fairness standard in Delaware

2026Mining Corp. v. Theriault, 51 A.3d 1213, 1244 (Del. 2012) (affirming trial court’s finding that “the process by which the Merger was negotiated and approved was not fair” and produced an unfair price); Disney II, 906 A.2d 27, 52 (Del. 2006) (explaining that the business judgment rule can be rebutted by establishing that “the directors breached their fiduciary duty of care” and that “[i]f that is shown, the burden then shifts to the director defendants to demonstrate that the challenged act or transaction was entirely fair to the corporation and its shareholders”); Weinberger v. UOP, Inc., 457

2026In Weinberger, the Delaware Supreme Court held that the entire fairness test requires compliance with the duty of disclosure and incorporated this principle into the fair dealing dimension.183 On the facts of the case, the Weinberger court held that “[m]aterial information, necessary to acquaint [the minority] shareholders with the bargaining positions of [the majority stockholder], was withheld under circumstances amounting to a breach of fiduciary duty.”184 The 183 The Weinberger decision referred to the duty of disclosure as the “duty of candor.” 457 A.2d at 711 .

2025See, e.g., Tesla, 298 A.3d at 700 (quoting Cinerama II, 663 A.2d at 1179 ) (“Even under our entire fairness standard, ‘[a] finding of perfection is not a sine qua non in an entire fairness analysis.’”); In re BGC Pr’s, Inc. Derivative Litig., 2022 WL 3581641 , at *18 (Del.

2025See also Cinerama II, 663 A.2d at 1162 (where “the presumption of the business judgment rule has been rebutted, the board of directors’ action is examined under the entire fairness standard.”). 161 H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 150 (Del.

2024Cognizant of this fact, we have chosen to apply the entire fairness standard to “interested transactions” in order to ensure that all parties to the transaction have fulfilled their fiduciary duties to the corporation and all its shareholders. [Lynch], 638 A.2d at 1110 .125 The same is true in later Supreme Court controlling stockholder cases not involving freeze out mergers.

2023Further, use of the two procedural mechanisms would yield no greater result than a burden shift under the entire fairness standard.174 Then-Vice Chancellor Strine, in In re Cox, noted that what Lynch I created was “a modest procedural benefit” but little more than that.175 In dicta, he suggested that Delaware law evolve and expand on Lynch I and suggested the following change to our standard of review governing certain transactions: The reform would be to invoke the business judgment rule standard of review when a going private merger with a controlling stockholder was effected 172 638 A.2d at

2024That is, where the controller irrevocably and publicly disables itself from using its control to dictate the outcome of the negotiations and the shareholder vote, the controlled merger then acquires the shareholder-protective characteristics of third-party, arm’s-length mergers, which are reviewed under the business judgment standard.”); Corwin, 125 A.3d at 312–13 (“[W]hen a transaction is not subject to the entire fairness standard, the long-standing policy of our law has been to avoid the uncertainties and costs of judicial second-guessing when the disinterested stockholders have had the fre

2024That is, where the controller irrevocably and publicly disables itself from using its control to dictate the outcome of the negotiations and the shareholder vote, the controlled merger then acquires the shareholder-protective characteristics of third-party, arm’s-length mergers, which are reviewed under the business judgment standard.”); Corwin, 125 A.3d at 312–13 (“[W]hen a transaction is not subject to the entire fairness standard, the long-standing policy of our law has been to avoid the uncertainties and costs of judicial second-guessing when the disinterested stockholders have had the fre

2024May 31, 2011) (observing that although the defendants had the ultimate burden of demonstrating the entire fairness of a transaction, the plaintiff had “the burden of alleging facts that suggest the absence of fairness” at the pleading stage); In re Cornerstone Therapeutics Inc. S’holder Litig., 115 A.3d 1173, 1180 (Del. 2015) (“[T]he mere fact that a plaintiff is able to plead facts supporting the application of the entire fairness standard to the transaction . . . does not relieve the plaintiff of the responsibility to plead a non- exculpated claim.”); Carlson, 2010 WL 2376890 , at *2 (“Delaw

