Supreme Court Affirms Chancery Court in Hollinger case
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.
