Blasius standard in Delaware

2013E.g., MM Cos., Inc. v. Liquid Audio, Inc., 813 A.2d 1118, 1129 (Del.2003) (“Both standards recognize the inherent conflicts of interest that arise when a board of directors acts to prevent shareholders from effectively exercising their right to vote either contrary to the will of the incumbent board members generally or to replace the incumbent board members in a contested election.”); Stroud v. Grace, 606 A.2d 75, 92, n. 3 (Del.1992) (incorporating Blasius standard within Unocal review). .

2010Accordingly, this Court has noted that the non-deferential Blasius standard of enhanced judicial review, which imposes upon a board of directors the burden of demonstrating a compelling justification for such actions, is rarely applied either independently or within the Unocal standard of review.” (quoting Williams v. Geier, 671 A.2d 1368, 1376 (Del. 1996))); Stroud v. Grace, 606 A.2d 75, 91 (Del.1992) (suggesting that Blasius applies when a "board[] of directors deliberately employ[s] various legal strategies either to frustrate or completely disenfranchise a shareholder vote,” but that more

2023Once the court required a compelling justification to justify the board’s action, the outcome was, for the most part, preordained.69 The Court of Chancery also skirted Blasius review by limiting the “primary purpose” requirement and redefining what it meant to be compelling.70 68 Id. at 1132 . 69 See Chesapeake, 771 A.2d at 323 (“In reality, invocation of the Blasius standard of review usually signals that the court will invalidate the board action under examination.

2023Once the court required a compelling justification to justify the board’s action, the outcome was, for the most part, preordained.69 The Court of Chancery also skirted Blasius review by limiting the “primary purpose” requirement and redefining what it meant to be compelling.70 68 Id. at 1132 . 69 See Chesapeake, 771 A.2d at 323 (“In reality, invocation of the Blasius standard of review usually signals that the court will invalidate the board action under examination.

2007E.g., Blasius, 564 A.2d at 660-661 ; Stroud, 606 A.2d at 92 (stating the Blasius standard is invoked only if "the 'primary purpose’ of the board’s action [is] to interfere with or impede exercise of the shareholder franchise”); State of Wisconsin Inv.

2007E.g., Blasius, 564 A.2d at 660-661 ; Stroud, 606 A.2d at 92 (stating the Blasius standard is invoked only if "the 'primary purpose’ of the board’s action [is] to interfere with or impede exercise of the shareholder franchise”); State of Wisconsin Inv.

2023Once the court required a compelling justification to justify the board’s action, the outcome was, for the most part, preordained.69 The Court of Chancery also skirted Blasius review by limiting the “primary purpose” requirement and redefining what it meant to be compelling.70 68 Id. at 1132 . 69 See Chesapeake, 771 A.2d at 323 (“In reality, invocation of the Blasius standard of review usually signals that the court will invalidate the board action under examination.

2023Once the court required a compelling justification to justify the board’s action, the outcome was, for the most part, preordained.69 The Court of Chancery also skirted Blasius review by limiting the “primary purpose” requirement and redefining what it meant to be compelling.70 68 Id. at 1132 . 69 See Chesapeake, 771 A.2d at 323 (“In reality, invocation of the Blasius standard of review usually signals that the court will invalidate the board action under examination.

2023See MONY, 853 A.2d at 674 (stating that outside the context of director elections, “courts will apply the exacting Blasius standard . . . only in circumstances in which self- interested or faithless fiduciaries act to deprive stockholders of a full and fair opportunity to participate in the matter and to thwart what appears to be the will of a majority of the stockholders”). 245 Mercier, 929 A.2d at 809 n.65 (citing Blasius, 564 A.2d at 663 ). 69 In a case warranting enhanced scrutiny based solely on a franchise conflict and not a situational conflict, the formulation of enhanced scrutiny cons

2023See MONY, 853 A.2d at 674 (stating that outside the context of director elections, “courts will apply the exacting Blasius standard . . . only in circumstances in which self- interested or faithless fiduciaries act to deprive stockholders of a full and fair opportunity to participate in the matter and to thwart what appears to be the will of a majority of the stockholders”). 245 Mercier, 929 A.2d at 809 n.65 (citing Blasius, 564 A.2d at 663 ). 69 In a case warranting enhanced scrutiny based solely on a franchise conflict and not a situational conflict, the formulation of enhanced scrutiny cons

2023Pell v. Kill describes Mercier’s three-part blended Unocal test, requiring “reasonable” fit to a legitimate objective, as governing “director action that affects stockholder voting,” and then proceeds to contrast that test with Liquid Audio’s requirement that “when the vote involves an election of directors or touches on matters of corporate control, the directors’ justification must not only be ‘reasonable’ but also ‘compelling.’” Pell, 135 A.3d at 787 (citing Liquid Audio, 813 A.2d at 1129–30)).

