## Facts

- This matter is presented as a negotiation teaching case (Harvard Faculty Seminar on Negotiation, Apr. 13, 1982) based on a shareholder dispute between Sisters of the Precious Blood (the Sisters) and Bristol-Myers Co. (Bristol).
- The Sisters were shareholders of Bristol and challenged statements Bristol distributed in proxy materials to shareholders.
- The Sisters alleged Bristol’s infant-formula marketing and sales practices in developing countries were contributing to illness and death of infants in the third world.
- The Sisters claimed Bristol’s proxy materials contained serious misrepresentations of fact about Bristol’s infant-formula activities in the third world, impairing shareholders’ ability to evaluate the issue.
- The Sisters sought injunctive relief requiring Bristol to send a corrected proxy solicitation and to hold a special shareholder meeting rather than waiting until the next annual meeting.
- The trial court declined to grant the requested injunctive relief and entered summary judgment for Bristol.
- The Sisters appealed to the United States Court of Appeals for the Second Circuit.
- The Second Circuit directed the parties into its mediation program, and the mediation process involved four conferences beginning July 19, 1977.
- Early in mediation, the Sisters indicated they would not settle without Bristol admitting it had lied to shareholders; Bristol maintained it had been truthful.
- Bristol offered to allow the Sisters to submit a written statement for distribution at the next annual meeting, with Bristol responding only by stating its opposition without further explanation; the Sisters rejected that proposal.
- Each side viewed the other as acting in bad faith during the bargaining process.
- Through continued mediation, the parties reached an agreement on December 24, 1977, ending the dispute without a reported appellate merits decision.

## Issues

1. Whether alleged factual misstatements in Bristol’s proxy communications regarding infant-formula practices could justify injunctive relief requiring a corrected solicitation and a special shareholder meeting.
2. Whether, after summary judgment for Bristol, the dispute could be resolved on appeal through court-sponsored mediation rather than a precedential appellate ruling.
3. Whether settlement was possible given the Sisters’ demand for an admission of wrongdoing and Bristol’s refusal to provide one, and what non-admission terms could still address shareholder-information concerns.

## Decision

- The trial court denied the Sisters’ requested injunctive relief (corrected proxy solicitation and a special meeting) and granted summary judgment for Bristol.
- On appeal, the Second Circuit required the parties to participate in an appellate mediation program.
- After four mediation conferences beginning in July 1977, the parties reached a settlement on December 24, 1977.
- The dispute concluded through settlement rather than a published appellate opinion resolving the merits.

## Legal Principles

- Proxy-solicitation disputes often turn on whether alleged factual inaccuracies are sufficiently significant to warrant judicially ordered corrective disclosures and the extraordinary step of compelling a new or special meeting.
- Summary judgment in favor of management does not necessarily end high-stakes shareholder conflicts; appellate procedure may channel such disputes into settlement-focused processes.
- Court-sponsored appellate mediation can resolve cases where the parties’ stated positions (e.g., a demand for a public admission versus a refusal to concede wrongdoing) block conventional settlement, by redirecting discussions to terms that deliver practical outcomes without formal liability findings.
- Settlement terms in shareholder-information disputes may be structured around future communications to shareholders (such as allowing a shareholder statement in meeting materials) while preserving each side’s ability to deny wrongdoing.

## Conclusion

In this teaching-case account, the Sisters challenged Bristol’s proxy communications about infant-formula practices in developing countries and sought a corrected solicitation and special meeting, but the trial court granted summary judgment for Bristol; on appeal, the Second Circuit moved the matter into an appellate mediation program, where—after several conferences and despite an early impasse over admissions—the parties reached a settlement that ended the controversy without a reported appellate merits decision.


Sisters of the Precious Blood v. Bristol-Myers Co.: A Shareholder-Management Dispute, April 13, 1982