually obligated to take certain actions.”113 Because corporate bylaws
109
See Pl.’s Post-trial Br. (Dkt. 260) 15, 52.
110
See generally Rejection Letter.
111
See Defs.’ Post-trial Br. (Dkt. 261) 6.
112
See Kellner v. AIM ImmunoTech Inc., 307 A.3d 998, 1037-38 (Del. Ch. 2023) (noting that the plaintiff “bears the burden of showing that his notice fulfills the bylaws’ requirements”), aff’d in part and rev’d in part, 320 A.3d 239 (Del. 2024). 113
Lee Enters., 2022 WL 453607, at *13 n.142.
19
constitute part of a broader binding contract among directors, officers, and
stockholders, the court employs principles of contract interpretation when construing
them. Clear and unambiguous terms are given their commonly accepted meaning,
and any ambiguity in an advance notice bylaw is resolved in favor of the
stockholder’s electoral rights.114
a. The Group Allegations
The defendants’ overarching theory is that Gliksberg and ATG formed an
undisclosed group with Brown.115 The Board was focused on this belief during the
March 26 meeting where it voted to reject the Nomination Notice. According to the
AI-generated transcript of that meeting, Lane told the Board that ATG and Brown
“may still be acting[] as a group together”—though he did not “know it to be true”—
and that highlighting this “narrative” was a “powerful part of th[e] rejection.”116
To be sure, the Board had reason to be suspicious. The Rejection Letter noted
Brown’s strange preemptive statement during the January 28 meeting at Empery’s
office that he was not working with Gliksberg—a statement that led the Board to
suspect otherwise.117 At trial, the defendants elicited evidence supporting the
114
See Hill Int’l, Inc. v. Opportunity P’rs L.P., 119 A.3d 30, 38 (Del. 2015); Jorgl, 2022 WL 16543834, at *10.
115
Defs.’ Post-trial Br. 7-14.
116
JX 495.
117
See Rejection Letter 3 (“Based on statements made by Tice Brown (‘Mr. Brown’) to members of the Company’s management (including at the Company’s New York office on
20
Board’s suspicion that Brown and Gliksberg were coordinating regarding Empery
securities—even without the evidence lost to Brown and Gliksberg’s use of Signal
with auto-delete enabled.118 It is more likely than not that Brown and Gliksberg’s
multiple communications in mid-January went beyond sharing pleasantries and
focused on their plans for Empery. After Ma-Weaver declined to work with Brown
on his plan to “crack open the DAT,” Brown and Gliksberg’s activity—phone calls,
stock purchases, and outreach to prospective nominees by Gliksberg—rapidly
intensified.
The defendants analogize these facts to precedent where the court held that an
undisclosed agreement, arrangement, or understanding (“AAU”) provided
contractual or equitable grounds to reject a nomination.119 Yet there is a significant
difference between the bylaws in those cases and the Bylaws at issue here. In prior
January 28, 2026), the Company understands that Mr. Brown and ATG Capital have had specific discussions regarding the acquisition of the Company’s securities, as well as the timing of such acquisitions-actions that strongly indicate coordination between Mr. Brown and ATG Capital.”).
118
See supra Sections I.C-G.
119
See Defs.’ Post-trial Br. 9-10. The defendants’ pre-trial brief relied heavily on this precedent, arguing that “[t]his Court has already explained the applicability of the definition of ‘participant’ in the context of a stockholder nomination.” Defs.’ Pre-trial Br. (Dkt. 224) 43-44. None of the cited cases concern the disclosure of a “participant,” much less a participant as defined in Schedule 14A.
21
cases, the bylaws at issue explicitly required a nominating stockholder to disclose
AAUs.120 Empery’s Bylaws do not.
Section 2.5 of Empery’s Bylaws, which governs “Notice of Nominations for
Election to the Board,” lacks any provision requiring a nominating stockholder to
disclose an AAU concerning Empery or the nomination. This omission is striking
because Section 2.4 of the Bylaws, which governs notices of business proposals to
be brought before a meeting, requires the disclosure of all agreements, arrangements,
and understandings in connection with the proposal.121 Nor does Empery have a
bylaw requiring the disclosure of a Section 13(d) group.122
120
See Jorgl, 2022 WL 16543834, at *12 (“Article I, Section 1.4, subsection (i) . . . requires the disclosure of ‘a description of all arrangements or understandings’ between the nominating stockholder ‘and each proposed nominee and any other person or persons ... pursuant to which the nomination(s) are being made.’”); Kellner I, 307 A.3d at 1028 (interpreting the phrase “arrangements or understandings” in a bylaw). 121
See Bylaws § 2.4(c)(iii) (requiring the disclosure of “a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder(s) or person(s) who have a right to acquire beneficial ownership at any time in the future of the shares of any class or series of the Corporation or any other person or entity (including their names) in connection with the proposal of such business by such stockholder”). Section 2.5 does not incorporate this provision.
122
Empery’s Bylaws mention Section 13(d) or its implementing regulations just twice. First, Section 2.4(c)(i) requires a proposing person or nominating stockholder to disclose shares that are “directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act).” Bylaws § 2.4(c)(i)(B). Second, Section 2.4(c)(ii)(A) mentions “Rule 13d” by referencing an inapplicable exception to the disclosure requirement for Schedule 13G filers. Id. § 2.4(c)(ii)(A).