2024The Delaware Supreme Court has instructed that if a plaintiff “seek[s] only monetary damages” from “a director who is protected by an exculpatory provision,” then to survive a motion to dismiss, the plaintiff “must plead non-exculpated claims against [the] director . . . , regardless of the underlying standard of review for the board’s conduct—be it Revlon, Unocal, the entire fairness standard, or the business judgment rule.”185 “So applied, the existence of an exculpatory provision operates 185 In re Cornerstone Therapeutics Inc., S’holder Litig., 115 A.3d 1173 , 1175–76 (Del. 2015) (footnote

2025Corp. L. 119 , 139 (2005) (arguing for a remedial standard that “provides the minority shareholders with the value of what was taken from them . . . .”). 73 Kahn v. Tremont Corp. (Tremont II), 694 A.2d 422, 430 (Del. 1997). 74 Weinberger, 457 A.2d at 711. 36 Economic fairness can be the predominant, even dispositive dimension of the fairness inquiry.75 But the procedural dimension also matters because the substantive dimension is usually contestable.

2024The transaction was not a freeze-out or squeeze-out involving a specific price per share, but Justice Jacobs, then a Vice Chancellor, applied the entire fairness test.77 Many more examples exist.78 73 Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del. 1993). 74 Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 406 (Del. 1988). 75 Tremont I, 1996 WL 145452 , at *7, rev’d on other grounds, 694 A.2d 422 (Del. 1997). 76 T.

2024“The possibility that the entire fairness standard of review may apply tends to preclude the Court from granting a motion to 109 Id.; accord Reis, 28 A.3d at 467 (“Depending on the facts and the nature of the loyalty breach, the answer can be a ‘fairer’ price.”); see, e.g., In re Dole Food Co., Inc. S’holder Litig., 2015 WL 5052214 , at *2 (finding that controller and his associate had engaged in fraud; holding that “[u]nder these circumstances, assuming for the sake of argument that the $13.50 price still fell within a range of fairness, the stockholders are not limited to a fair price.

2024Aug. 27, 2015). 77 “The fair price analysis is part of the entire fairness standard of review; it is not itself a remedial calculation.” Reis, 28 A.3d at 465 .

2023“A determination that a transaction must be subjected to an entire fairness analysis is not an implication of liability.” Emerald P’rs v. Berlin, 787 A.2d 85, 93 (Del. 2001).

2020Berlin, 787 A.2d 85, 93 (Del. 2001) (“A determination that a transaction must be subjected to an entire fairness analysis is not an implication of liability.”). >4 The Tesla Board elected not to implement the dual protections endorsed by Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) as a means to earn business judgment review.

2026Mining Corp. v. Theriault, 51 A.3d 1213, 1244 (Del. 2012) (affirming trial court’s finding that “the process by which the Merger was negotiated and approved was not fair” and produced an unfair price); Disney II, 906 A.2d 27, 52 (Del. 2006) (explaining that the business judgment rule can be rebutted by establishing that “the directors breached their fiduciary duty of care” and that “[i]f that is shown, the burden then shifts to the director defendants to demonstrate that the challenged act or transaction was entirely fair to the corporation and its shareholders”); Weinberger v. UOP, Inc., 457

2023Mining, 51 A.3d at 1244 (noting that “[b]ecause the issues relating to fair dealing and fair price were so intertwined, the Court of Chancery did not separate its analysis, but rather treated them together in an integrated examination” and finding that approach to be “consistent with the inherent non-bifurcated nature of the entire fairness standard of review.”).

