Delaware Litigation Lawyer & Attorney : Francis G. X. Pileggi : Corporate, Business, Commercial, Delaware Chancery Court

As noted today in the Legal Ethics Forum blog, the U.S. Supreme Court today reversed a conviction involving the former accounting firm Arthur Andersen's efforts to destroy documents that the prosecutors argued were important evidence in their investigation. Although criminal liability is generally beyond the scope of this blog, I often write about developments in electronic discovery, and the decision today by the U.S. Supreme Court is likely to be a necessary part of any discussion about the ramifications of destroying e-data in the course of a lawsuit or investigation.

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Two recent Chancery Court decisions addressed the issues of forum non conveniens and determination of proper directors pursuant to Section 225 of the DGCL. As explained in prior posts, these will be short references to the main issues in the cases.
In Kurtin v. KRE, LLC, et al., Vice Chancellor Parsons stayed a Delaware case in favor of a first-filed suit in California involving similar parties and issues.
In Nevins v. Bryan, et al., the court engaged in an extensive analysis to determine that a challenge to the membership of the board of a non-profit corporation was not successful, based on the detailed factual analysis engaged in. Both decisions are available at the court's website.

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Two separate mergers generated 2 recent decisions from Chancellor Chandler on unrelated issues. In Mehiel v. Solo Cup Company, the court was called upon to interpret the terms of a merger agreement that dealt with post-closing adjustments to working capital. The court also answered the question, which apparently had not been decided in Delaware, regarding whether a court can compel an arbitrator to allow discovery.

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For those who want to learn more about blogs by lawyers, or blawgs, Kevin O'Keefe's recent post, and the links it refers to, is a good primer.

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Professor Bainbridge has a post that explains the difference between a sub-agent as opposed to a co-agent of a principal, and their respective fiduciary duties, rights and liabilities.

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I want to call attention to a blog I just noticed that focuses on doing business in Asia, with a special emphasis on China. It can be found at this link.

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By: Francis G.X. Pileggi, Esquire and Leslie B. Spoltore, Esquire

Delaware legislation makes it clear that officers, as well as directors, of Delaware corporations can be subject to the personal jurisdiction of Delaware courts for claims made against those individuals in their capacity as officers and directors of Delaware entities. Similar consent statutes apply to managers of Delaware limited liability companies. See 10 Del. C. § 3114 and 6 Del. C. Section 18-109. See also Assist Stock Management LLC v. Rosheim, 753 A.2d 974 (Del. Ch. 2000).

However, when jurisdiction over relevant individuals is not clearly within the consent statutes, in appropriate circumstances the "civil conspiracy theory of jurisdiction" may apply to secure jurisdiction over a non-resident party.

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In Re Fuqua Industries, Inc. Shareholders Litigation, a case that was originally filed in 1991, and currently on a Consolidated Third Amended Derivative Complaint, was the subject of prior decisions, but in this opinion Chancellor Chandler allowed an entrenchment claim to proceed to trial due to genuine issues of material fact, in the context of a Motion for Summary Judgment. Among other claims and defenses, the opinion addressed the requirements for an entrenchment claim to include the following: "In order to rebut the business judgment rule, a successful claim of entrenchment requires plaintiffs to prove that the defendant directors engaged in actions which had the effect of protecting their tenure and that the action was motivated primarily or solely for the purpose of achieving that goal." The entrenchment allegation involved a large stock redemption plan. The case also involved alleged breaches due to some directors receiving more for their stock from a third party in exchange for favors granted to the buyer. The court noted, however, that plaintiffs need not prove damages in order to establish a breach of the duty of loyalty. The full opinion is available here.

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Prof. Larry Ribstein has an enlightening post on the ethical and economic aspects of blogs, that can be found here.

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For those interested in knowing more about web logs (blogs or blawgs) by lawyers, Kevin O'Keefe has an informative post about the experience of one lawyer that can me found here.

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Prof. Gordon Smith provides a scholarly analysis of a recent Chancery Court decision that addresses shareholder voting tallies:

Licht v. Storage Technology Corp. has the look of an entirely conventional dispute in the Delaware Court of Chancery. Licht is a stockholder in Storage Technology, and he wants the company to adopt cumulative voting for directors. He submitted a proposal to the effect at the annual meeting of stockholders, and a majority of the shares voted supported his proposal. Unfortunately for Licht, a number of shares abstained from voting, and these votes are counted as "no" votes under Delaware law. Pretty straightforward, but the case contains a clarifying twist at the end that will make it a nice case for my teacher's manual.