22
The defendants point to two provisions in the Bylaws that they believe
required ATG to disclose its relationship with Brown. They first cite a bylaw that
requires a nominating stockholder to disclose any “participant” in a proxy
solicitation (the “Participant Bylaw”).123 They also cite bylaws that require a
nomination to include information required to be disclosed by Section 14(a) of the
Securities Exchange Act of 1934 (the “Section 14(a) Bylaws”).124 ATG has met its
burden to demonstrate that the Nomination Notice complied with both provisions
with respect to the deficiencies the Board invoked in the Rejection Letter.
i. The Participant Bylaw
Empery’s Rejection Letter stated that the Nomination Notice was deficient
because it failed to identify Brown as a “participant” in ATG’s proxy solicitation.125
Section 2.5 of the Bylaws defines “Nominating Person” to include “the stockholder
providing the notice . . . and any other participant in such solicitation.”126 If Brown
123
Defs.’ Post-trial Br. 13 (“[B]rown was a ‘participant in such solicitation’ as the term is used in Section 2.5.”).
124
Id. at 8 (“The disclosure of Gliksberg and Brown’s arrangement was easily required under the Section 14(a) Bylaws.”).
125
Rejection Letter ¶ 4.
126
Bylaws § 2.5(c) (emphasis added).
23
were a participant, the Bylaws would have required ATG to disclose details about
Brown as a Nominating Person.127
Section 2.4(c) of the Bylaws defines “participant” by reference to “paragraphs
(a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A.”128 Although Section 2.5(c)
does not explicitly define participant,129 the parties agree that the Section 2.4(c)
definition applies equally to Section 2.5.130
A Schedule 14A is a required disclosure form that must be filed with the
Securities and Exchange Commission (SEC) in connection with certain proxy
solicitations.131 Paragraph 3(a) of Instruction 3 to Item 4 of Schedule 14A delineates
127
See Rejection Letter 3-4.
128
Bylaws § 2.4(c) (“For purposes of this Section 2.4, the term ‘Proposing Person’ shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.” (emphasis added)). 129
Compare Bylaws § 2.5(c) (“For purposes of this Section 2.5, the term ‘Nominating Person’ shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, and (iii) any other participant in such solicitation.” (emphasis added)), with id. § 2.4(c); see supra note 128.
130
See Pl.’s Post-trial Br. 29-30; Defs.’ Post-trial Br. 43. This reading is reasonable, since Sections 2.4 and 2.5 provide parallel tracks for stockholder action at an annual meeting. It would be illogical for Empery to apply a regulation-based standard for “participants” backing a proposal (Section 2.4), but apply a vague standard for “participants” seeking to nominate director candidates (Section 2.5).
131
17 C.F.R. § 240.14a-101.
24
the persons deemed to be a “participant” or a “participant in a solicitation” in a proxy
contest. The five subparagraphs that Empery’s Bylaws incorporate define
“participant” as:
(ii) In the case of a solicitation . . . each of the soliciting person’s
nominees for election as a director;
(iii) Any committee or group which solicits proxies, any member
of such committee or group, and any person whether or not
named as a member who, acting alone or with one or more other
persons, directly or indirectly takes the initiative, or engages, in
organizing, directing, or arranging for the financing of any such
committee or group;
(iv) Any person who finances or joins with another to finance the
solicitation of proxies . . . ;
(v) Any person who lends money or furnishes credit or enters
into any other arrangements, pursuant to any contract or
understanding with a participant, for the purpose of financing or
otherwise inducing the purchase, sale, holding or voting of
securities of the registrant by any participant or other persons, in
support of or in opposition to a participant; except that such terms
do not include a bank, broker or dealer who, in the ordinary
course of business, lends money or executes orders for the
purchase or sale of securities and who is not otherwise a
participant; and
(vi) Any person who solicits proxies.132
The defendants focus on subparagraph (v). They argue that this subparagraph
broadly captures anyone who “‘enters into any . . . understanding with a participant,
for the purpose of . . . purchas[ing] . . . or voting’ securities ‘in support of’ a
132
Id. at Item 4, Instruction 3(a)(ii)-(vi) (2025).
25
participant.”133 This interpretation excises the core limiting language of the
regulation, however.
Section 14(a) “control[s] the conditions under which proxies may be
solicited.”134 The definition of “participant” reflects that focus by covering a person
who “‘solicits,’ ‘takes the initiative,’ and ‘engages in organizing, directing, or
arranging’ for financing.”135 Federal case law interpreting Item 4, Instruction 3 of
Schedule 14A confirms its narrow focus on proxy solicitation and financing.136
Courts have rejected attempts to classify individuals as “participants” where they
neither financed the proxy contest nor directly participated in the solicitation.137
Instruction 3(a)(v) is therefore directed at persons providing financial support or
other economic inducements for a solicitation.
133
Defs.’ Post-trial Br. 11 (citing 17 C.F.R. § 240.14a-101, Item 4, Instruction 3(a)(v)). 134
J.I. Case Co. v. Borak, 377 U.S. 426, 431 (1964) (citation omitted).
135
IBS Fin. Corp. v. Seidman & Assoc., LLC, 954 F. Supp. 980, 989 (D.N.J. 1997), rev’d on other grounds, 136 F.3d 940 (3d Cir. 1998).
136
See id. (holding that defendants were not “participants” because they neither financed nor arranged financing for the proxy contest (citing Chris-Craft Indus. v. Indep. S’holders Comm., 354 F. Supp. 895, 907-08 (D. Del. 1973))).
