COURT OF CHANCERY 

OF THE

SAM GLASSCOCK III 

VICE CHANCELLOR

STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE

34 THE CIRCLE

GEORGETOWN, DELAWARE 19947

Date Submitted: September 26, 2014 

Date Decided: September 26, 2014 

Seth D. Rigrodsky, Esquire 

Brian D. Long, Esquire 

Gina M. Serra, Esquire 

Jeremy J. Riley, Esquire 

Rigrodsky & Long, P.A. 

2 Righter Parkway, Suite 120 

Wilmington, DE 19803 

Donald J. Wolfe, Jr., Esquire 

Kevin R. Shannon, Esquire 

Christopher N. Kelly, Esquire 

Potter Anderson & Corroon LLP 

1313 N. Market Street 

Hercules Plaza, 6th Floor 

Wilmington, Delaware 19899-0951 

Kurt M. Heyman, Esquire 

Patricia L. Enerio, Esquire 

Dawn Kurtz Crompton, Esquire 

Proctor Heyman LLP 

300 Delaware Ave., Suite 200 

Wilmington, Delaware 19801 

Re: In re Cornerstone Therapeutics Inc. Stockholder Litigation, 

Consolidated Civil Action No. 8922-VCG 

Dear Counsel: 

 In a recent Memorandum Opinion1

 I denied Motions to Dismiss brought by 

Defendants Christopher Codeanne, Michael Enright, James A. Harper, Michael 

Heffernan, Laura Shawver, Craig Collard, and Robert Stephan (collectively, the 

“Director Defendants”), finding that, since entire fairness applied to the transaction 

 

1

In re Cornerstone Therapeutics Inc. S’holder Litig., 2014 WL 4418169 (Del. Ch. Sept. 10, 

2014). 
2 

at issue in this litigation ab initio, under the holding of Emerald Partners II2 the 

Director Defendants must await a determination of entire fairness at trial before 

this Court may consider whether they are exculpated from liability by a Section 

102(b)(7) provision.3

 On September 23, 2014, the Director Defendants moved for 

an interlocutory appeal of that decision under Delaware Supreme Court Rule 42. I 

heard Plaintiffs’ oral response to the application on September 26, 2014. 

 A Rule 42 interlocutory appeal may be certified by this Court only when the 

appealed decision (1) “determines a substantial issue,” (2) “establishes a legal 

right,” and (3) meets one or more criteria further enumerated in the Rule, including 

that the decision falls under any of the criteria for certification of questions of law 

set forth in Rule 41.4 Here, all three requirements of Rule 42 are met. In opposing 

the application for interlocutory appeal, Plaintiffs argue that my decision in the 

Memorandum Opinion to decline to consider the Director Defendants’ exculpation 

from liability at the motion-to-dismiss stage does not raise a substantial issue, as it 

merely concerns the timing of when the exculpation provision will be considered. 

However, my determination, if reversed, could lead to the dismissal of the Director 

Defendants from this litigation, and thus constitutes a substantial issue in the 

course of this litigation. Further, my ruling in the Memorandum Opinion 

 

2

Emerald Partners v. Berlin (Emerald Partners II), 787 A.2d 85 (Del. 2001). 

3

In re Cornerstone Therapeutics, 2014 WL 4418169, at *12. 

4

 Supr. Ct. R. 42(b). 
3 

establishes a legal right in that it necessitates the Director Defendants be held as 

parties to the litigation, unable to assert their Section 102(b)(7) defense, at least 

until a determination of entire fairness at trial. Finally, my ruling satisfies the 

criteria enumerated in Rule 42(b)(i) by meeting the “[c]onflicting decisions” 

qualification for certification of questions of law set forth in Rule 41(b)(ii);5

 the 

Director Defendants accurately point out that decisions of this Court are conflicting 

on the determinative question of law: when dealing with a transaction subject to 

entire fairness review ab initio, whether breach of duty on the part of facially 

disinterested directors “who negotiated with the controller or otherwise facilitated 

the transaction needs to be specifically pled; and whether an exculpation provision 

adopted pursuant to Section 102(b)(7) must be ignored at the motion-to-dismiss 

stage, to await consideration after the transaction has been reviewed for entire 

fairness at trial.”6

 The legal test aside, Plaintiffs argue that interlocutory appeal is 

 

5

 Supr. Ct. R. 41(b)(ii). 

