Kellner v. AIM ImmunoTech Inc.

Court of Chancery of the State of Delaware · 2023 · Corporations

Updated August 22, 2026

Corporationsadvance notice bylawsstockholder franchisedirector nominationsproxy contestsUnocalstockholder voting rightsproxy contest

Facts

AIM amended its advance notice bylaws in March 2023 after experiencing a disputed 2022 nomination effort that, in the board's view, concealed who was supporting and funding the nominations. In August 2023, Kellner submitted a notice nominating himself, Deutsch, and Chioini for election to AIM's board. The board concluded that the notice failed to comply with the bylaws, especially by omitting or misrepresenting arrangements or understandings relating to the nomination effort, and rejected the notice. Kellner then challenged both the facial validity of several amended bylaw provisions and the board's rejection of his notice.

Issue

Whether AIM's amended advance notice bylaws were valid under Delaware law when adopted in anticipation of a possible proxy contest, and whether the board lawfully and equitably rejected Kellner's nomination notice for noncompliance with those bylaws. Also, whether equity should excuse any noncompliance.

Rule

Advance notice bylaws are generally valid if they reasonably further the legitimate purposes of orderly meetings and disclosure, but when adopted or enforced in a context implicating the stockholder franchise they are reviewed under enhanced scrutiny using Unocal with sensitivity to voting rights. The board must show a good-faith, reasonable identification of a threat to an important corporate interest and a response that is reasonable in relation to that threat and not preclusive or coercive. In enforcement, courts first apply contractual interpretation to determine whether clear bylaw requirements were met, resolving ambiguity in favor of stockholder electoral rights, and then consider whether equity excuses strict compliance or bars inequitable application.

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Red Mesa Therapeutics, a Delaware corporation based in Phoenix, amended its advance notice bylaws in April after a contentious director-nomination effort the prior year appeared to conceal who was coordinating and funding the challenge. The board relied on outside counsel and stated that its goal was to improve transparency for stockholders before the next annual meeting.

If a stockholder facially challenges the amended bylaws, what standard is most likely to govern the court's review of the board's adoption decision?

Explanation. When advance notice bylaws are adopted in a context implicating stockholder voting rights and a looming proxy contest, the majority opinion applies Unocal with sensitivity to the stockholder franchise. The board must show it reasonably and in good faith identified a threat to an important corporate interest and adopted a proportionate response. The court rejected the idea that a separate automatic compelling-justification standard governed the bylaw-adoption analysis. (Derived from Kellner v. AIM ImmunoTech Inc. (n.d.).)