Opinion ID: 4109387
Heading Depth: 2
Heading Rank: 1

Heading: 2d 319 (Del. 1993), as corrected (Dec. 8, 1993).

Text: 5 duties they are owed.4 In many cases, it might be difficult to allege that the value they are receiving in the merger is unfair simply as a result of the failure to consider value associated with their derivative suit. But that reality may also suggest that, even according full value to the potential recovery in the derivative suit (rarely a guarantee), the plaintiffs still received fair value in the merger. To make the general rule one where derivative plaintiffs can continue to sue after a merger would thus raise overall transaction costs and barriers to mergers, with obvious costs to public investors, with no gain substantial enough to compensate them. Thus, we adhere to Lewis v. Anderson5 and its progeny and reverse. Along with the rest of the partnership‟s assets, ownership of the claim passed to the partnership‟s successor by operation of law in the merger. The derivative plaintiff‟s recourse was to file a money damages challenge to the merger and prove that the failure to accord value to the limited partnership in the merger was somehow violative of his rights. We conclude that the plaintiff lost standing to continue this derivative action when the merger closed—both as to the direct appeal and cross-appeal. Because our holding terminates the litigation, we do not reach the other issues raised by the parties. 4 See Parnes v. Bally Entm’t Corp., 722 A.2d 1243, 1245 (Del. 1999) (“In order to state a direct claim with respect to a merger, a stockholder must challenge the validity of the merger itself, usually by charging the directors with breaches of fiduciary duty resulting in unfair dealing and/or unfair price.” (citing Lewis, 477 A.2d at 1046 n.10; Kramer v. W. Pac. Indus., Inc., 546 A.2d 348, 352 (Del. 1988) (additional citation omitted))). 5 477 A.2d 1040 (Del. 1984). 6