First the law. Section 216(2) of the Delaware General Corporation Law provides: "In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders." This is a default rule, subject to change by the company. In this instance, the company's bylaws stated: "Except as otherwise provided by statute or by the certificate of incorporation, . . . the affirmative vote of a majority of the shares represented at a meeting at which a quorum is present and entitled to vote on the subject matter shall be the act of the stockholders."

You can imagine a world in which the voting rules specified that a "majority of the votes cast" was the metric, but that is not the default rule in Delaware, and it is not the rule adopted by the company's bylaws. Even though a share "abstains," it is present at the meeting and entitled to vote on the proposal. Under the prevailing standards, therefore, Licht doesn't have much of an argument.

The clarifying twist lies in the Court's "distinction between an abstention and the lack of authority to vote." While a share that "abstains" is both present at the meeting and entitled to vote, a share without authority to vote on a particular matter may be present at the meeting (for purposes of establishing a quorum), but not "entitled to vote" on the proposal. Such shares -- which include broker non-votes -- are not considered in determining the majority.

The decision can be obtained from the Chancery Court's website.

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The intent of this blog is to highlight key business cases primarily from the Delaware Chancery Court and Delaware Supreme Court, as well as related issues such as legal ethics and electronic discovery. When the volume of cases published by the Court and my workload at any given time, both collide, instead of providing extensive summaries, I may just list the names of the cases and the issues that they address. I am currently obtaining the cases from the Court's website, and often the opinions do not appear on the website until a week or more after the date of the opinion. The following recent opinions are available for downloading at the Chancery Court's website.

In Re Prime Hospitality, Inc. Shareholders Litigation,
Chancellor Chandler's opinion in this matter explains why he declined to approve a consolidated class action settlement.

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In the recent decision of Frontier Oil Corporation v. Holly Corporation, pdf, Vice Chancellor Noble issued a 117-page opinion finding that Holly did not repudiate a merger agreement nor did it breach its implied covenant of good faith and fair dealing under the merger agreement. He also ruled that Frontier breached the merger agreement by declaring a repudiation by Holly, but that Holly suffered no damages as a result of Frontier's breach of the merger agreement and was only entitled to an award of nominal damages. The case was based on a 2003 agreement between Frontier and Holly to merge. During March of 2003, in advance of a definitive merger agreement, the parties proceeded with due diligence. Although the board of Frontier approved the merger agreement on March 28, the board meeting of Holly did not go as smoothly. The board of Holly decided that it needed additional information before deciding to proceed with the merger, though that desire was tempered by Frontier's concern that the plans for the merger might be leaked to the public and that the stock might be traded on non-public information regarding the transaction. In light of potential Frontier liabilities, Holly and Frontier renegotiated the terms of the merger agreement. The Holly board subsequently approved the merger agreement which provided that either party could terminate the agreement based on a number of situations.

During the 14 weeks following the execution of the merger agreement, litigation was commenced which involved obligations that Frontier had guaranteed and therefore, Frontier could not rely on a previously hoped for "corporate separateness defense" of a subsidiary. In addition, an investment banker had determined that Holly significantly undervalued certain assets and that Frontier had struck a good, "perhaps too good of a" deal. The guarantee by Frontier of certain liabilities involved in the recently filed lawsuit apparently was a shock to Holly.

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In VLIW Technology, LLC v. Hewlett-Packard Company, the Chancery Court was recently called upon to address claims involving an agreement by a software company for the sale of a perpetual license to certain technology. The agreement required the purchaser to maintain the confidentiality of the trade secret information for a period of five years. The software company that sold the perpetual license went out of business shortly after the date of the agreement in 1990. The case involves the subsequent disclosure of that licensed technology after the five year period expired. The 36-page decision contains many factual details that were addressed in the first decision of the trial court, which was later appealed to the Delaware Supreme Court, and is now being decided again on a Motion to Dismiss based on statute of limitations arguments. The bottom line of the decision is that the court found that the three year statute of limitations had expired prior to suit being brought and therefore, was time barred. If nothing else, the case highlights the need to make clear the duration of any confidentiality provisions in an agreement where confidentiality is considered to be of long term importance.

