In In Re: General Motors (Hughes) Shareholder Litigation, download file, the Supreme Court affirmed the opinion of the Chancery Court dismissing a lengthy complaint that alleged a long list of claims in connection with the spinoff by GM of its wholly-owned subsidiary, Hughes. The claims included: the breach of the duty of loyalty and unjust enrichment in the payment of a special dividend by Hughes to GM; the breach of the duty of loyalty and failing to deal fairly with GM shareholders; the breach of the duty of loyalty and manipulating the shareholder vote; breach of the duty of disclosure; and the aiding and abetting of a breach of fiduciary duty.
The Chancery Court’s opinion in essence held that the effect of shareholder ratification was to maintain the presumptions of the business judgment rule.
In affirming the dismissal of the complaint, the court also discussed the application of “judicial notice” under Delaware Rule of Evidence 201(b), as well as under what circumstances a court may consider matters outside of the complaint in a Motion to Dismiss under Rule 12(b)(6). In upholding the denial of discovery on the Motion to Dismiss the Supreme Court determined that the Chancery Court may properly consider facts that are otherwise subject to judicial notice without affording the plaintiff an opportunity to take discovery where the plaintiff has no good faith basis for challenging the authenticity or the legitimacy of an extraneous fact.