In re Xura Stockholder Litigation, C.A. No. 12608-VCS (Del. Ch. Dec. 10, 2018)

Lately, the Delaware Supreme Court has given great weight to the deal price in appraisal cases.  As a result, plaintiffs have put a greater focus on showing that the process leading to the merger makes that price unreliable, potentially because of breaches of fiduciary duty.  One strategy for recovery is to file a breach of fiduciary case after obtaining valuable discovery in the appraisal case.  This decision explains when such a fiduciary duty case can go forward notwithstanding the appraisal proceeding seeking to recover for the same loss. 

The decision also is notable for two other reasons.  First, the plaintiffs pled around Corwin by adequately alleging the stockholder vote approving the challenged transaction was uninformed.  Second, the plaintiffs stated a claim against one fiduciary (the CEO) notwithstanding the board’s approval of the transaction.  If a board can ratify a fiduciary’s wrongdoing, it had to know about it first.