Opinion ID: 2156563
Heading Depth: 1
Heading Rank: 16

Heading: Mays' Independent Directors

Text: Orloff also argues, in the alternative, that the Court of Chancery order requiring the production of Mays' documents is correct and should be affirmed, because the outside directors of Mays who constituted the Special Committee were not independent of Weinstein and, in fact, acted at its behest. This argument finds no support in the record. Orloff seeks Mays' documents in his capacity as a stockholder of Weinstein, not Mays. Mays is a New York public corporation that does not do business in Delaware. Only two of Mays' seven directors are also directors of Weinstein. Neither of those non-independent Weinstein directors, who are also Orloff's relatives, were members of the Special Committee established by Mays to consider Weinstein's request for the documents that Orloff was seeking to inspect. Although Orloff does not contend that Mays is a wholly-owned subsidiary or the alter ego of Weinstein, he does submit that the Mays Special Committee board members' findings were only a pretext to accommodate the wishes of Weinstein, its controlling stockholder. The record does not support this claim. To establish that the committee was not independent, it is not enough for Orloff to assert that the Mays directors were nominated by Weinstein, the majority stockholder that controlled the outcome of the board election. [30] A controlling interest or majority stock ownership does not deprive the corporation's directors of the presumptions of independence, and that their acts have been taken in good faith and in the best interests of the corporation. There must be coupled with the allegation of control such facts as would demonstrate that through personal or other relationships the directors are beholden to the controlling person [or entity]. [31] No such showing was made here. Under the facts of this case, Mays' separate corporate existence is entitled to respect. Orloff made no showing that any member of the Mays Special Committee lacked independence from Weinstein or that the Special Committee's decision not to produce Mays' confidential documents was in any way wrongful. Accordingly, absent the agreement of Mays' board, Weinstein lacks the power to cause Mays to produce the documents in Mays' possession.