Document Type
Article
Publication Title
Vanderbilt Law Review En Banc
Publication Date
8-2024
Page Number
130
Keywords
chancery court, injunctive relief, investor activism
Disciplines
Courts | Law
Abstract
In Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del.2015) ("Corwin"), the Delaware Supreme Court ruled that "a fully informed, uncoerced vote of a majority of the company's disinterested stockholders" precludes application of the fact-based enhanced scrutiny standard of review under Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) ("Revlon"). See In re Edgio, Inc. Shareholders Litigation, C.A. No. 2022-0624, 2023 WL 3167648, at *10 (Del. Ch. May 1, 2023) ("Edgio"). Because application of Corwin "restore[s] business judgment review," alleged breaches of so-called Revlon duties by corporate directors effectively are "cleansed" by a qualifying stockholder vote. The policy underlying Corwin is relatively straightforward (at least in its articulation, if not its application): "When disinterested stockholders make a mature decision about their economic self-interest, judicial second-guessing is almost completely circumscribed by the doctrine of ratification." Post-Corwin, some commentators have expressed concern that Corwin established a bright-line rule in an area where the Delaware judiciary previously had significant discretion in making enhanced scrutiny's reasonableness inquiry. While Corwin has become a useful ex post tool to defeat post-closing damages claims premised on failure to satisfy the standard of conduct required under Revlon, the doctrine does have its limits. See Robert S. Reder & Robert W. Dillard, Chancery Court Declines to Apply Corwin at Pleading Stage to "Cleanse" Breach of Fiduciary Duty Claim Due to Material Non-Disclosures, 73 VAND. L. REV. EN BANC 17 (2020); Robert S. Reder & Amanda M. Mitchell, Chancery Court Refuses Pleading Stage Dismissal Under Corwin When Stockholders Not Fully Informed of Long-Overdue Financial Restatement, 73 VAND. L. REV. EN BANC 35 (2020).
Recommended Citation
Robert S. Reder and Kathleen E. Sharkey,
Chancery Court Declares Corwin Unavailable to Defend Against Unocal Claim for Injunctive Relief, 77 Vanderbilt Law Review En Banc. 130
(2024)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1706