In NBC Universal, Inc. v. Paxson Communications Corporation, on April 29, 2004, Vice Chancellor Lamb decided the issue of rights under the Certificate of Incorporation of Paxson in the context of a declaratory judgment action. The Certificate of Incorporation provided that upon liquidation of Paxson, the holders of certain preferred stock would receive a "liquidation preference" and the amount of that preference is the primary issue in the case. The complaint raised issues about the selection of a nationally recognized independent investment banking firm which, according to the Certificate of Designation in the Certificate of Incorporation, would be chosen by Paxson in its sole discretion as the means of determining the dividend rate to apply in connection with the liquidation preference. Paxson filed a motion for judgment on the pleadings and NBC filed a cross-motion for judgment on the pleadings or, in the alternative, summary judgment. The court noted that before a motion for summary judgment is ripe for decision, the non-movant normally should have an opportunity for some discovery (citations at footnote 9 omitted). The court also noted that interpretation of a corporate Certificate of Designation, is based on the standard rules of contract interpretation, and that the enforcement of unambiguous contracts is appropriate for the court to resolve as a matter of law in a summary judgment posture (citation omitted). A contract is not rendered ambiguous simply because the parties in litigation differ concerning its meaning. Rather, a contract is ambiguous only when the provisions and controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings. Delaware adheres to the "objective theory of contracts," namely that a contract's construction should be that which would be understood by an objective, reasonable third party. Unless the intent of the parties clearly shows otherwise, words in a contract are interpreted using their common and ordinary meaning.

The 28-page opinion has useful analysis for contract interpretation in general, such as referring to the "last antecedent rule" requiring that a modifying phrase be construed as referring to its nearest antecedent, but noting that that is but one of numerous rules designed to assist in the discovery of intent of the parties to an agreement and is not to be inflexibly or uniformly applied. The court noted the general rule of contract interpretation that the document should be read as a whole, and if possible, interpreted to reconcile all provisions of the document. The court concluded that the term "liquidation preference" was intended to mean that the original purchase price of the preferred stock would be $10,000 per share. However, the court ruled that the redemption provisions at issue were highly idiosyncratic and that before reaching any conclusions about the meaning of the unusual provisions the court believed that it was prudent to allow for the development and presentation of a factual record of the parties' negotiations and dealings and declined to rule on that particular issue.

Both opinions can be found here at the Court's website.

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Gordon Smith has a recent blog post that provides insightful commentary on a recent Chancery Court decision addressing an issue of first impression regarding dividend rights of preferred stock:

"A recent Delaware Court of Chancery case examines the nature of preferred stock. In Shintom Co., Ltd. v. Audiovox Corporation, pdf, Chancellor Chandler considers a claim that the Delaware General Corporation Law (§ 151(c)) "mandates that the holders of preferred stock must receive dividend rights." The plaintiff in this case (Shintom) argues that "because Audiovox Delaware's preferred shares do not pay dividends, they are void as a matter of law." According to Chancellor Chandler, "This appears to be a question of first impression."

Section 151(c) reads as follows (emphasis added):

The holders of preferred or special stock of any class or of any series thereof shall be entitled to receive dividends at such rates, on such conditions and at such times as shall be stated in the certificate of incorporation or in the resolution or resolutions providing for the issue of such stock adopted by the board of directorsif any as hereinabove provided, payable in preference to, or in such relation to, the dividends payable on any other class or classes or of any other series of stock, and cumulative or noncumulative as shall be so stated and expressed. When dividends upon the preferred and special stocks, if any, to the extent of the preference to which such stocks are entitled, shall have been paid or declared and set apart for payment, a dividend on the remaining class or classes or series of stock may then be paid out of the remaining assets of the corporation available for dividends as elsewhere in this chapter provided.

Shintom wanted to read the first part of that section -- "The holders of preferred or special stock of any class or of any series thereof shall be entitled to receive dividends" -- as requiring dividends, but Chancellor Chandler refers to the "plain language" of § 151(c) to reject this reading: "Had the drafters of § 151(c) intended for mandatory dividends, they certainly would not have left open the very real possibility that the rates could be set at zero." This must be the right answer. It is certainly the answer I would have given to a client, and I suspect that this is a case of first impression because the issue isn't really very close."