137
See id.; see also Lone Star Steakhouse & Saloon, Inc. v. Adams, 148 F. Supp. 2d 1141, 1153-54 (D. Kan. 2001); Atl. Coast Airlines Hldgs., Inc. v. Mesa Air Gp., Inc., 295 F. Supp. 2d 75, 85 (D.D.C. 2003) (noting “there is no evidence” that alleged participant provided funds “in furtherance of the solicitation”). The defendants cite Lane v. Page in support of their position, which stated that “[p]articipation in solicitation and financing solicitation are [] distinct concepts” and “one can be labeled a participant without being a financier.” 649 F. Supp. 2d 1256, 1287 (D.N.M. 2009). Defs.’ Post-trial Br. 12 n.6. Lane interpreted paragraph (a)(iii) of Instruction 3 to Item 4 of Schedule 14A. It did not mention subparagraph (v).
26
The canon of ejusdem generis further undermines the defendants’ broad
reading. When general words follow specific words in an enumeration, the general
words ordinarily embrace only objects similar in nature to those specifically
enumerated.138 Here, the general phrase “any other arrangements” follows “lends
money” and “furnishes credit” within a clause concerning “financing” and
“otherwise inducing.”139 These surrounding terms indicate that “any other
arrangements” must refer to arrangements of a similar financial or economic
character—not to any tacit agreement that might facilitate an activist campaign.
The phrase “otherwise inducing” does not alter this conclusion. Basic
grammatical structure dictates that “otherwise inducing” is part of the prepositional
phrase “for the purpose of,” which describes the intent behind the lending of money,
furnishing of credit, or other similar arrangements. Reading “any other
arrangements” to encompass a non-monetary agreement to purchase shares on the
open market severs the clause from its financial context and renders it redundant to
subparagraph (iii), which addresses coordination in soliciting proxies. A plain
reading gives each provision distinct meaning: subparagraph (iii) governs
138
See Triple C Railcar Serv., Inc. v. City of Wilmington, 630 A.2d 629, 631 (Del. 1993) (“[W]here general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned.” (quoting Black’s Law Dictionary 464 (5th ed. 1979))).
139
17 C.F.R. § 240.14a-101, Item 4, Instruction 3(a)(v).
27
coordination in soliciting proxies, while subparagraph (v) governs persons who
provide financing, credit, or comparable economic inducements for the solicitation.
Applying the proper definition, Brown is not a participant in ATG’s
solicitation. ATG did not nominate Brown. Brown did not “finance” ATG’s
nomination, nor did he “lend money or furnish credit” to ATG to induce its
“purchase, sale, holding or voting of securities.” The record contains no evidence
whatsoever that Brown participated in ATG’s proxy contest or assisted with
financing for ATG’s proxy. The Rejection Letter also did not suggest that Brown
lent money, furnished credit, or had a similar arrangement with ATG, but focused
solely on suspected coordination between Brown and Gliksberg.140
ii. The Section 14(a) Bylaws
The defendants also cite the Section 14(a) Bylaws as requiring ATG to
disclose its coordination with Brown.141 Bylaw Section 2.5(c)(iii)(B) requires a
nomination notice to set forth all information relating to a director candidate “that is
required to be disclosed in a proxy statement . . . in a contested election pursuant to
Section 14(a) under the Exchange Act.”142 Similarly, Bylaw Section 2.5(c)(ii)
140
See Rejection Letter 3.
141
See Defs.’ Post-trial Br. 7-8.
142
Bylaws § 2.5(c)(iii)(B) (requiring the disclosure of “[a]ll information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act
28
requires the nomination notice to disclose any “Disclosable Interests” for each
Nominating Person, incorporating a requirement to provide any information “that
would be required to be disclosed in a proxy statement . . . pursuant to Section 14(a)
of the Exchange Act.”143
The defendants read these provisions as catch-alls that permitted the Board to
request any information that, in the Board’s estimation, would be material under
Section 14(a) or the regulations it incorporates. In post-trial briefing, they advance
two theories for why the Section 14(a) Bylaws required ATG to disclose any
arrangement or understanding with Brown about Empery securities. Neither
succeeds.
First, the defendants focus on Item 5(b)(1)(viii) of Schedule 14A, which
requires specified disclosures in proxy solicitations regulated under Section 14(a) of
the Exchange Act.144 Item 5(b)(1)(viii) contains a disclosure requirement for
(including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected)”).
143
Id. § 2.5(c)(ii) (adopting the definition of “Disclosable Interest” in Section 2.4(c)(ii), except that “the term ‘Nominating Person’ shall be substituted for the term ‘Proposing Person’ in all places it appears in Section 2.4(c)(ii) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting)”); see id. § 2.4(c)(ii)(G) (defining “Disclosable Interest” to include “any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act”).
144
Defs.’ Post-trial Br. 8-9.
29
“arrangements or understandings” that the defendants contend is “similar” to and
“broader” than the Section 13(d) “group” standard.145 Under Item 5(b)(1), a proxy
solicitation by any stockholder for the election of directors at an annual meeting must
describe “any substantial interest, direct or indirect, by security holdings or
otherwise, of each participant” in “any matter to be acted upon at the meeting.”146
For purposes of this provision, the defendants treat Gliksberg as the
“participant” in ATG’s solicitation. The regulation requires that, for each
participant, the proxy:
(viii) State whether or not the participant is, or was within the
past year, a party to any contract, arrangements or
understandings with any person with respect to any securities of
the registrant, including, but not limited to joint ventures, loan
or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies. If so, name the parties to such contracts,
arrangements or understandings and give the details thereof.147
The defendants argue that because this regulation is incorporated into Section 14(a),
and Section 14(a)’s requirements are incorporated into the Bylaws, ATG was
required to disclose any AAU Gliksberg had with Brown concerning Empery’s
securities.148
145
Id. at 8.
