## Facts

- JANA Master Fund, Ltd., an investment fund, and its affiliates held about 11% of CNET Networks, Inc.’s common stock.
- CNET, a Delaware corporation, had an eight-member staggered board with two directors up for reelection at the upcoming annual meeting.
- JANA planned a proxy contest: replace the two directors up for reelection, amend the bylaws to expand the board from eight to thirteen, and nominate five additional directors to obtain a new board majority.
- On December 26, 2007, JANA notified CNET it intended to solicit proxies and demanded stockholder list materials under DGCL § 220 to communicate with stockholders.
- CNET refused and asserted JANA lacked a proper purpose because its intended solicitation allegedly violated an advance-notice/eligibility bylaw.
- The disputed bylaw required a stockholder seeking to nominate directors or propose other business at the annual meeting to have beneficially owned at least $1,000 in market value of CNET common stock for at least one year.
- JANA sued for declaratory relief that the bylaw did not apply (or was being interpreted invalidly) and to clear the way for proxy solicitation and inspection.
- The case was decided on cross-motions for judgment on the pleadings based on the court’s view that the bylaw’s language was unambiguous.

## Issues

1. Whether CNET’s advance-notice/eligibility bylaw applied to JANA’s intended director nominations and proposals so as to bar them.
2. Whether the bylaw was ambiguous under Delaware contract-interpretation principles and, if not, what its plain meaning required.
3. Whether CNET could rely on the asserted bylaw violation to deny JANA’s DGCL § 220 stocklist demand for lack of a proper purpose.

## Decision

- The Court of Chancery held the bylaw’s plain, unambiguous language did not apply to JANA’s nominations and proposals.
- Because the bylaw was inapplicable, CNET could not use it to block JANA’s proxy contest efforts.
- CNET also could not rely on the alleged bylaw noncompliance to deny JANA’s § 220 request for stocklist materials.
- The court declined to address the hypothetical validity of the bylaw under enhanced-scrutiny doctrines because the dispute was resolved by textual interpretation.

## Legal Principles

- Delaware courts interpret corporate bylaws using the objective theory of contracts, focusing on the text as it would be understood by a reasonable third party.
- A bylaw is ambiguous only if it is reasonably susceptible to more than one meaning; disagreement by litigants does not create ambiguity.
- If a bylaw is unambiguous, the court enforces its plain meaning without resort to extrinsic evidence.
- Advance-notice and eligibility bylaws are enforced as written; a corporation cannot expand their reach through policy-driven interpretation not supported by the text.
- A corporation may not deny DGCL § 220 inspection on the ground that the stockholder’s stated purpose is improper where the alleged impropriety rests on a misapplication of the corporation’s bylaws.

## Conclusion

The Court of Chancery resolved the dispute by strictly applying ordinary contract-interpretation rules to the advance-notice/eligibility bylaw, concluding the bylaw did not reach JANA’s nominations and proposals; as a result, CNET could not invoke that bylaw to obstruct JANA’s proxy contest or to refuse production of stocklist materials under DGCL § 220.


JANA Master Fund, Ltd. v. CNET Networks, Inc., 954 A.2d 335 (Del. Ch. 2008)