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As if we needed an exclamation point for emphasis, for the fourth day in a row, the front page of The Wall Street Journal reminds us of the painful lesson forced on Morgan Stanley as a result of what at least one judge thought was their failure comply with electronic discovery obligations in their trial in Florida defending against Coleman's, Inc.'s claims. The story can be read without a subscription at www.law.com. My prior posts have provided a short history of the case, and why it is the best lesson to make the point that electronic discovery must be understood by all litigators and their clients. It is widely believed that Morgan Stanley lost a case that many observers think should have been an easy win. Not only did they lose due to what appears to be their inability to properly retrieve, search and produce the appropriate e-data, but in addition to the $604 million verdict, the Florida jury yesterday added another $850 million in punitive damages. Prior to the trial, the judge imposed a penalty of partial summary judgment against them due to e-discovery problems that she blamed on them, and thereafter, it would have been very hard for them to win the case.

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For the third day in a row, the Wall Street Journal (subscription required for access to all articles), has had a front page reminder of the importance to businesses and their lawyers of "getting it right" when it comes to having control over electronic data that must be produced in the course of a lawsuit. The story today continues to chronicle the woe suffered by Morgan Stanley as a result of a partial summary judgment granted against it by a judge who determined that such a penalty was warranted as a result of their alleged failure to comply with e-data disclosure requirements in the suit brought by Coleman, Inc.--regardless of the merits of the claims or defenses.
I am giving a seminar today on electronic discovery and the articles in The Wall Street Journal could not be more timely to emphasize how important this aspect of litigation is. Morgan Stanley has learned that lesson at the cost of a $604 million verdict and they are now in the midst of the punitive damages hearing before the same Florida jury that could triple that amount.

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Though not strictly within the confines of the scope of this blog, the recent post by Kevin O'Keefe (the guru of lawyer blogs or blawgs), about new developments related to Google searches should be of interest to anyone in the blogosphere.

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The Wall Street Journal article on the front page today and yesterday made it clear to anyone who did not already know that "electronic discovery" can be a determining factor in the outcome of almost any major case. The article recounts what in my view is a surprising outcome (based on the initial claim) of Ron Perelman's lawsuit against Morgan Stanley in connection with Morgan Stanley's role on behalf of Sunbeam when it purchased Perelman's interest in Coleman. It appears that problems that Morgan Stanley had with electronic discovery resulted in an adverse instruction to the Florida jury at the beginning of the trial, and the result yesterday was a jury verdict against Morgan Stanley of $604 million, and there may be punitive damages to follow.

I am giving a seminar tomorrow on Electronic Discovery Basics to a group of CFOs, and the referenced article in the WSJ could not be more timely to emphasize how important it is for companies to be prepared for electronic discovery before they are involved in a lawsuit.

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For those interested in a scholarly exchange of views about the new suit by Roy Disney regarding the choice of a new CEO for The Disney Co., you should read a "point/counterpoint" among Prof. Larry Ribstein and Prof. Bainbridge and Prof. Gordon Smith here and here.

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Chancellor Chandler approved on May 2, 2005, a Plan of Dissolution and Liquidation of Fab Industries, Inc., which until March 2005 was trading on the American Stock Exchange. Among the issues presented was whether there was an implied timetable under Section 275 of the DGCL by which a Certificate of Dissolution needed to be filed after a Plan of Dissolution was approved by the board and shareholders. Without deciding if there was a per se reasonable time period required under the statute, the Chancellor ruled that the period in this case was reasonable as it allowed up to 3 years for the Certificate of Dissolution to be filed, and during that period the board would try to find a buyer for the business. The sale of substantially all the assets was also contingent upon a Certificate of Dissolution being filed first, unless there was another shareholder vote to authorize that change from the Plan of Dissolution.

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By: Francis G. X. Pileggi and Bernard G. Conaway

Section 220 of the Delaware General Corporation Law gives a shareholder the right to inspect certain books and records of a corporation, but that right is not without limitations. The right to those books and records oftentimes seems shallow because enforcing that right, if contested, requires a substantial amount of time and money to file a lawsuit under Section 220, engage in limited discovery, and endure a trial that, only if successful, will merely establish your right to certain books and records with limitations imposed for such matters such as confidentiality of the information. A recent decision by the Delaware Chancery Court clarifies the overlap of such a special statutory summary proceeding with the discovery rights which might otherwise be available in a related lawsuit. Khanna v. Covad Communications Group, Inc., 2004 WL 187274 (Del. Ch.). The scope of discovery in a "conventional" lawsuit is much broader than that available in a Section 220 case. Documents obtainable by means of a simple discovery request in a conventional action contrasts with a Section 220 lawsuit; that only if successful after trial, would entitle one to the limited scope of documents available under Section 220.

