Opinion ID: 2052439
Heading Depth: 2
Heading Rank: 2

Heading: Alignment of Interests Between CIS and PriCellular:

Text: In concluding that Broz usurped an opportunity properly belonging to CIS, the Court of Chancery held that [f]or practical business reasons CIS' interests with respect to the Mackinac transaction came to merge with those of PriCellular, even before the closing of its tender offer for CIS stock. Based on this fact, the trial court concluded that Broz was required to consider PriCellular's prospective, post-acquisition plans for CIS in determining whether to forego the opportunity or seize it for himself. Had Broz done this, the Court of Chancery determined that he would have concluded that CIS was entitled to the opportunity by virtue of the alignment of its interests with those of PriCellular. We disagree. Broz was under no duty to consider the interests of PriCellular when he chose to purchase Michigan-2. As stated in Guth, a director's right to appropriate [an]... opportunity depends on the circumstances existing at the time it presented itself to him without regard to subsequent events. Guth, 5 A.2d at 513. At the time Broz purchased Michigan-2, PriCellular had not yet acquired CIS. Any plans to do so would still have been wholly speculative. Accordingly, Broz was not required to consider the contingent and uncertain plans of PriCellular in reaching his determination of how to proceed. Whether or not the CIS board would, at some time, have chosen to acquire Michigan-2 in order to make CIS a more attractive acquisition target for PriCellular or to enhance the synergy of any combined enterprise, is speculative. The trial court found this to be a plausible scenario and therefore found that, pursuant to the factors laid down in Guth, CIS had a valid interest or expectancy in the license. This speculative finding cuts against the statements made by CIS' Chief Executive and the entire CIS board of directors and ignores the fact that CIS still lacked the wherewithal to acquire Michigan-2, even if one takes into account the possible availability of PriCellular's financing. Thus, the fact of PriCellular's plans to acquire CIS is immaterial and does not change the analysis. In reaching our conclusion on this point, we note that certainty and predictability are values to be promoted in our corporation law. See Williams v. Geier, Del.Supr., 671 A.2d 1368, 1385 n. 36 (1996). Broz, as an active participant in the cellular telephone industry, was entitled to proceed in his own economic interest in the absence of any countervailing duty. The right of a director or officer to engage in business affairs outside of his or her fiduciary capacity would be illusory if these individuals were required to consider every potential, future occurrence in determining whether a particular business strategy would implicate fiduciary duty concerns. In order for a director to engage meaningfully in business unrelated to his or her corporate role, the director must be allowed to make decisions based on the situation as it exists at the time a given opportunity is presented. Absent such a rule, the corporate fiduciary would be constrained to refrain from exploiting any opportunity for fear of liability based on the occurrence of subsequent events. This state of affairs would unduly restrict officers and directors and would be antithetical to certainty in corporation law.