2025Ch. 2024) (same); Dole Food, 2015 WL 5052214 , at *2–3, 25, 47; Bomarko I, 794 A.2d at 1164, 1177 . 42 Thorpe v. CERBCO, Inc. (Thorpe II), 676 A.2d 436, 445 (Del.1996). 43 Weinberger, 457 A.2d at 714 . 23 are very broad in fashioning equitable and monetary relief under the entire fairness standard as may be appropriate, including rescissory damages.”44 The award can also include “elements of rescissory damages,” so long as the court “considers them susceptible of proof and a remedy appropriate to all the issues of fairness” presented by the case.45 In a plenary breach of fiduciary duty action,

2024But since 1994 (if not before), Delaware law has deemed the business judgment rule rebutted and applied the entire fairness test ab initio to any transaction between the corporation and a controlling stockholder in which the controller receives a non-ratable benefit.24 Unless the transaction incorporates one or more protective mechanisms, “the standard of review for that decision is entire fairness, with the burden of proof resting on the defendants.”25 22 Cinerama, Inc. v. Technicolor, Inc. (Technicolor Plenary IV), 663 A.2d 1156, 1163 (Del. 1995) (citation omitted). 23 Gesoff v. IIC Indus.,

2025The true “test of fairness” is whether the minority stockholder receives at least “the substantial equivalent in value of what he had before.”235 The procedural dimension of the entire fairness inquiry examines the process that generated the result to determine how closely it replicated arms’ length 233 Id. 234 Weinberger, 457 A.2d at 711 . 235 Sterling v. Mayflower Hotel Corp., 93 A.2d 107, 114 (Del. 1952); accord Rosenblatt v. Getty Oil Co., 493 A.2d 929, 940 (Del. 1985) (“[T]he correct test of fairness is ‘that upon a merger the minority stockholder shall receive the substantial equivalent

2018For illustrative cases where the defendants prevailed under the entire fairness standard of review in a post-trial setting, see Kahn v. Lynch Commc’n Sys., Inc., 669 A.2d 79 (Del. 1995); Technicolor Plenary IV, 663 A.2d 1156 ; Nixon v. Blackwell, 626 A.2d 1366 (Del. 1993); Rosenblatt v. Getty Oil Co., 493 A.2d 929 (Del. 1985); Trados II, 73 A.3d 17 ; Zimmerman v. Crothall, 62 A.3d 676 (Del.

2025The true “test of fairness” is whether the minority stockholder receives at least “the substantial equivalent in value of what he had before.”235 The procedural dimension of the entire fairness inquiry examines the process that generated the result to determine how closely it replicated arms’ length 233 Id. 234 Weinberger, 457 A.2d at 711 . 235 Sterling v. Mayflower Hotel Corp., 93 A.2d 107, 114 (Del. 1952); accord Rosenblatt v. Getty Oil Co., 493 A.2d 929, 940 (Del. 1985) (“[T]he correct test of fairness is ‘that upon a merger the minority stockholder shall receive the substantial equivalent

2025The true “test of fairness” is whether the minority stockholder receives at least “the substantial equivalent in value of what he had before.”235 The procedural dimension of the entire fairness inquiry examines the process that generated the result to determine how closely it replicated arms’ length 233 Id. 234 Weinberger, 457 A.2d at 711 . 235 Sterling v. Mayflower Hotel Corp., 93 A.2d 107, 114 (Del. 1952); accord Rosenblatt v. Getty Oil Co., 493 A.2d 929, 940 (Del. 1985) (“[T]he correct test of fairness is ‘that upon a merger the minority stockholder shall receive the substantial equivalent

2025Ch. 2024) (observing that “having a conflict of interest is not something one is guilty of” (cleaned up)). 76 Monroe Cnty., 2010 WL 2376890 , at *2; see also Nixon v. Blackwell, 626 A.2d 1366, 1376 (Del. 1993) (“Application of the entire fairness rule does not . . . always implicate liability of the conflicted corporate decision maker, nor does it necessarily render the decision void.”). 77 See Solomon, 1995 WL 250374 , at *6. 14 B.

2024The transaction was not a freeze-out or squeeze-out involving a specific price per share, but Justice Jacobs, then a Vice Chancellor, applied the entire fairness test.77 Many more examples exist.78 73 Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del. 1993). 74 Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 406 (Del. 1988). 75 Tremont I, 1996 WL 145452 , at *7, rev’d on other grounds, 694 A.2d 422 (Del. 1997). 76 T.

