Background
ATG Capital Opportunities Fund LP submitted a notice nominating director candidates for Empery Digital Inc.’s 2026 annual meeting. Empery’s board rejected the notice, and ATG sued.
In an August 28 post-trial decision, the Court of Chancery held that ATG’s notice complied with Empery’s advance notice bylaws. The court concluded that the board’s stated grounds—alleged failures to disclose another stockholder as a solicitation participant and ATG’s short position in a Bitcoin ETF—were either unsupported by the bylaws’ text or raised only during litigation rather than in the rejection letter. The court also held that the board acted inequitably by rejecting the nomination without a contractual basis.
The defendants then sought certification for an interlocutory appeal before final judgment.
The Court’s Holding
Vice Chancellor Will refused to certify the interlocutory appeal. Although the prior decision resolved a substantial issue—whether ATG’s nomination notice was valid and its nominees could stand for election—the court found that the benefits of immediate review did not outweigh the costs of piecemeal appellate litigation under Delaware Supreme Court Rule 42.
The decision applied settled Delaware contract-interpretation principles to Empery’s bylaws and did not resolve a question of first impression. The court also held that its refusal to consider new litigation-stage rationales for rejecting the notice was consistent with Delaware precedent: a board’s defensive action must be assessed on the record and reasons available when it acted, not on post-hoc theories.
Immediate review would not end the case because challenges to a purportedly dilutive offering and other defensive measures remained pending. Nor did the approaching October 14 annual meeting create an injustice: allowing a court-approved slate to appear on the ballot preserved stockholders’ choice, and Delaware law provides a post-election remedy for disputed elections.
Key Takeaways
- Interlocutory appeals remain exceptional even when an order resolves a central election-related dispute.
- A board rejecting a nomination notice must rely on contractual deficiencies identified when it acts, rather than new theories developed in litigation.
- Previously uninterpreted bylaw language does not alone make a contract dispute a Delaware issue of first impression.
Why It Matters
The ruling reinforces that advance notice bylaws will be enforced as written, not expanded through litigation. Companies seeking particular disclosures—such as agreements, arrangements, or understandings concerning nominations—must expressly require them in their bylaws.
For contested elections, the decision also underscores the court’s reluctance to pause litigation for immediate appellate review where an election can proceed and statutory mechanisms remain available to address a disputed result afterward.