As we’ve been sharing here and on The Proxy Season Blog, a handful of lawsuits have been filed by shareholder proposal proponents after companies elected to exclude a proposal without traditional no-action relief from the Corp Fin Staff. There’s also a pending lawsuit filed by ICCR and As You Sow seeking to stop the implementation of Corp Fin’s new policy and return to prior years’ practice.

While three of the proponent lawsuits against companies have settled, two remain ongoing, and the judge in one case ruled on a preliminary injunction request this week. Ann Lipton, law professor at the University of Colorado Law School, recently shared more on LinkedIn, noting that the judge denied the preliminary injunction request on the basis that As You Sow did not show a likelihood of prevailing on the merits under Rule 14a-8(i)(7)’s ordinary business exclusion.

As You Sow conceded Chubb is a Swiss entity and therefore was not properly served. Judge gave it additional time to serve, but –

As You Sow did not show entitlement to preliminary injunction to include its proposal on Chubb’s proxy.

As You Sow did not show a likelihood of prevailing on the merits, because of the ordinary business exclusion.

The excluded proposal sought “a report to assess whether pursuing claims for compensation against parties responsible for climate change could reduce losses, benefit shareholders, and help preserve affordable homeowners insurance.” Ann continues:

Though climate change is important, the proposal is about subrogation: “As acute a threat as climate change might be to Chubb’s business model, As You Sow does not articulate why that threat—and not Chubb’s subrogation practices—is the ‘focus[]’ of its proposal.”

I’d say, the reason the proposal transcends ordinary business is because the ultimate goal is to force entities that cause climate change to internalize the costs. But it’s hard to argue that that’s an issue Chubb’s shareholders should be voting on, which puts As You Sow in an awkward position.

That said, the judge said there were a lot of unanswered interpretive questions about the rule and she might revise her opinion with further briefing.

– Meredith Ervine