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The Delaware Court of Chancery’s opinion in Fox v. CDx Holdings, Inc., C.A. No. 8031-VCL (Del. Ch. July 28, 2015), addresses a complex set of facts relating to the liability resulting from the intentionally inaccurate valuation of a spin-off in order to avoid tax consequences to the controlling stockholders, which wrongly minimized the value of stock options [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance].
There are a number of eminently quotable insights and observations in this 82-page decision that could easily be the subject of a lengthy synopsis, but for busy readers who would prefer highlights until they can devote more time to reading the whole opinion, I offer a few selected bullet points that should be of interest to corporate and commercial litigators:
“Hindsight bias has been defined in the psychological literature as the tendency for people with outcome knowledge to believe falsely that they would have predicted the reported outcome of an event.” Hal R. Arkes & Cindy A. Schipani, Medical Malpractice v. the Business Judgment Rule: Differences in Hindsight Bias, 73 Or. L. Rev. 587, 591 (1994) [lexis.com | Lexis Advance]. “[S]tudies have demonstrated not only that people claim that they would have known it all along, but also that they maintain that they did, in fact, know it all along.” (citations omitted)
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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