On April 25, 2025, Justice Chan of the New York County Commercial Division issued a decision in Colle Capital Partners I, L.P. v. Automaton, Inc., 2025 NY Slip Op. 31479(U), denying a preliminary injunction because of an imbalance in the equities, explaining:
[E]ven if plaintiffs have shown a likelihood of success on the merits and irreparable harm, their motion must be denied on the balance of equities because plaintiffs’ harm does not outweigh Automaton’s. Plaintiffs’ proposed injunction would force Automaton to cease all business unless they give plaintiffs, who do not currently have stock or official positions in Automaton, the chance to weigh in on all decisions that shareholders and board members, respectively, would be entitled to weigh in on. Plaintiffs ask for one exception: defendants to conduct any business or votes necessary to effectuate plaintiffs’ stock conversion. However, contrary to plaintiffs’ assertions, this is, in effect, the ultimate relief plaintiffs request in the case. More importantly, the proposed injunction allows plaintiffs to hold Automaton hostage unless the company meets their demands. Plaintiffs provide no authority for such broad relief so early in the case.
Plaintiffs do not meaningfully address this point since they claim defendants conceded balance of the equities. However, they cite to Wisdom Import Sales Co. v Labatt Brewing Co. for the proposition that there is irreparable harm when a shareholder’s voting rights are restricted. The case is a useful exemplar if only because it is so different from the case at bar. There, the District Court and the Second Circuit enjoined a single corporate action or event that threatened one party’s voting rights. Specifically, two beer companies owned a beer distribution company, with one company (plaintiff appointing two directors and the other (defendant) appointing five. Per their agreements, any fundamental matters required a supermajority board vote, effectively giving plaintiff a minority veto. All other matters only required a simple majority. At some point, the beer distribution company was weighing whether to integrate other beer brands. The board voted 4·2 in favor of integration, with plaintiffs directors opposed and one director seat unfilled. Plaintiff argued the integration was a fundamental matter and therefore could not pass without a supermajority. The District Court and the Second Circuit agreed and granted an injunction against the integration.
The critical difference between Wisdom and the present case is that the court in Wisdom enjoined a single action or event-the brand integration. By contrast, plaintiffs here ask to enjoin all Automaton business unless plaintiffs get a seat at the table. The harms simply cannot be compared.
(Internal quotations and citations omitted).