146
17 C.F.R. § 240.14a-101, Item 5(b)(1).
147
Id. at Item 5(b)(1)(viii) (emphasis added).
148
See Defs.’ Post-trial Br. 9.
30
Second, the defendants argue that ATG was required to disclose any AAU
with Brown because it was information material to voting stockholders under
Rule 14a-9.149 Rule 14a-9 prohibits materially false or misleading statements or
omissions in proxy solicitations under Section 14(a), including statements that omit
“any material fact necessary in order to make the statements therein not false or
misleading.”150 “An omitted fact is material if there is a substantial likelihood that
a reasonable shareholder would consider it important in deciding how to vote.”151
I need not decide whether, or to what extent, Rule 14a-9 supplies an additional
disclosure obligation through the Bylaws’ incorporation of Section 14(a). The
defendants did not preserve that theory as a basis for rejecting ATG’s Nomination
Notice. The Rejection Letter did not mention the Section 14(a) Bylaws as requiring
disclosure of any agreement or understanding with Brown, or reference Rule 14a-9
as an independent basis for rejection. Nor did it assert that the Section 14(a) Bylaws
operate as a general requirement to disclose any information the Board deems
material.152 Rather, the Rejection Letter’s reference to the AAU disclosure
149
See id. at 7-8; see also id. at 10 (“To the extent the Court determines the undisclosed arrangement or understanding was material, it also should have been disclosed under Rule 14a-9.”).
150
17 C.F.R. § 240.14a-9(a).
151
TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).
152
At post-trial argument, defendants’ counsel contended that the Rejection Letter invoked the Section 14(a) and Rule 14a-9 requirements as an independent, broadly applicable disclosure obligation. See Tr. of Post-trial Oral Arg. (Dkt. 273) (“Post-trial Arg. Tr.”) 44-31
requirement of Item 5(b)(1)(viii) was explicitly grounded in Brown’s status as an
undisclosed “participant”:
Further, because the Notice Letter fails to include a description
of Mr. Brown as a participant or Nominating Person, it fails to
include any other information relating to Mr. Brown that would
be required to be disclosed in a proxy statement or other filing
required to be made in connection with solicitations of proxies
or consents in support of the election of directors at the 2026
Annual Meeting pursuant to Section 14(a) of the Exchange
Act[.]153
Perhaps recognizing the challenge of proving that Brown met the technical
regulatory definition of a “participant” under Schedule 14A, the defendants now
attempt to decouple the purported disclosure failure from Brown’s participant status
entirely. Their post-trial brief maintains that the disclosure requirement for any
AAU between Gliksberg and Brown applied “irrespective” of whether Brown was a
participant.154 This pivot is impermissible. When a board rejects a nomination, it
48. He cited language in the Rejection Letter that states: “Section 2.5(c)(iii)(B) of the Bylaws requires that the Notice Letter include all information relating to each Nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).” Rejection Letter ¶ 3. This paragraph merely states what the Bylaws require. It does not say that ATG breached Section 14(a) broadly or Rule 14a-9 for failing to disclose an AAU between Gliksberg and Brown. See Post-trial Arg. Tr. 50-52.
153
Rejection Letter ¶ 4 (emphasis added).
154
Defs.’ Post-trial Br. 10 (“[I]rrespective of whether Brown is a “participant” in ATG’s nomination, if Gliksberg had any arrangement or understanding with Brown concerning the acquisition or voting of their Empery Digital securities, that information was required to be disclosed under the Section 14(a) Bylaws.”).
32
must give the nominating stockholder sufficient notice of the contractual basis for
rejection. Having grounded its rejection in the asserted failure to disclose Brown as
a participant, the defendants cannot wait until trial to abandon that basis and advance
a different theory of contractual noncompliance. Advance notice bylaws are not
moving targets.
Although ATG bears the burden of proving its compliance with the Bylaws,
the court does not conduct a de novo audit of the Nomination Notice to seek out
unasserted breaches. The plaintiff’s burden is bounded by the deficiencies the Board
fairly identified in its Rejection Letter.155 Because advance notice bylaws operate
as conditions precedent, a board seeking to reject a nomination must identify a
contractual basis for doing so.156 I therefore hold the defendants to the contractual
grounds they invoked and limit my review to the reasons fairly stated in the
Rejection Letter.
The defendants’ pre-trial brief confirms the point. It did not argue that the
Nomination Notice violated the Section 14(a) Bylaws by failing to disclose an AAU
155
See Rosenbaum v. CytoDyn Inc., 2021 WL 4775140, at *21 (Del. Ch. Oct. 13, 2021) (“The Board cannot base its decision to reject the Nomination Notice on after-discovered facts.”); cf. Paragon Techs., Inc. v. Cryan, 2023 WL 8269200, at *7 n.116 (Del. Ch. Nov. 30, 2023) (questioning whether the defendants could raise alleged nomination notice deficiencies that were “litigation constructs” raised after the board’s rejection). 156
See Lee Enters., 2022 WL 453607, at *13 n.142.
33
with Brown irrespective of Brown’s status as a participant.157 That theory appeared
only in post-trial briefing. It is waived.158 For that independent reason, I need not
decide whether the Section 14(a) Bylaws would otherwise require disclosure of an
AAU with Brown under Rule 14a-9.