2021“Blasius does not apply in all cases where a board of directors has interfered with a shareholder vote.”138 Rather, “courts will apply the exacting Blasius standard sparingly, and only in circumstances in which self-interested or faithless fiduciaries act to deprive stockholders of a full and fair opportunity to participate in the matter.”139 “For the 135 Letter from Lisa Zwally Brown to the Court Regarding Standard of Review (Oct. 8, 2021) (D.I. 61) (“Brown Ltr.”), at 2. 136 Pell v. Kill, 135 A.3d 764, 769 (Del.

2023See MONY, 853 A.2d at 674 (stating that outside the context of director elections, “courts will apply the exacting Blasius standard . . . only in circumstances in which self- interested or faithless fiduciaries act to deprive stockholders of a full and fair opportunity to participate in the matter and to thwart what appears to be the will of a majority of the stockholders”). 245 Mercier, 929 A.2d at 809 n.65 (citing Blasius, 564 A.2d at 663 ). 69 In a case warranting enhanced scrutiny based solely on a franchise conflict and not a situational conflict, the formulation of enhanced scrutiny cons

2021Where such circumstances are not present, the business judgment rule will ordinarily apply . . . .” Id. (emphasis added). 146 EMAK Worldwide, Inc. v. Kurz, 50 A.3d 429, 433 (Del. 2012). 37 fiduciary and the beneficiary.”147 When it comes to the enforcement of bylaws against stockholders, the board does not act simply as an arms-length contracting partner; board members are fiduciaries and, in the context of an advance notice bylaw, they are fiduciaries confronting a structural and situational conflict.148 With these principles in mind, the Delaware Supreme Court wrote 50 years ago in Schnell t

2023The stockholder Coster III, 2022 WL 1299127 , at *11 (“The compelling-justification test has been described colorfully as calling for the court to view the directors’ explanations with a gimlet eye.” (citing Pell, 135 A.3d at 787 , and Williams, 671 A.2d at 1376 )); Pell, 135 A.3d at 787 (“The Delaware Supreme Court has held that when the vote involves an election of directors or touches on matters of corporate control, the directors’ justification must not only be ‘reasonable’ but also ‘compelling.’ In this context, the shift from ‘reasonable’ to ‘compelling’ requires that the directors estab

2010Accordingly, this Court has noted that the non-deferential Blasius standard of enhanced judicial review, which imposes upon a board of directors the burden of demonstrating a compelling justification for such actions, is rarely applied either independently or within the Unocal standard of review.” (quoting Williams v. Geier, 671 A.2d 1368, 1376 (Del. 1996))); Stroud v. Grace, 606 A.2d 75, 91 (Del.1992) (suggesting that Blasius applies when a "board[] of directors deliberately employ[s] various legal strategies either to frustrate or completely disenfranchise a shareholder vote,” but that more

2010Accordingly, this Court has noted that the non-deferential Blasius standard of enhanced judicial review, which imposes upon a board of directors the burden of demonstrating a compelling justification for such actions, is rarely applied either independently or within the Unocal standard of review.” (quoting Williams v. Geier, 671 A.2d 1368, 1376 (Del. 1996))); Stroud v. Grace, 606 A.2d 75, 91 (Del.1992) (suggesting that Blasius applies when a "board[] of directors deliberately employ[s] various legal strategies either to frustrate or completely disenfranchise a shareholder vote,” but that more

2010See Unitrin, 651 A.2d at 1383 ; Stahl, 1990 WL 114222 , at *8; Moran, 490 A.2d at 1080 . 178 . "[T]he Delaware Supreme Court and this court have both recognized the high degree of overlap between the concerns animating the Blasius standard of review and those that animate Unocal." Chesapeake Corp. v. Shore, 771 A.2d 293, 320 (Del.Ch.2000); Stroud, 606 A.2d at 92 n. 3; Unitrin, 651 A.2d at 1378-79 ; William T.

