Delaware Judge Rules that Judge: Cryo-Cell Should Hold Special Meeting & New Election

A judge in the Delaware Court of Chancery ruled the results of a shareholders vote at Cryo-Cell International Inc. in July were tainted by inequitable behavior by Mercedes Walton, the company's chairman and chief executive, and should be set aside.

Vice Chancellor Leo Strine Jr. also said in his Tuesday ruling that the best remedy would be to order a prompt special meeting at which a new election would be held and presided over by a special master. Strine said the cost of the special meeting should not be borne by the company and its stockholders, but by the management slate that was elected at the July meeting.

A call to Walton for comment was pending return.

The judge rejected a call by David Portnoy, the dissident Cryo-Cell investor who filed the lawsuit, to immediately seat a competing slate of nominees that was defeated at the July shareholders meeting. The judge also said Walton and other Cryo-Cell directors did not have to pay Portnoy's litigation and proxy solicitation costs.

Portnoy said in an e-mailed statement that he was "extremely pleased" with the ruling. In addition to an immediate revote, Portnoy said he "planned to hold each and every board member accountable."

Portnoy has contended that Cryo-Cell (OTCBB: CCEL), an Oldsmar-based company that cryopreserves umbilical cord stem cells for family use, has underperformed and that Walton is responsible for that.