2024Trados II, 73 A.3d at 44 (“To obtain review under the entire fairness test, the stockholder plaintiff must prove that there were not enough independent and disinterested individuals among the 293 The complaint had originally asserted claims against the Versa Defendants as controlling stockholders of BSW, but the court dismissed those claims in 2018 because GB-SP failed to allege facts supporting a reasonable inference that Domus or Versa were controlling stockholders of the Company.

2024Trados II, 73 A.3d at 55 (“A reviewing court deploys the entire fairness test to determine whether the members of a conflicted board of directors complied with their fiduciary duties.”). b.

2018Corp., 498 A.2d 1099, 1104 (Del. 1985) (“[The] duty of fairness certainly incorporates the principle that a cash-out merger must be free of fraud or misrepresentation.”); Weinberger, 457 A.2d at 710 (holding entire fairness standard requires compliance with duty of disclosure and incorporating this principle into fair dealing aspect of the test); Lynch v. Vickers Energy Corp., 383 A.2d 278, 281 (Del. 89 The fair price aspect of the entire fairness test “relates to the economic and financial considerations of the proposed merger, including all relevant factors: assets, market value, earnings, f

2017Corp., 498 A.2d 1099, 1103, 1107 (Del. 1985) (permitting fairness challenge to merger based on controller’s allegedly unfair manipulation of the timing of the transaction); Weinberger, 457 A.2d at 711 (noting that factors affecting fairness include “questions of when the transaction was timed, how it was initiated, structured, negotiated, disclosed to the directors, and how the approvals of the directors and the stockholders were obtained”); Cox Commc’ns, 879 A.2d at 617 (positing that the entire fairness standard for controlling stockholder transactions rests on “a sincere concern that merger

2024At that point, the remedy could be a damages award equal to the fair value of the shares, but “the measure of any recoverable loss . . . under an entire fairness standard of review is not necessarily limited to the difference between the price offered and the ‘true’ value as determined under appraisal proceedings.” Technicolor Plenary II, 634 A.2d at 371 .

2022Ch. 1999) (citing 263 Weinberger, 457 A.2d at 711 ). 264 Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993). 265 That is, the breach of fiduciary duty claims against them are subject to the entire fairness standard of review and they will be found liable if they do not carry their burden under the standard. 49 Defendants advocated for a pre-trial burden shift under the Lynch doctrine, which provides that controlling stockholders may shift the burden of persuasion by “an approval of the transaction by an independent committee of directors.” 266 Because I found genuine issues of mate

2026The analysis would not flow through the entire fairness test, in which the defendants gain the ability to prove entire fairness but functionally have to disprove causation. 67 Aronson, 473 A.2d at 812. 40 • When the business judgment rule applies, the level of carelessness is gross negligence.68 • When enhanced scrutiny applies, the level of carelessness is action that falls outside a range of reasonableness.69 • When entire fairness applies, the level of carelessness is action resulting in a decisionmaking process that fails to satisfy the fair dealing dimension of the unitary entire fairness

2026The analysis would not flow through the entire fairness test, in which the defendants gain the ability to prove entire fairness but functionally have to disprove causation. 67 Aronson, 473 A.2d at 812. 40 • When the business judgment rule applies, the level of carelessness is gross negligence.68 • When enhanced scrutiny applies, the level of carelessness is action that falls outside a range of reasonableness.69 • When entire fairness applies, the level of carelessness is action resulting in a decisionmaking process that fails to satisfy the fair dealing dimension of the unitary entire fairness

1999Fair dealing The “fair dealing” element of the entire fairness analysis “also embraces the duty of candor owed by corporate fiduciaries to disclose all material information relevant to corporate decisions from which they may derive a personal benefit.” Mills Acquisition Co. v. Macmillan, Inc., Del.Supr., 559 A.2d 1261, 1280 (1988); cf. 8 Del.

