Description
Depot directors and officers in federal court in
realm of the business judgment rule. Parties who are
Georgia, alleging that they breached their fiduciary
considering merger transactions should thus consider
duties by failing to prevent the data breach. It remains
making the transaction subject to ratification by the
to be seen how this litigation will conclude, but the
disinterested stockholders. This step could ultimately
experience of Home Depot should serve as a reminder
provide the parties with a more deferential standard of
to corporations to be vigilant about protecting their
review if any shareholders sue regarding the
customers’ and employees’ personal data and to
transaction and make post-closing damages cases
directors to provide adequate oversight of the
more difficult to bring.
corporation’s cybersecurity efforts.
Not only do data breaches lead to suits by those directly affected, but they can lead to costly securities-related litigation as well. The Delaware Supreme Court also reiterated this year that the business judgment rule can apply even to a buyout involving a controlling stockholder if the transaction is approved by both (1) a special APPLICABILITY OF BUSINESS JUDGMENT REVIEW committee of independent directors, and (2) a majority Delaware Supreme Court decisions this year provide summarily affirmed a 2014 opinion of the Chancery additional guidance on when the deferential business judgment rule will apply when transactions are challenged in court. of the minority shareholders. In Swomley v. Schlecht, 2015 WL 7302260 (Del.
Nov. 19, 2015), the Court Court that had applied the Supreme Court’s decision in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del.
2014), in dismissing a suit at the pleading stage upon finding that the business judgment rule applied to a controlling In Corwin v. KKR Financial Holdings LLC, 2015 WL party merger. Portions of the MFW case had left 5772262 (Del.
2015), the plaintiffs challenged a stock- doubts whether a plaintiff could avoid dismissal under for-stock merger and contended that the plaintiff- MFW merely by alleging an unfair price. The Supreme friendly entire fairness standard should apply because Court’s affirmance in Swomley, and the discussion at one of the parties was allegedly a controlling the oral argument, confirm that defendants should be stockholder of the other, or alternatively “enhanced able to obtain pleading stage dismissals under MFW in scrutiny” under Revlon should apply. Not only did the appropriate circumstances despite allegations that the Chancery Court and Supreme Court find that there price was too low.
Parties considering entering into a was no controlling stockholder, they found that the transaction involving a controlling stockholder merger transaction was approved by a fully informed, should consult with outside counsel on how to uncoerced vote of the disinterested stockholders and structure the transaction under this line of cases so as that such approval brought the transaction within the to obtain business judgment review. HAYNESBOONE.COM 2015 YEAR IN REVIEW: SECURITIES LITIGATION 35 .
Not only do data breaches lead to suits by those directly affected, but they can lead to costly securities-related litigation as well. The Delaware Supreme Court also reiterated this year that the business judgment rule can apply even to a buyout involving a controlling stockholder if the transaction is approved by both (1) a special APPLICABILITY OF BUSINESS JUDGMENT REVIEW committee of independent directors, and (2) a majority Delaware Supreme Court decisions this year provide summarily affirmed a 2014 opinion of the Chancery additional guidance on when the deferential business judgment rule will apply when transactions are challenged in court. of the minority shareholders. In Swomley v. Schlecht, 2015 WL 7302260 (Del.
Nov. 19, 2015), the Court Court that had applied the Supreme Court’s decision in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del.
2014), in dismissing a suit at the pleading stage upon finding that the business judgment rule applied to a controlling In Corwin v. KKR Financial Holdings LLC, 2015 WL party merger. Portions of the MFW case had left 5772262 (Del.
2015), the plaintiffs challenged a stock- doubts whether a plaintiff could avoid dismissal under for-stock merger and contended that the plaintiff- MFW merely by alleging an unfair price. The Supreme friendly entire fairness standard should apply because Court’s affirmance in Swomley, and the discussion at one of the parties was allegedly a controlling the oral argument, confirm that defendants should be stockholder of the other, or alternatively “enhanced able to obtain pleading stage dismissals under MFW in scrutiny” under Revlon should apply. Not only did the appropriate circumstances despite allegations that the Chancery Court and Supreme Court find that there price was too low.
Parties considering entering into a was no controlling stockholder, they found that the transaction involving a controlling stockholder merger transaction was approved by a fully informed, should consult with outside counsel on how to uncoerced vote of the disinterested stockholders and structure the transaction under this line of cases so as that such approval brought the transaction within the to obtain business judgment review. HAYNESBOONE.COM 2015 YEAR IN REVIEW: SECURITIES LITIGATION 35 .
