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.
Unlike the general issue of substantive arbitrability (whether the parties agreed to arbitrate the subject matter of a particular dispute), which is reviewable by the court, resolution of procedural questions, such as whether to allow discovery, and the proper invocation of arbitration, should be left to the arbitrator. Other issues discussed by the court can be found in the full opinion.
In the second case, Tooley, et al., v. AXA Financial, Inc., et al.,pdf, Chancellor Chandler allowed claims to proceed to trial based on an allegation that the majority stockholder benefited to the detriment of minority stockholders in connection with a merger whose effective date was delayed at the request of the majority stockholder. There were sufficient facts pled to support self-dealing and a breach of the duty of loyalty, and thus to overcome the presumption of the business judgment rule. The court noted that there may be circumstances in which the board is justified in treating one class of stockholders differently than another, but such circumstances were not apparent to the court at the current early stage of the case.