Opinion ID: 2266268
Heading Depth: 1
Heading Rank: 2

Heading: Procedural History and Disposition in the Court of Chancery

Text: Prior to the short-form merger, on December 17, 1987, Zirn filed this class-action suit naming as defendants AHP, VLI and VLI's individual directors. In July of 1989, the Court of Chancery dismissed Zirn's claims relating to insider trading and conversion. The trial court, however, certified a class consisting of nearly all of VLI's stockholders of record as of November 16, 1987 and allowed the remaining claims of equitable fraud and breach of the duty of disclosure to proceed to trial. Zirn v. VLI Corp., Del.Ch., C.A. No. 9488, mem. op., 1991 WL 20378 (Feb. 15, 1991). After trial concluded, the Court of Chancery granted judgment for the Defendants on all of Zirn's claims. Zirn v. VLI Corp., Del.Ch., C.A. No. 9488, slip op., 1992 WL 136450 (June 10, 1992). On appeal from that decision, this Court held that the Court of Chancery had applied the wrong standard of materiality, erroneously analyzing the subjective beliefs of the VLI directors. Zirn I, 621 A.2d at 779-80. The Court then remanded the matter for further proceedings consistent with its 1993 opinion. On remand, the trial court reached its decision based on the record of the first trial, supplemented by additional discovery on the issue of patent counsel's opinion. Again, the trial court found for Defendants on all claims. Zirn v. VLI Corp., Del.Ch., C.A. No. 9488, mem. op. at 28, 1995 WL 362616 (June 12, 1995). This appeal followed. In this appeal, Zirn contends that: (1) VLI's Board of Directors breached its fiduciary duty in connection with the disclosure of patent counsel's advice concerning the likelihood of patent reinstatement and the expected timing of reinstatement; (2) AHP breached its duty of disclosure in connection with the January 8, 1988 Notice of Merger by excluding from that document any discussion of patent counsel's advice; and (3) VLI and its directors are liable for equitable fraud. Since the Court of Chancery entered judgment for the Defendants and failed to reach the issue of damages, Zirn seeks from this Court an award of damages and prejudgment interest. We address these contentions seriatim below.