Updated at 5:11 p.m.
People for the Ethical Treatment of Animals is seeking a court order to force Merck & Co. Inc. to include a resolution from the animal rights group in materials for the pharmaceutical company’s annual shareholder meeting.
PETA holds 101 shares of Merck, according to a complaint (PDF) seeking injunctive relief filed yesterday in U.S. District Court for the District of Columbia. The group is accusing the company of wrongfully denying its request to include a resolution in the proxy materials that calls on Merck to disclose use of animal testing in in-house and contracted research.
Leveraging stock ownership to pursue advocacy goals, known as shareholder activism or advocacy, is nothing new for PETA, which owns shares in 35 corporations, according to in-house attorney Susan Hall.
However, while companies often resist PETA’s attempts to use its shareholder status, she said, this lawsuit marks the first time PETA is taking a corporation to court over the denial of a request to include a resolution in shareholder proxy materials.
Merck’s annual shareholder meeting is scheduled for May 24. PETA is asking the court to force Merck to include its resolution in the proxy materials for the meeting, or else compel Merck to hold a special meeting to present PETA’s resolution to other shareholders.
According to PETA’s complaint, Merck contested PETA’s request on the grounds that they had failed to prove shareholder status. Merck merged with Schering-Plough Corp. on Nov. 3, 2009, and, according to the complaint, had told PETA that they needed to prove ownership in Schering-Plough to be eligible.
Hall said that under U.S. Securities and Exchange Commission rules, PETA needs to prove ownership of stock for one year prior to filing its request for inclusion in proxy materials in order to be eligible. Since the merger took place on Nov. 3, 2009 and PETA submitted its resolution on Nov. 17, 2010, Hall said Merck is in the wrong in requiring PETA to also prove ownership of Schering-Plough shares.
According to the complaint, PETA also maintains that it meets the eligibility threshold of holding at least $2,000 or 1 percent of Merck.
PETA had originally submitted its proposal on Oct. 28, but claims in their complaint that they formally withdrew it and refiled on Nov. 17 in order to comply with Merck’s other objection that PETA was making multiple proposals when they were limited to making one.
Merck did not have counsel listed as of Friday, and a company representative was not immediately available for comment.
Updated to correct the value of PETA shares in Merck.