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Chancery Court Grants Pleading Stage Dismissal of Revlon Claims Against Target Company Directors Despite Looming Proxy Contest

Posted by on Thursday, December 17, 2020 in Delaware Corporate Law Bulletins, En Banc, Volume 73.

Robert S. Reder & Victoria D. Selover | 73 Vand. L. Rev. En Banc 249 (2020) |

“In Rudd, Vice Chancellor Zurn rejected Plaintiff’s attempted reliance on Tangoe for the proposition that threat of a proxy contest, in and of itself, disabled otherwise independent and disinterested target company directors from making an unconflicted decision to sell the Company. Even absent the potent Corwin defense, because the Outerwall directors were protected by the Exculpatory Provision, Plaintiff’s failure to plead a non-exculpated breach of fiduciary duty resulted in a pleading stage dismissal of his Revlon-based damages action. More was required in the pleadings than naked reliance on Engaged’s threat to replace the Board. While the Chancery Court does not reflexively dismiss Revlon-based claims, the bar for achieving a damages award against target company directors remains a high one indeed.”

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Robert S. Reder and Victoria D. Selover