* * *
ATG carried its burden of demonstrating that its Nomination Notice complied
with the Bylaws with respect to the specific deficiencies the Board invoked. Brown
does not meet the definition of a “participant” incorporated into the Bylaws. ATG’s
Nomination Notice therefore did not violate the Participant Bylaw.159
157
See Defs.’ Pre-trial Br. 43-47 (arguing only that ATG was required to disclose Brown under the Participant Bylaw).
158
See Zaman v. Amedeo Holdings, Inc., 2008 WL 2168397, at *16 (Del. Ch. May 23, 2008) (“Raising this argument in the post-trial briefs is unfair, too late, and does not preserve this argument. It is waived.”); see also Roth v. Sotera Health Co., 2026 WL 847180, at *15 n.212 (Del. Ch. Mar. 26, 2026) (same); In re Mindbody, Inc., S’holder Litig., 332 A.3d 349, 412 (Del. 2024).
159
The defendants moved for an adverse inference based on Gliksberg’s spoliation of Signal messages, arguing that the destroyed communications would have proven that ATG and Brown were coordinating as a group. See Defs.’ Mot. For Adverse Inferences Due to Spoliation of Evid. (Dkt. 212). I need not resolve the spoliation motion to decide this claim. Even if I assume that the destroyed messages would prove that ATG (or Gliksberg) and Brown formed a group and coordinated their efforts to liquidate Empery, my conclusion would remain the same. The asserted Bylaw provisions did not require the disclosure of general coordination, and coordination alone does not necessarily transform Brown into a ‘participant’ under Schedule 14A, Item 4, Instruction 3(a). Because the requested inference would not amend the Bylaws, it would not cure the contractual invalidity of the Board’s rejection. The defendants’ request for adverse inferences is therefore denied as moot.
34
b. The Bitcoin Hedge Allegations
The Rejection Letter’s second main ground for rejecting ATG’s Nomination
Notice was its failure to disclose a Bitcoin hedge.160 At the time ATG submitted
the Nomination Notice, it had hedged its Empery equity position “dollar for dollar”
to isolate and eliminate the risk of Bitcoin price movement by shorting Bitcoin
ETFs.161 The defendants assert that this undisclosed hedge misaligned ATG with
Empery’s long-only stockholders and incentivized ATG to push for the liquidation
of the Company’s Bitcoin.162
To determine what a stockholder must disclose, the court looks first to the
plain text of the contract.163 Empery’s Bylaws are specific regarding the disclosure
of economic hedges. Section 2.4(c)(ii) requires the disclosure of derivatives,
synthetic equity, and short positions in Empery’s own stock.164 Some DAT
160
Rejection Letter ¶ 3.a.
161
See Chan Tr. 501; JX 563 at 3.
162
See Defs.’ Post-trial Br. 6-7; see also Rejection Letter ¶ 3.a (“ATG Capital’s interests are adverse to such shareholders because an increase in the price of Bitcoin negatively impacts ATG Capital, requiring ATG Capital to post additional collateral and further increasing its financing costs without the benefit of the increase in the price of Bitcoin due to ATG Capital’s [Bitcoin] hedge. Thus, ATG Capital is incentivized to push the Company to liquidate its Bitcoin as quickly as possible.”).
163
See, e.g., Vejseli v. Duffy, 2025 WL 1452842, at *14 (Del. Ch. May 21, 2025) (“Bylaws are contracts between the stockholders and the corporation, interpreted according to their ‘commonly accepted meaning unless the context clearly requires a different one or unless legal phrases having a special meaning are used.’” (quoting BlackRock Credit Allocation Income Tr. v. Saba Cap. Master Fund, Ltd., 224 A.3d 964, 977 (Del. 2020))). 164
Bylaws § 2.4(c)(ii).
35
corporations’ bylaws require the disclosure of commodity hedges.165 By contrast,
neither Empery’s Bylaws nor its questionnaire for director candidates require the
disclosure of commodity hedges, cryptocurrency hedges, or positions in unrelated
ETFs.166
Given this contractual silence, the defendants look to the Bylaws’ general
incorporation of Section 14(a) and Schedule 14A. The Rejection Letter specified
that the non-disclosure of the Bitcoin hedge violated Item 5(b)(1) of Schedule 14A,
which is incorporated into Section 2.5(c)(iii)(b) of the Bylaws. 167 Item 5(b)(1)
requires that a proxy statement describe “any substantial interest, direct or indirect,
by security holdings or otherwise, of each participant . . . in any matter to be acted
upon at the meeting.”168 The regulation then identifies twelve categories of
information, most of which are expressly sought by Empery’s bylaws and
questionnaire (e.g., name, address, and occupation).169 None of those categories
expressly requires disclosure of investments in unrelated assets or issuers, much less
a nominating stockholder’s purported “misalignment” with other stockholders.
165
See JX 708 (Rebuttal Report of Edward Rock (“Rock Report”)) ¶¶ 58-66; JX 845 § 8(C)(3)(d)-(e); PTO ¶ 47.
166
See Rock Report ¶¶ 39-40 (citing JX 52).
167
Rejection Letter ¶ 3.a; see Bylaws §§ 2.5(c)(iii)(B), 2.5(c)(ii).
168
17 C.F.R. § 240.14a-101, Item 5(b)(1) (2025).
169
Id.
