Opinion ID: 2441952
Heading Depth: 2
Heading Rank: 3

Heading: Westland Failed to Establish a Credible Basis to Infer Wrongdoing

Text: Westland's books and records demand identified two allegedly suspect incidents of wrongdoing. The first was Axcelis' Board's handling of SHI's two acquisition proposals. The second was the Board's refusal to accept the resignations of the three directors who failed to receive an affirmative majority vote at the May 2008 annual meeting. Westland's evidence to support its purpose consisted of (1) the parties' Joint Stipulation of Uncontested Facts and exhibits thereto, and (2) Westland's logical conclusions from those facts and exhibits that the Axcelis Board had acted out of improper entrenchment motives. The Vice Chancellor, however, drew different logical conclusions from those same uncontested facts, and determined that there was no support in the record of any entrenchment motive other than Westland's bare accusations suggesting such a motive. [26] Westland claims that the Court of Chancery incorrectly applied the credible basis standard by requiring Westland to present affirmative evidence of wrongdoing. For support, Westland offers only its proposed interpretation of the uncontested facts, which (Westland asserts) create a legitimate basis to believe that the Board's decisions might have been the product of improper entrenchment motives. By way of example, Westland conclusorily asserts that [i]t cannot seriously be disputed ... that SHI's acquisition proposals could have been deemed a `threat' to the Axcelis Board's control over the Company, and that the Board's rejection of the three directors' resignations and denial of SHI's request for a modest extension, were made [i]n the face of this threat. Essentially, Westland disagrees with the Vice Chancellor's inferences from the undisputed facts. Westland's disagreement, without any further affirmative showing, is insufficient. The Vice Chancellor concluded that Axcelis' rejection of SHI's unsolicited acquisition proposals, without more, was not a defensive action under Unocal. [27] That conclusion must stand, because the record provides no credible basis to infer that the Board's rejections of those proposals, and its refusal to extend the deadline for SHI to submit a revised acquisition bid, were other than good faith business decisions.