1995When shareholders challenge directors’ actions, usually one of three levels of judicial review is applied: the traditional business judgment rule, the Unocal standard of enhanced judicial scrutiny, or the entire fairness analysis. 7 “Because the effect of the proper invocation of the business judgment rule is so powerful and the standard of entire fairness so exacting, the determination of the appropriate standard of judicial review frequently is determinative of the outcome of [the] litigation.” Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d at 1279 (citing AC Acquisitions Corp. v. Anders

2022Dec. 31, 2003) (“The value of a corporation is not a point on a line, but a range of reasonable values . . . .”), aff’d in part, rev’d in part on other grounds, 884 A.2d 26 (Del.2005); see also Bershad v. Curtiss-Wright Corp., 535 A.2d 840 , 76 a single number, but to determine whether the transaction price falls within a range of fairness.”368 Because the entire fairness test is unitary, the court does not consider price in a vacuum.

2018Corp., 498 A.2d 1099, 1104 (Del. 1985) (“[The] duty of fairness certainly incorporates the principle that a cash-out merger must be free of fraud or misrepresentation.”); Weinberger, 457 A.2d at 710 (holding entire fairness standard requires compliance with duty of disclosure and incorporating this principle into fair dealing aspect of the test); Lynch v. Vickers Energy Corp., 383 A.2d 278, 281 (Del. 89 The fair price aspect of the entire fairness test “relates to the economic and financial considerations of the proposed merger, including all relevant factors: assets, market value, earnings, f

2022Dec. 31, 2003) (“The value of a corporation is not a point on a line, but a range of reasonable values . . . .”), aff’d in part, rev’d in part on other grounds, 884 A.2d 26 (Del.2005); see also Bershad v. Curtiss-Wright Corp., 535 A.2d 840 , 76 a single number, but to determine whether the transaction price falls within a range of fairness.”368 Because the entire fairness test is unitary, the court does not consider price in a vacuum.

2017Compare Technicolor Plenary IV, 663 A.2d at 1176-77 (affirming that merger consideration of $23 per share was entirely fair), with Cede & Co. v. Technicolor, Inc. (Technicolor Appraisal III), 884 A.2d 26, 30 (Del. 2005) (awarding fair value in appraisal of $28.41 per share). 47 Consistent with the unitary nature of the entire fairness test, the fair process and fair price aspects interact.

2020Ch. 2009) (“[OJur Supreme Court rightly expects . . . that our state’s trial courts will [apply Supreme Court precedent].”). ‘5 Lynch, 638 A.2d at 1116-17 ; Tremont II, 694 A.2d at 428 . 46 Guth v. Loft, 5 A.2d 503, 510 (Del. 1939) (“The rule that requires an undivided and unselfish loyalty to the corporation demands that there shall be no conflict between duty and self-interest.’’). 47 Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983). 16 that where one stands on both sides of a transaction, he has the burden of establishing its entire fairness, sufficient to pass the test of careful scr

2020Ch. 2009) (“[O]ur Supreme Court rightly expects . . . that our state’s trial courts will [apply Supreme Court precedent].”). 45 Lynch, 638 A.2d at 1116-17 ; Tremont II, 694 A.2d at 428 . 46 Guth v. Loft, 5 A.2d 503, 510 (Del. 1939) (“The rule that requires an undivided and unselfish loyalty to the corporation demands that there shall be no conflict between duty and self-interest.”). “” Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983). 16 that where one stands on both sides of a transaction, he has the burden of establishing its entire fairness, sufficient to pass the test of careful scru

2024We requested supplemental briefing to answer the following question: for a controlling stockholder transaction that does not involve a freeze out merger, like the transaction here, does the entire fairness standard of review change to business judgment if a 1 Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014). 3 defendant shows either approval by an independent special committee or approval by an uncoerced, fully informed, unaffiliated stockholder vote.

2023All aspects of the issue must be examined as a whole since the question is one of entire fairness.121 “The requirement of fairness is unflinching in its demand that where one stands on both sides of a transaction, he has the burden of establishing its entire fairness, sufficient to pass the test of careful scrutiny by the courts.” 122 “[E]ntire fairness is the highest standard of review in corporate law[,]”123 and “the defendants bear the burden of proving that the transaction with the controlling stockholder was entirely fair to the minority stockholders.”124 “A determination that a transacti

2024Pure Resources observed that if controlling stockholder tender offers were not reviewed under the entire fairness standard, then Lynch’s understanding of inherent coercion was counterintuitive because it incentivized bypass – the very act it sought to prevent. 808 A.2d at 441–43.