36
The defendants also argue that ATG’s Bitcoin hedge was material information
that Empery “[s]tockholders were entitled to know” under Rule 14a-9.170 As with
their arguments concerning Rule 14a-9 and the disclosure of an AAU, this theory
was not asserted as a basis for rejection and is waived. I need not reach whether
Rule 14a-9 would otherwise require disclosure of ATG’s Bitcoin hedge, whether the
hedge was material under Rule 14a-9, or whether the Bylaws incorporate that
requirement.171
If the Board wanted to know about commodity hedges, it could have adopted
a bylaw expressly requiring that information, included such a request in its nominee
questionnaire, or asked ATG directly.172 ATG could not fairly be expected to guess
that the Board would interpret the Bylaws to require the disclosure of a Bitcoin short
position. To the extent the interplay between the Bylaws and Section 14(a) creates
any ambiguity, Delaware law resolves that doubt in favor of the stockholder’s
electoral rights.173
170
Defs.’ Post-trial Br. 30-31; see also JX 657 (Expert Report of Joseph A. Grundfest) ¶ 42. 171
See supra note 158.
172
The Board never asked ATG for information about its Bitcoin hedge, although the Bylaws expressly contemplate that the Board may request additional information from a nominating stockholder. See Bylaws § 2.5(g).
173
See Jorgl, 2022 WL 16543834, at *10 (“Any ambiguity in an advance notice bylaw is resolved ‘in favor of the stockholder’s electoral rights.’” (quoting Hill Int’l, 119 A.3d at 38)).
37
The defendants also insist that the Board properly rejected ATG’s Nomination
Notice because a “reasonable stockholder” would view the hedge as a “divergence
of interests” material to their election decision.174 This line of argument is consistent
with the Board’s view that it was conducting a “suitability” inquiry rather than
evaluating ATG’s compliance with the Bylaws.175 It reflects a misunderstanding of
not only basic contract interpretation, but also the purpose advance notice bylaws
serve under Delaware law.
Advance notice bylaws are “designed and function to permit orderly meetings
and election contests and to provide fair warning to the corporation so that it may
have sufficient time to respond to shareholder nominations.”176 They have both
“information-gathering and disclosure functions,”177 so that boards of directors can
“knowledgeably make recommendations about nominees” that permit stockholders
to “cast well-informed votes.”178 An advance notice bylaw does not authorize
incumbent directors to exclude candidates based on the directors’ disagreement with
their business plans or economic incentives.
174
Defs.’ Post-trial Br. 31-32.
175
Read Tr. 727 (“[I]t was not so much about the bylaws as about the suitability of having a long-term shareholder who is actively betting against the value of bitcoin.”); see Foster Tr. 708 (noting a “guttural reaction” that the Bitcoin short should have been disclosed). 176
Openwave Sys. Inc. v. Harbinger Cap. P’rs Master Fund I Ltd., 924 A.2d 228, 239 (Del. Ch. 2007); see Rock Tr. 631-32.
177
Lee Enters., 2022 WL 453607, at *18.
178
Id. at *9.
38
Because the Bylaws did not require the disclosure of commodity hedges, ATG
could not have breached the Bylaws by failing to disclose its Bitcoin hedge in its
Nomination Notice.
* * *
ATG has carried its burden to prove that its Nomination Notice complied with
the Bylaws regarding the two deficiencies the defendants advanced at trial. Brown
does not meet the definition of a “participant” incorporated into the Bylaws, and the
Bylaws did not require the disclosure of commodity hedges. Because the defendants
abandoned the remaining purported violations listed in the Rejection Letter, those
arguments are waived.179 The Board therefore lacked contractual grounds to reject
the Nomination Notice.
My analysis proceeds to the second step of Delaware’s twice-tested
framework: an equitable review of the Board’s actions.180
179
Wimbledon Fund LP v. SV Special Situations LP, No. 4780-VCS, 2011 WL 378827, at *7 n.44 (Del. Ch. Feb. 4, 2011) (“Wimbledon did not raise that argument in its briefs, and generally arguments not raised in a party’s briefs are deemed waived because they have not been fairly asserted.”); see also In re PNB Holding Co. S’holders Litig., No. CIV.A. 28-N, 2006 WL 2403999, at *18 (Del. Ch. Aug. 18, 2006) (“The argument is untimely because it was not addressed in the pre-trial order and was not raised until trial.”). 180
Kellner II, 320 A.3d at 259 (“In other words, when corporate action is challenged, it must be twice-tested – first for legal authorization, and second by equity.”).
39
2. The Equitable Review
ATG alleges that the directors breached their fiduciary duties by rejecting its
Nomination Notice.181 When a board takes defensive action that interferes with a
corporate election or a stockholder’s voting rights in a contest for control, the board’s
conduct is subject to enhanced scrutiny.182 Under this intermediate standard of
review, the Board bears the burden to establish: (1) that it “faced a threat to an
important corporate interest or to the achievement of a significant corporate benefit,”
which threat was “real and not pretextual,” and that the board’s motivations were
proper; and (2) that its response was “reasonable in relation to the threat posed and
was not preclusive or coercive to the stockholder franchise.”183 The inquiry is a
“‘situationally specific’ application of Unocal,” and “[f]undamentally, the standard
to be applied is one of reasonableness.”184
If the defendants relied solely on ATG’s purported Bylaw violations, the
Board could not satisfy the first prong. The contractual violations asserted in the
Rejection Letter did not exist.185 But the Board’s mistaken view of the Bylaws does
181
See Pl.’s Post-trial Br. 53-57.