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Very recently, in the case of: In Re: J.P. Morgan Chase & Co. Shareholder Litigation, Vice Chancellor Lamb granted a motion to dismiss in a 34-page decision, based on the complaint in which stockholders of the acquirer sued its directors alleging breaches of fiduciary duty with regard to the acquisition of the bank. Their claims are based on an allegation that the directors paid too much for the acquired bank and in light of the CEO of the target proposing a no-premium merger if he were immediately promoted to CEO of the resulting entity. The CEO of the acquirer allegedly refused that offer, choosing instead to pay the premium for the target's stock and retain his title. The defendants moved to dismiss the complaint on the basis that the claims are derivative, not direct, and that demand was not excused. A similar federal class action complaint was filed in the U.S. District Court for the District of Delaware in March of 2005 and that court refused to stay the instant Chancery Court litigation which was filed in January of 2005.

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By: Francis G.X. Pileggi and Bernard G. Conaway

Much has been written about recent developments in electronic discovery, and the topic easily lends itself to a law review article as opposed to a short essay such as this. Nonetheless, the narrow scope of this article will be to highlight a few recent developments that should be of great importance to any litigator. For example, the United States District Court for the District of Delaware recently developed non-binding electronic discovery guidelines. As of this writing, neither the Delaware Chancery Court nor the Delaware Superior Court have formally adopted any amendments to their rules of civil procedure that specifically relate to electronic discovery issues similar to the new guidelines promulgated by Chief Judge Robinson of the District Court.

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Tip of the hat to Professor Larry Ribstein for his recent post about the May 5, 2005 opinion of the Delaware Supreme Court affirming a recent Chancery Court decision upholding the internal affairs doctrine to apply Delaware law to the issue of voting different classes of shares of a Delaware corporation, as referenced in a recent post of mine.

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In Chavin v. PNC Bank, Delaware, the Delaware Supreme Court ruled on April 28, 2005 that expenses incurred by the trustee of a trust, though in good faith, were based on mistaken assumptions and should not be paid for by the trust. This is contrary to the general rule that litigation costs incurred by a trustee to defend or preserve the trust are paid for by the trust. The court had previously ruled 2 years ago on issues related to beneficiaries of the trust. See 816 A.2d 781 (Del. 2003).

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A plan by Lone Star Steak House to retain and protect employees based on an arrangement that would be triggered by votes of the "existing directors" under certain circumstances, was upheld recently in California Public Employees' Retirement System v. Coulter. The plan was only in effect for 2 years and no payments were made under the plan. CalPERS argued that the plan was a breach of the board's fiduciary duty in that it gave the board members differential voting powers based on a classification not present in the Certificate of Incorporation. The opinion rebuffed the argument that the reasoning of Carmody v Toll Brothers should apply, because under the Lone Star plan, the voting power of the board members was neither limited nor expanded, and thus did not require for its effectiveness a special provision in the Certificate of Incorporation. The Chancery Court also rejected, however, the argument that the issue should not be addressed in light of no damages having been suffered under the plan, based on the equitable theory that "every wrong has a remedy" (in the event that it was found to have been a breach of fiduciary duty), and also due to the theory that a court can address an issue that might not be ripe but that is a recurring issue which often evades review.

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The independence of a member of the board of directors of a company has always been an important issue under Delaware law, but the issue has gained increasing national importance based on the recent requirements for the New York Stock Exchange and Nasdaq-listed companies, as well as the recent Sarbanes-Oxley Act. In addition to the fact that most NYSE companies are incorporated in Delaware, the issue is critical for purposes of filing a derivative action against a corporation because, as a practical matter, if a majority of the board is deemed independent, and presuit demand is required, claims against a corporation may never go to trial.