6

In re Cornerstone Therapeutics, 2014 WL 4418169, at *5. Compare DiRienzo v. Lichtenstein, 

2013 WL 5503034, at *10–11 (Del. Ch. Sept. 30, 2013) (“To burden the Special Committee with 

proving entire fairness, [plaintiff] must allege sufficiently that the committee members breached 

a non-exculpated fiduciary duty. This inquiry necessarily requires consideration of the 

Company’s 102(b)(7) provision.”), and In re S. Peru Copper Corp. S’holder Derivative Litig., 52 

A.3d 761, 787 n.72 (Del Ch. 2011) (dismissing disinterested directors on summary judgment 

based on a Section 102(b)(7) provision because “[t]he entire fairness standard ill suits the inquiry 

whether disinterested directors who approve a self-dealing transaction and are protected by an 

exculpatory charter provision authorized by 8 Del. C. § 102(b)(7) can be held liable for breach of 

fiduciary duties. Unless there are facts suggesting that the directors consciously approved an 

unfair transaction, the bad faith preference for some other interest than that of the company and 

the stockholders that is critical to disloyalty is absent. The fact that the transaction is found to be 

unfair is of course relevant, but hardly sufficient, to that separate, individualized inquiry.”), with 

In re Orchard Enterprises, Inc. S’holder Litig., 88 A.3d 1, 38 (Del. Ch. 2014) (“[W]hen a case 
4 

nonetheless not warranted here because resolution of the appeal, even in the 

Director Defendants’ favor, would not terminate this litigation, but would have the 

effect of interrupting the parties’ progress toward trial. I do not find this argument 

persuasive, however; I have not entered a stay in the proceedings and thus the 

parties may proceed to trial concurrent with the Supreme Court’s consideration of 

this appeal, should the Court elect to entertain it. 

 For the foregoing reasons, the Director Defendants’ Application for 

Certification of Interlocutory Appeal is granted. An appropriate Order 

accompanies this Opinion. 

Sincerely, 

/s/ Sam Glasscock III 

Sam Glasscock III 

 

involves a controlling stockholder with entire fairness as the standard of review, and when there 

is evidence of procedural and substantive unfairness, a court cannot summarily apply Section 

102(b)(7) on a motion for summary judgment to dismiss facially independent and disinterested 

directors. Under those circumstances, it is not possible to hold as a matter of law that the ‘factual

basis for [the] claim solely implicates a violation of the duty of care.’ Rather, ‘the inherently 

interested nature of [the transaction becomes] inextricably intertwined with issues of loyalty.’ 

The court must conduct a trial, determine whether the transaction was entirely fair, and if not, 

‘identify the breach or breaches of fiduciary duty upon which liability for damages will be 

predicated in the ratio decidendi of its determination that entire fairness has not been 

established.’ Only then can the court conduct the director-by-director analysis necessary to 

determine who is exculpated from liability.” (citations omitted)). 
5 

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE 

 

IN RE CORNERSTONE 

THERAPEUTICS INC. 

STOCKHOLDER LITIGATION 

)

)

)

CONSOLIDATED 

Civil Action No. 8922-VCG

ORDER GRANTING LEAVE TO APPEAL FROM INTERLOCUTORY 

ORDER

This 26th day of September, 2014, the Defendants having made application 

pursuant to Rule 42 of the Supreme Court for an order certifying an appeal from 

the interlocutory order of this Court, dated September 10, 2014; and the Court 

having found that such order determines substantial issues and establishes legal 

rights and that the following criteria of Supreme Court Rule 42(b) apply: 42(b)(i); 

IT IS SO ORDERED that the Court’s order of September 10, 2014, is 

hereby certified to the Supreme Court of the State of Delaware for disposition in 

accordance with Rule 42 of that Court. 

Dated: September 26, 2014 /s/ Sam Glasscock III

Vice Chancellor