2016Sept. 4, 2014) (“Absent [the procedural protections listed in M&F Worldwide], a minority stockholder’s challenge to a transaction in which a controlling stockholder stands on both sides implicates the entire fairness standard of review.”). 49 In re Pure Res., Inc. S’holders Litig., 808 A.2d 421, 436 (Del.

2025Ch. 2024) (same); Dole Food, 2015 WL 5052214 , at *2–3, 25, 47; Bomarko I, 794 A.2d at 1164, 1177 . 42 Thorpe v. CERBCO, Inc. (Thorpe II), 676 A.2d 436, 445 (Del.1996). 43 Weinberger, 457 A.2d at 714 . 23 are very broad in fashioning equitable and monetary relief under the entire fairness standard as may be appropriate, including rescissory damages.”44 The award can also include “elements of rescissory damages,” so long as the court “considers them susceptible of proof and a remedy appropriate to all the issues of fairness” presented by the case.45 In a plenary breach of fiduciary duty action,

2024A court may shape the rescission of contract remedy in order to serve substantial justice.”); see also Weinberger, 457 A.2d at 714 (“[T]he Chancellor’s powers are complete to fashion any form of equitable and monetary relief as may be appropriate.”); Int’l Telecharge, Inc. v. Bomarko, Inc., 766 A.2d 437, 440 (Del. 2000) (“In determining damages, the powers of the Court of Chancery are very broad in fashioning equitable and monetary relief under the entire fairness standard as may be appropriate, including rescissory damages” (internal citations omitted)). 925 See, e.g., eBay Domestic Hldgs., I

2025To successfully rebut the business judgment rule “in this manner, thereby leading to the application of the entire fairness standard, a plaintiff must normally plead facts demonstrating ‘that a majority of the director defendants have a financial interest in the transaction or were dominated or controlled by a materially interested director.’” Orman, 794 A.2d at 22 (quoting Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 979 (Del.

2022May 7, 2014) (“The possibility that the entire fairness standard of review may apply tends to preclude the Court from granting a motion to dismiss under Rule 12(b)(6) . . . .”); Orman, 794 A.2d at 15 n.36 (Del.

2025The plaintiff contests the “paradigmatic conflicted controller transaction” through which FNF secured $250 million in F&G preferred stock.70 It argues that, because the Transaction was not conditioned on a vote of F&G’s minority stockholders, the entire fairness standard of review applies.71 The application of entire fairness typically “will preclude dismissal of a complaint on a Rule 12(b)(6) motion to dismiss.”72 “Entire fairness is not, however, 67 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (citation omitted). 68 Gen.

2025See supra note 67 and accompanying text (quoting Savor, 812 A.2d at 896-97 ). 104 Weinberger, 457 A.2d at 711 . 19 fairness analysis “because a fair price is more likely to follow fair dealing.”105 The failure to plead facts showing the absence of a fair price is fatal to an entire fairness claim, irrespective of a plaintiff’s fair dealing allegations.106 FNF argues that the plaintiff has not met its pleading-stage burden to advance allegations showing that the Transaction’s terms were unfair to the Company.107 In response, the plaintiff insists that its “Complaint is replete with well-support

2020One way to provide such protections would be to adhere to the more stringent entire fairness standard of judicial review.*© 35 584 A.2d 490, 502 (Del.

2020One way to provide such protections would be to adhere to the more stringent entire fairness standard of judicial review.*° 35 584 A.2d 490, 502 (Del.

2025Motors (Hughes), 897 A.2d at 168 (quoting Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)).

2021Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006)). 459 125 A.3d 304 (Del. 2015). 86 of a majority of disinterested shares approved the Merger in a fully informed, uncoerced vote, and, therefore, the business judgment rule unrebuttably applies.460 Even if Corwin is inapplicable, the Director Defendants argue that Plaintiff’s duty of care claims against them are barred by the exculpation provision in the Company’s Certificate of Incorporation, and that Plaintiff does not plead a nonexculpated duty of loyalty claim.461 Plaintiff asserts that she has stated nonexculpated claims again