Court Opinion

ID: 9652315
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:22:10.208853+00
Date Added: 2024-06-11T18:12:50.248292
License: Public Domain

McNEILLY, Justice
(concurring):
I concur in the result, and I agree with the holding of the majority that a § 251 merger, made for the sole purpose of freezing out minority stockholders, is an abuse of the corporate process; and that the complaint, which so alleges in this suit, states a cause of action for violation of a fiduciary duty for which the Court may grant such relief as it deems appropriate under the circumstances. I also agree with the learned and eloquent analysis of the Delaware case law on the subject of mergers made by Justice Duffy in his opinion.
In these cases of going private, be they mergers under § 251 or § 253, it is my opinion that Sterling v. Mayflower, Del.Supr., 33 Del.Ch. 293, 93 A.2d 107 (1952), establishes an avenue for judicial scrutiny with a firm foundation based upon factual determinations of fundamental fairness and economic reasonableness which should be our guideline for future cases. It is not disputed that majority stockholders owe to the minority a fiduciary obligation in dealing with the latter’s holdings, and full compliance with the statutory requirements to effect a merger does not insulate a breach of that duty from judicial intervention, although it may affect the relief afforded. In my opinion a complaint alleging such a breach states a cause of action, shifting the burden to the majority to establish the entire fairness of the transaction. To determine whether that burden has been met under Sterling, I think the Court must scrutinize the business purpose, or economic necessity, desirability and feasibility involved, evidence of self-serving, manipulation, or overreaching, and all other relevant factors of intrinsic fairness or unfairness. Upon finding a breach of the fiduciary duty owed, the Court must then grant such relief as the circumstances require, by injunction, appraisal, damages, or other available equitable relief, if any, keeping in mind, however, the continuing legislative approval of mergers and the judicially mandated avoidance of their disruption by dissenting stockholders.