182
See Coster, 300 A.3d at 672-73; Kellner I, 307 A.3d at 1025.
183
Coster, 300 A.3d at 672-73.
184
Kellner I, 307 A.3d at 1025, 1042 (citation omitted); see also Coster, 300 A.3d at 671-73.
185
An AI-generated transcript of the March 26 Board meeting reflects a discussion that the Rejection Letter “threw [in] the kitchen sink” and that though no “single” omission in the Nomination Notice was “detrimental . . . in the aggregate [ATG was] sloppy.” JX 495 at 1.
40
not, standing alone, establish that its underlying concerns were false or pretextual.
The first Unocal inquiry asks whether the Board had a reasonable and good-faith
basis for concluding that a threat to an important corporate interest existed.186 I
therefore consider the additional justification the defendants advance for the
rejection.
The defendants contend that the Board rejected the Nomination Notice
because it suspected ATG and Brown were hatching a plan to take control of Empery
and liquidate its Bitcoin.187 The record provides some support for that concern.
Brown demanded that the Company liquidate its Bitcoin during his January 28
meeting with Lane and Silver.188 Days later, Brown planted a story with Bloomberg
columnist Matt Levine titled “Cracking Open the DATs,” which detailed a playbook
for forcing a Bitcoin treasury to liquidate.189 Shortly after publication, Gliksberg
texted a link to the article to one of his Board nominees, warning the recipient not to
Lane acknowledged that the “objective” was to “reject” the Nomination Notice and “see what” ATG and Brown did in response. Id. at 2.
186
See Kellner I, 307 A.3d at 1025-26 (explaining that the first prong requires a reasonable and good-faith investigation supporting grounds for concluding that a threat to the corporate enterprise existed).
187
See Defs.’ Post-trial Br. 16-19.
188
Silver Tr. 551-52; Lane Tr. 284.
189
JX 234; JX 217.
41
“text [Gliksberg] about it.”190 Gliksberg’s testimony that he had no plans to liquidate
the Company’s Bitcoin is difficult to credit against this backdrop.191
These facts give the Board a reasonable basis for concern about the slate’s
plans for Empery’s Bitcoin strategy. But that concern must be distinguished from
the notion that the Board was entitled to prevent stockholders from voting on those
plans. Directors’ fiduciary duties do not empower them to interfere with a contest
for control merely because they believe that the insurgent’s business plan is unwise
or destructive. As Delaware courts consistently hold, defensive actions “cannot be
justified on the grounds that the board knows what is in the best interests of the
stockholders.”192 The relevant question is whether the Board identified a threat to
an important corporate interest—not whether it preferred its own policy choices to
those advocated by the insurgents.193
190
JX 219. Gliksberg testified that he sent the text to keep business and personal texts separate. Gliksberg Tr. 139-40. This explanation makes little sense in the context of his other text message chains. Instead, the timing and context of the message suggest an intent to conceal coordination.
191
See Gliksberg Tr. 56, 85 (testifying that he has no plans to liquidate Empery’s Bitcoin). 192
Coster, 300 A.3d at 672; see also Mercier v. Inter-Tel (Del.), Inc., 929 A.2d 786, 811 (Del. Ch. 2007) (noting that the “we know better” defense “is no justification at all” for interfering with a contest for corporate control); Pell v. Kill, 135 A.3d 764, 790 (Del. Ch. 2016) (“[T]he belief that directors know better than stockholders is not a legitimate justification when the question involves who should serve on the board of a Delaware corporation.”).
193
See Kellner I, 307 A.3d at 1025-26 (explaining that the threat must concern matters of “corporate policy and effectiveness which touches on issues of control,” rather than the
42
Assuming, without deciding, that the Board reasonably perceived a legitimate
threat, the Board nevertheless fails the second Unocal prong. Its response—
rejecting the Nomination Notice—was not reasonable in relation to the threat it
perceived.
A comparison to Kellner v. AIM ImmunoTech Inc. is instructive. There, the
board’s rejection of a nomination notice was upheld because the notice concealed
arrangements and understandings central to the nomination effort, which frustrated
the disclosure function of the advance notice bylaws. The board in Kellner had a
legitimate interest in obtaining that information, and the timing of the notice left no
meaningful opportunity to cure the deficiencies.194 Here, the Board rejected the
Nomination Notice despite its compliance with the disclosure requirements on which
the Board relied. In contrast to Kellner, the Board was not enforcing a valid
disclosure requirement designed to protect the corporate electoral process.
Rejection was a disproportionate response to the perceived threat of ATG’s
plans for Empery. The Board could have informed stockholders of the evidence
concerning ATG’s and Brown’s relationship, their apparent views concerning
Empery’s Bitcoin strategy, and the risks the Board believed a change in control
board’s belief that “certain director nominees would be worse for the company than themselves”).
194
See id. at 1042-44.
43
presented.195 Those arguments could then have been tested through the electoral
process. Nothing in the record suggests that permitting Empery’s stockholders to
consider ATG’s slate would have prevented the Board from making its case to the
electorate or from disclosing the information it regarded as material.
That distinction is meaningful under Coster v. UIP Companies, Inc.196 The
issue is not whether the Board had reason to distrust ATG or disagree with its plans,
but whether rejecting a nomination that complied with the Bylaws was a reasonable
means of addressing the perceived threat. Because the Board lacked valid
contractual grounds to reject the Nomination Notice and had available means to
communicate its concerns to the stockholders, the Board failed to show that rejection
was a reasonable response to the perceived threat.
