In Re Plains Exploration & Production Company Stockholder Litigation, Cons., C.A. No. 8090-VCN (Del. Ch. May 9, 2013).
Issues Addressed: Were Revlon duties of the board breached due to the absence of a special committee and pre-market check in connection with the sale of the company, and (ii) were disclosure obligations breached due to alleged omissions in the proxy statement.
Short Answer: No to both based on the facts of this case.
This case addressed the claims that the duties of the directors in connection with the sale of the company, based on the seminal Delaware Supreme Court decision in Revlon, were breached. The Revlon duties of a board, in essence, are fiduciary duties that require the directors to get the best price for the company when it is determined to be for sale, and the procedures employed by the board in connection with the sale or merger will be scrutinized to determine if they were consistent with the board’s obligations. This case recited the contours and parameters of those obligations, but reiterates that there is no formal script or procedures that the directors need to follow. Certain types of procedures and processes have been addressed over the many years that Revlon has been applied, however, and this opinion builds on that extensive jurisprudence.
Select Highlights of Legal Rulings
This decision provides additional guidance on two points in particular: Neither: (i) absence of a special committee, nor (ii) the absence of a pre-market check, will, per se, amount to a violation of Revlon duties. Of course, this finding needs to be tethered to the facts of this case which include a board that: (i) was experienced in the oil and gas industry, (ii) was adequately involved in the negotiations, and (iii) had 7 out of 8 directors who were independent and disinterested.
More to follow later, but in the meantime an expert overview of the case has been provided by Frank Reynolds at this link. Frank edits the Westlaw Journal: Delaware Corporate for the Thomson Reuters’ Legal News & Analysis.