Sunday, November 24, 2013

In re Wheelabrator Technolgies, Inc. Shareholders Litigation case brief

In re Wheelabrator Technolgies, Inc. Shareholders Litigation case brief summary
663 A.2d 1194 (Del. Ch. 1995)


CASE SYNOPSIS
Defendants, target corporation and its directors, filed a motion for summary judgment under Del. Ch. Ct. R. 56(e) in a class action brought by plaintiffs, shareholders in a target corporation (class), challenging the merger of the target corporation into an acquiring corporation, and alleging breach of fiduciary obligation to disclose to the class material information concerning the merger.

CASE FACTS
The class alleged a breach of fiduciary obligation to disclose to the class material information as to the merger that would have significant effect upon shareholders' vote, and alleging that the directors breached the duties of loyalty and due care. The target corporation and its directors filed a motion for summary judgment pursuant to Del. Ch. Ct. R. 56(e).

DISCUSSION

  • The court held that: 
  • 1) the class failed to adduce evidence sufficient to defeat summary judgment on the duty of disclosure claim, as proxy statements in a vote to approve the merger were consistent with relevant facts; 
  • 2) the fully-informed shareholder vote approving the merger operated to extinguish the class' duty of care claims, but not its duty of loyalty claim; and 
  • 3) the business judgment standard of review, with the class having the burden of proof, rather than the entire fairness standard, applied to the class' claim against the directors that alleged their recommendation of the merger violated the duty of loyalty.

CONCLUSION
The court granted in part summary judgment in favor of the target corporation and its directors on the claim of a breach of fiduciary obligation to disclose, and on the claim of a breach of duty of care. The court denied in part the target corporation's motion for summary judgment on the class' breach of duty of loyalty claim.


Recommended Supplements for Corporations and Business Associations Law

No comments:

Post a Comment

Search Thousands of Case Briefs and Articles.