The rejection was also preclusive in its practical effect. By removing ATG’s
nominees from the ballot entirely, the Board effectively foreclosed ATG from
presenting its slate to the stockholders and assured the incumbents an uncontested
election. That is not to say that every rejection of a nomination notice is necessarily
preclusive or inequitable. A board may reasonably reject a nomination when its
failure to satisfy valid advance-notice requirements poses a meaningful threat to a
195
If the Board believed ATG’s proxy materials were materially misleading under federal or state law by omitting this coordination or the Bitcoin short, its proper recourse was to seek injunctive relief to compel corrective disclosures, not to unilaterally disenfranchise the electorate.
196
300 A.3d at 672-73.
44
legitimate corporate interest.197 But where, as here, the asserted contractual
deficiencies were nonexistent and the Board could address its substantive concerns
through disclosure and advocacy, rejecting the nomination was a disproportionate
response.
The Board’s complaints about ATG’s plans, suitability, and perceived
economic misalignment are arguments for the electorate—not a basis for removing
ATG’s slate from the electoral process. The Board was—and is—entitled to tell
stockholders why it believes ATG’s strategy is harmful to Empery and to urge them
to reject the slate. It was not entitled to use an erroneous interpretation of its Bylaws
to prevent stockholders from making that choice themselves. On this record, the
Board’s rejection of the Nomination Notice was inequitable and constituted a breach
of the directors’ fiduciary duties.198
B. The Nomination Reopening Claim
ATG argues the Board breached its fiduciary duties by refusing to reopen the
nomination window after announcing a pivot from a Bitcoin DAT strategy to an AI
data-center business.199 Relying on Hubbard v. Hollywood Park Realty Enterprises,
Inc., it contends that the data center transaction supports reopening the window
197
See Kellner I, 307 A.3d at 1042-44.
198
See Coster, 300 A.3d at 667; Kellner I, 307 A.3d at 1025, 1044.
199
See Pl.’s Post-trial Br. 67-69.
45
because it is an “unanticipated” and “material” change to Empery’s business
announced after the nomination deadline.200 The defendants insist that Hubbard
lends no support to ATG’s request because, among other reasons, ATG already
nominated its slate and no other stockholder seeks to nominate.201
Hubbard presents a “context-specific application of Schnell.”202 In Hubbard,
after the advance notice deadline passed, the board settled with an insurgent, shifted
the allegiance of a board majority to his radical new agenda, and contractually bound
itself not to waive the advance notice bylaw.203 The court reopened the nomination
window because this post-deadline, board-driven “material change of
circumstances” locked stockholders out of mounting a dissident slate.204
The harm Hubbard addressed was the denial of a choice between competing
slates. The opinion opens by identifying the harm in precisely those terms: absent
an injunction, “the enforcement of the advance notice by-law” would have resulted
in the management “slate of candidates running unopposed.”205 Hubbard does not
200
Id.; see Hubbard v. Hollywood Park Realty Enters., 1991 WL 3151 (Del. Ch. Jan. 14, 1991).
201
See Defs.’ Post-trial Br. 55.
202
Sternlicht v. Hernandez, 2023 WL 3991642, at *15 (Del. Ch. June 14, 2023) (citing AB Value P’rs, LP v. Kreisler Mfg. Corp., 2014 WL 7150465, at *5 (Del. Ch. Dec. 16, 2014)).
203
Hubbard, 1991 WL 3151, at *3-4, *11.
204
Id. at *12.
205
Id. at *1.
46
stand for the notion that a dissident is entitled to a do-over of its nomination
whenever a company undertakes a post-deadline commercial transaction. The
overarching principle is that Schnell and its progeny protect electoral fairness, not
business strategy.206
Here, Empery’s stockholders will not be disenfranchised. Because I have
found that ATG’s Nomination Notice is valid and that the Board's rejection was
inequitable, ATG’s nominees will stand for election. Empery’s stockholders will
therefore have a choice between the incumbent Board and ATG’s slate, which
publicly committed to evaluate strategic alternatives.207 Even if the data center
transaction radically altered the Company’s strategic direction, it did not manipulate
the corporate machinery or result in the sort of uncontested election Hubbard sought
to prevent. ATG therefore did not prove that the Board breached its fiduciary duties
by declining to reopen the nomination window after announcing the data center
transaction.
206
See, e.g., AB Value, 2014 WL 7150465, at *7 (declining to reopen a nomination window based on post-deadline executive compensation increases, and finding that routine governance friction did not justify reopening the nomination window); Sternlicht, 2023 WL 3991642, at *22-23 (refusing to reopen a nomination window following the postdeadline formation of a special committee); Vejseli v. Duffy, 2025 WL 1452842, at *18 (Del. Ch. May 21, 2025) (reopening a nomination window to cure a board’s inequitable reduction of available director seats on the eve of a proxy contest).
207
JX 453 at 14 (ATG preliminary proxy statement).
47
III. CONCLUSION
Because the Board lacked contractual grounds to reject ATG’s Nomination
Notice, judgment on Count III is entered for ATG. Insofar as Count I concerns the
Board’s rejection of ATG’s nomination notice, judgment on Count I is entered for
ATG in part. ATG’s Nomination Notice is valid. ATG’s nominees may stand for
election at Empery’s annual meeting. Judgment on Count V is entered for the
defendants.
The parties are to confer on a form of order to implement this decision, which
must be filed within three business days. Within 14 business days, they are to
provide the court with a proposed schedule for resolving the remainder of the claims.
48