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Court Dismisses Shareholder Lawsuit Against Vermillion

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This story originally ran on Nov. 26.

The Delaware Court of Chancery last week dismissed with prejudice a lawsuit filed against Vermillion by shareholders George Bessenyei and Robert Goggin.

Through the lawsuit, Bessenyei and Goggin had sought to reverse Vermillion's decision to eliminate the board seat vacated by company CEO Gail Page.

The suit was part of a larger effort by Bessenyei and Goggin and their fellow Vermillion shareholder Gregory Novak to influence the direction of the company by winning control of seats on its board.

In February, the trio – asserting that Vermillion had been "plagued by gross mismanagement" – notified the company that they intended to nominate Goggin and Novak for election to the two board seats that were to be up for election at its 2012 annual meeting (PM 3/2/2012).

The two seats up for grabs were Page's and that of John Hamilton, a former executive at Depomed. The company has since nominated Viracor-IBT Laboratories CEO Paul Sohmer to stand for election to Hamilton's seat. Upon Page's resignation from the board on May 15 – which coincided with the announcement of her impending resignation as CEO – the company eliminated this seat, reducing the number of directors to six from seven and the number up for election at the 2012 meeting to one from two (PM 5/18/2012).

In response, Bessenyei and Goggin filed suit, seeking a declaration that both original seats had to stand for election at Vermillion's next annual meeting and a finding that the directors had breached their fiduciary duties by eliminating Page's seat upon her resignation (PM 6/15/2012).

The court dismissed the suit last week on the grounds that documents filed with the court by the plaintiffs were improperly notarized. Because it was dismissed with prejudice, the case cannot be re-filed.

The ruling clears the way for Vermillion to hold its annual meeting, which the court had delayed pending the resolution of the case. Bessenyei, Goggin, and Novak have nominated Goggin as a candidate for the one board seat up for election.

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