2025Apr. 15, 2024) (TRANSCRIPT) (rejecting defendants’ attempt to “recast[]” a Blasius claim as 747 A.2d at 79 (explaining that “a wrongful impairment by fiduciaries of the stockholders’ voting power or freedom works a personal injury to the stockholders, not to the corporate entity”). 15 See Brookfield Asset Mgmt., Inc., 261 A.3d at 1266 (explaining that a claim challenging a private placement of stock to a controller for allegedly inadequate consideration, resulting in dilution of the minority stockholders’ voting power, is derivative). 14 a dilution claim where the complaint “plainly complain[e

2025Apr. 15, 2024) (TRANSCRIPT) (rejecting defendants’ attempt to “recast[]” a Blasius claim as 747 A.2d at 79 (explaining that “a wrongful impairment by fiduciaries of the stockholders’ voting power or freedom works a personal injury to the stockholders, not to the corporate entity”). 15 See Brookfield Asset Mgmt., Inc., 261 A.3d at 1266 (explaining that a claim challenging a private placement of stock to a controller for allegedly inadequate consideration, resulting in dilution of the minority stockholders’ voting power, is derivative). 14 a dilution claim where the complaint “plainly complain[e

2023“For the Blasius standard to be invoked, the challenged action had to be taken for the sole or primary purpose of thwarting a shareholder vote.” Kallick v. Sandridge Energy, Inc., 68 A.3d 242, 258 (Del.

2023“For the Blasius standard to be invoked, the challenged action had to be taken for the sole or primary purpose of thwarting a shareholder vote.” Kallick v. Sandridge Energy, Inc., 68 A.3d 242, 258 (Del.

2021Where such circumstances are not present, the business judgment rule will ordinarily apply . . . .” Id. (emphasis added). 146 EMAK Worldwide, Inc. v. Kurz, 50 A.3d 429, 433 (Del. 2012). 37 fiduciary and the beneficiary.”147 When it comes to the enforcement of bylaws against stockholders, the board does not act simply as an arms-length contracting partner; board members are fiduciaries and, in the context of an advance notice bylaw, they are fiduciaries confronting a structural and situational conflict.148 With these principles in mind, the Delaware Supreme Court wrote 50 years ago in Schnell t

2021Where such circumstances are not present, the business judgment rule will ordinarily apply . . . .” Id. (emphasis added). 146 EMAK Worldwide, Inc. v. Kurz, 50 A.3d 429, 433 (Del. 2012). 37 fiduciary and the beneficiary.”147 When it comes to the enforcement of bylaws against stockholders, the board does not act simply as an arms-length contracting partner; board members are fiduciaries and, in the context of an advance notice bylaw, they are fiduciaries confronting a structural and situational conflict.148 With these principles in mind, the Delaware Supreme Court wrote 50 years ago in Schnell t

2013See Johnston v. Pedersen, 28 A.3d 1079, 1089-90 (Del.Ch.2011) (applying Unocal to preferred stock issuance designed to affect proxy contest); Mercier, 929 A.2d at 812-13 (applying Unocal to postponement of stockholder vote); Chesapeake, 111 A.2d at 330-334 (analyzing supermajority bylaw adopted to affect consent solicitation under Unocal). .

2013See Johnston v. Pedersen, 28 A.3d 1079, 1089-90 (Del.Ch.2011) (applying Unocal to preferred stock issuance designed to affect proxy contest); Mercier, 929 A.2d at 812-13 (applying Unocal to postponement of stockholder vote); Chesapeake, 111 A.2d at 330-334 (analyzing supermajority bylaw adopted to affect consent solicitation under Unocal). .

1995The Blasius standard may be viewed as a particularization of the more general doctrine that “board action taken for the principal purpose of impeding the effective exercise of the stockholder franchise is inequitable and will be restrained or set aside in proper circumstances.” Stahl v. Apple Bancorp, Inc., Del.Ch., 579 A.2d 1115, 1122 (1990), see Aprahamian, 531 A.2d 1204 ; Schnell, 285 A.2d 437 ; Lerman, 421 A.2d 906 .

1995The Blasius standard may be viewed as a particularization of the more general doctrine that “board action taken for the principal purpose of impeding the effective exercise of the stockholder franchise is inequitable and will be restrained or set aside in proper circumstances.” Stahl v. Apple Bancorp, Inc., Del.Ch., 579 A.2d 1115, 1122 (1990), see Aprahamian, 531 A.2d 1204 ; Schnell, 285 A.2d 437 ; Lerman, 421 A.2d 906 .

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.

1992See Gilbert, 575 A.2d at 1144 ; Paramount, 571 A.2d at 1153-54 ; Mills, 559 A.2d at 1287 ; Unocal, 493 A.2d at 954-56 ; see also Cheff v. Mathes, Del.Supr., 199 A.2d 548, 556 (1964); Bennett v. Propp, Del.Supr., 187 A.2d 405, 409 (1962); Guth v. Loft, Inc., Del.Supr., 5 A.2d 503 , 510 *92 (1939). 3 After reviewing the record in this case, we conclude that a Blasius analysis in connection with the validity of the Amendments and By-laws was inappropriate.