Plaintiff, a preferred stockholder of QuadraMed Corporation, sought to enjoin the acquisition of QuadraMed on the grounds that the consideration to be received by the preferred stockholders did not exceed the “as if converted value” they were allegedly entitled to demand in a merger. Based on those contractual rights, the plaintiff asserted that the QuadraMed board had a fiduciary duty to allocate more of the merger consideration to such preferred stockholders. The Court found that plaintiff did not prove a probability of success on the merits. Specifically, the Court found that when a certificate of designation does not provide preferred stockholders with the right to vote on a merger or a liquidation preference in a merger, but with a contractual right to certain treatment, a board that allocates consideration consistent with such contractual rights need not ordinarily do more.
