Lyondell Chemical Co. v. Ryan case brief summary
970 A.2d 235 (2009)
Appellant stockholders filed a class
action suit against appellee directors alleging a breach of the
fiduciary duties of care, loyalty and candor. The Court of Chancery
(Delaware) denied the directors' motion for summary judgment in order
to obtain a more complete record before deciding the issue of bad
faith. The court accepted an interlocutory appeal to consider the
claim that the directors did not act in good faith in selling the
CASE FACTS The trial court found that the company
charter included an exculpatory provision, pursuant toDel. Code tit.
8, § 102(b)(7), protecting the directors from personal liability for
breaches of the duty of care. Thus, the case turned on whether the
alleged shortcomings also implicated the duty of loyalty, a breach of
which was not exculpated.
ISSUE The sole issue was whether the directors
were entitled to summary judgment on the failure to act in good faith
HOLDING The court found that they were.
The directors were
disinterested and independent; they were aware of the company's value
and its prospects; and they considered the offer, under the buyer's
time constraints, with the assistance of financial and legal
There was no evidence from which to infer that they
knowingly ignored their responsibilities, thereby breaching their
duty of loyalty.
The trial court should have inquired whether the
directors utterly failed to attempt to obtain the best sale price.
The directors did not breach their duty of loyalty by failing to act
in good faith.
In concluding otherwise, the chancery court reversibly
The court reversed the decision of the chancery court and remanded
the matter for entry of judgment in favor of the directors. Recommended Supplements for Corporations and Business Associations Law
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