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On May 4, 2005, the Delaware Supreme Court, in what has been called the "sempiternal appraisal action" thoroughly recorded in the annals of Delaware corporate law, decided Cede & Co. v Technicolor, Inc., for the sixth time that it has been appealed from the Court of Chancery.
Law review articles have been written about the prior decisions and it is a challenge to condense the latest decision into a short post on a blog. The opinion includes citations to the prior decisions. After a 31-page discussion, and commending the trial court for its careful analysis, the Supreme Court affirmed in part, but remanded so that the judgment could conform to the "law of the case" which required a 15.28% discount rate and a prejudgment interest rate of 10.32% compounded annually.

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In NuCar Consulting, Inc. v. Timothy Doyle, the Chancery Court recently determined that a "prospective client list" satisfied the definition of a trade secret under the Delaware Uniform Trade Secrets Act and that because a former employee did not return it, and used it wilfully against his former employer, the court awarded attorneys' fees under the statute as well as the amount determined to have been received from clients on the list. The factual details can be found in the opinion issued on April 5, 2005. The court determined that the ruling would have been the same even if a "termination agreement" were not enforceable as a "non-compete", due to the statutory definition of a trade secret and the manner in which the list was compiled and maintained.

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In a decision on April 18, 2005, the Court of Chancery reaffirmed that the scope of an arbitrator's authority, in terms of what issues are to be decided by him pursuant to an arbitration agreement, are in the first instance for that arbitrator to determine. In CAPROC Manager, Inc. v. The Policeman and Firemen's Retirement System of the City of Pontiac, Vice Chancellor Parsons initially granted injunctive relief to maintain the status quo pending a resolution of the issues before him. Among the issues between the parties were the selection of the proper manager of the LLC. The court relied on cases that required that the arbitration clause must state "an express provision excluding the dispute from the coverage of the arbitration clause..." Such clear language from the parties' agreement was absent and therefore, the court declined to intervene. The opinion can be found here.

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The recent Chancery Court decision of Examen, Inc. v. VantagePoint Venture Partners 1996, read opinion here, involved the issue of whether California law or Delaware law applied to the stockholder vote of a company incorporated in Delaware but whose headquarters and primary place of business are in California. If California law applied, the holder of preferred shares would vote as a separate class and would have been able to block a merger. If Delaware law applied, all shareholders would vote together and the merger would likely be approved by the holders of common shares. In granting a Motion for Judgment on the Pleadings, Vice Chancellor Lamb relied on a long line of Delaware Supreme Court cases as well as a United States Supreme Court case for the seminal principle that the internal affairs of a corporation are governed by the law of that entity's state of incorporation. Several days after the decision, Chancellor Chandler denied a stay pending appeal of the decision based on a 4-part test. In sum, the court denied a stay pending appeal due to a balancing of equities and the unlikelihood of success on appeal.
The Delaware Supreme Court shortly thereafter affirmed the decision to apply Delaware law. Read that opinion here.

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In City of Wilmington v. AFSCME, the Court of Chancery recently ruled that it would not overturn the decision of an arbitrator, even if it disagreed with the arbitrator, as long as the decision was rational. At footnote 39, the court cited another Chancery Court decision for the standard of review which requires more than a "mere error of law or fact". Rather, the award of an arbitrator must rise to the level of being "irrational" before a court will refuse to enforce it. See Falcon Steel Co., Inc. v. HCB Contractors, Inc., 1991 WL 50139 ( Del. Ch. April 4, 1991).

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On April 19, 2005, the Delaware Supreme Court affirmed the decision of the Chancery Court in Black v. Hollinger International, Inc., read opinion here.
The Chancery Court had ruled that bylaw amendments made by Lord Black, as a controlling shareholder, were invalid because they had an inequitable purpose and an inequitable effect, due inter alia, to their goal of stripping an independent committee of the board of its power. See trial court decision at 844 A.2d 1022 (Del. Ch. 2004). A special committee of the board sued Lord Black, as the board chairman, for breach of his fiduciary duties.
The lower court also ruled that Black violated his fiduciary duties for several reasons, including preventing the board from considering a strategic opportunity; using confidential data to further his own interests; and not making full disclosure to other board members about his conduct when full disclosure was expected. The court below also ruled that Black violated an agreement with his company and that the Rights Plan complied with Unocal Corp. v. Mesa Petroleum Co.. The trial court was further affirmed in its decision that the Rights Plan did not rise to the level of disenfranchisement of shareholders such that it ran afoul of the Blasius standard.

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