Plains Exploration & Production Company Stockholder Litigation,
Cons., C.A. No. 8090-VCN (Del. Ch. May 9, 2013) [an enhanced version of this opinion is available to lexis.com
Were Revlon duties of the board breached due to the absence of a special
committee and pre-market check in connection with the sale of the company, and
(ii) were disclosure obligations breached due to alleged omissions in the proxy
Short Answer: No
to both based on the facts of this case.
This case addressed the claims that the duties of the
directors in connection with the sale of the company, based on the seminal
Delaware Supreme Court decision in Revlon, were breached. The Revlon
duties of a board, in essence, are fiduciary duties that require the directors
to get the best price for the company when it is determined to be for sale, and
the procedures employed by the board in connection with the sale or merger will
be scrutinized to determine if they were consistent with the board's
obligations. This case recited the contours and parameters of those
obligations, but reiterates that there is no formal script or procedures that
the directors need to follow. Certain types of procedures and processes have
been addressed over the many years that Revlon has been applied,
however, and this opinion builds on that extensive jurisprudence.
Select Highlights of Legal Rulings
This decision provides additional guidance on two points
in particular: Neither: (i) absence of a special committee, nor (ii) the
absence of a pre-market check, will, per se, amount to a violation of Revlon
duties. Of course, this finding needs to be tethered to the facts of this case
which include a board that: (i) was experienced in the oil and gas industry,
(ii) was adequately involved in the negotiations, and (iii) had 7 out of 8
directors who were independent and disinterested.
More to follow later, but in the meantime an
expert overview of the case has been provided by Frank Reynolds at this link.
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Eckert Seamans.
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