John O’Toole writes:

In In re Volcano Corporation Stockholder Litigation, the Court of Chancery held that stockholders’ acceptance of tender offers as part of mergers accomplished under  § 251(h) of the Delaware General Corporation Law (“DGCL”) “has the same cleansing effect as a stockholder vote in favor of a transaction.” C.A. No. 10485-VCMR, 2016 WL 3583704, at *11 (Del. Ch. June 30, 2016).  Thus, as “the business judgment rule irrebuttably applies” to a transaction approved by the “fully informed vote [of] a majority of a company’s disinterested, uncoerced stockholders,” the same result obtains upon “the acceptance of a first-step tender offer by fully informed, disinterested, uncoerced stockholders representing a majority of a corporation’s outstanding shares in a two-step merger under section 251(h)….”

Copyright: bbourdages / 123RF Stock Photo
Copyright: bbourdages / 123RF Stock Photo

The Court’s decision in Volcano is particularly noteworthy for two reasons.  First, Vice Chancellor Montgomery-Reeves determined that the fully informed, disinterested, uncoerced acceptance of a tender offer done pursuant to § 251(h) is functionally identical to a fully informed, disinterested, uncoerced stockholder vote.  Second, the Court’s determination that the  acceptance of tender offers and stockholder votes are, at least in this context, the same, extends the irrebuttable application of the business judgment rule as discussed in the line of Supreme Court cases from Corwin to Attenborough, to § 251(h) tender offers and mergers.

In equating § 251(h) tender offers to stockholder votes, the Vice Chancellor determined that § 251(h) sufficiently protects stockholder interests and that the policy analysis undertaken by the Supreme Court in Corwin as to stockholder votes applies equally to § 251(h) tender offers.  The Court held that because § 251(h) requires merger agreements, which in turn activate directors’ disclosure obligations and fiduciary duties, and prohibits structural coercion, stockholder interests are no less protected than if a vote were required.  Further, where the Supreme Court in Corwin held that, in the context of a vote, “stockholders [should] have…the free and informed chance to decide on the economic merits of a transaction for themselves” and “that judges are poorly positioned to evaluate the wisdom of business decisions,” the Court here found such policy “equally applicable to a tender offer in a Section 251(h) merger.”  Vice Chancellor Montgomery-Reeves held that “a stockholder is no less exercising her ‘free and informed chance to decide on the economic merits of a transaction’ simply by virtue of accepting a tender offer rather than casting a vote.”  Thus, the Court held that because of such statutory protections and policy considerations, there is no “basis for distinguishing between a stockholder vote and a [§ 251(h)] tender offer.”

It follows then, and the Court held, that mergers approved by the acceptance of § 251(h) tender offers should be afforded the same “cleansing effect” as mergers approved by stockholder votes.  Thus, for both § 251(h) mergers and mergers approved by stockholder votes, the business judgment standard of review irrebuttably applies.  In so holding, the Court clarified and expanded upon the recent line of Chancery and Supreme Court opinions discussing the effect of fully informed, disinterested, uncoerced stockholder votes.  Vice Chancellor Montgomery-Reeves explained that “[i]n this context, if the business judgment rule is ‘irrebuttable,’ then a plaintiff only can challenge a transaction on the basis of waste….If, by contrast, the business judgment rule is ‘rebuttable,’ then a board’s violation of either the duty of care or duty of loyalty…would render the business judgment rule inapplicable.”  By expanding the irrebuttable application of the business judgment rule, the Court necessarily expanded the types and number of mergers that will now be, at least practically speaking, insulated from stockholder challenges.


John O’Toole is a summer associate, resident in the firm’s Wilmington office.

In the recent Court of Chancery decision of De Vries v. Del Mar, L.L.C., C.A. No. 9372-ML (June 3, 2015), Master LeGrow granted disclosure of privileged information under the Garner doctrine relating to the settlement of a $3 million loan to Del Mar, LLC (the “Company”), the transfer of the Company’s primary asset – a property located in Baja, Mexico valued at $68.9 million – to the lender in post-settlement negotiations, and potential mismanagement and self-dealing by the managing member of the Company, Baja Management, LLC.

This Final Report issued by Master LeGrow is significant in that the Court held that the plaintiffs demonstrated sufficient “good cause” to compel inspection of privileged books and records of the Company related to the post-settlement events under the Garner doctrine of the Fifth Circuit Court of Appeals, adopted by the Delaware Supreme Court in Wal-Mart Stores v. Indiana Electrical Workers Pension Trust Fund IBEW, 95 A.3d 1264 (Del. 2014).

The Court found that the plaintiffs adequately demonstrated that the privileged information was essential to their stated purpose, and good cause to support application of the fiduciary duty exception. In evaluating the “good cause” factors under the Garner doctrine, the Court concluded that the plaintiffs had presented a colorable claim of mismanagement (from which the Court could infer a credible basis of wrongdoing), a significant necessity of access and availability to the privileged information, and a narrow basis of inquiry.

The Court also found compelling the fact that the Company had failed to provide annual financial reports to its members over the years, as required by the Company’s operating agreement, which could have alerted the minority members to the status of their investment and the Property. As a result, the Court concluded plaintiffs’ had met the burden of showing sufficient “good cause” under Garner to invoke the fiduciary duty exception and compel inspection of the post-settlement privileged documents.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In the recent decision of Ehlen v. Conceptus, Inc., C.A. No. 8560-VCG (Del. Ch. May 24, 2013), the Court of Chancery ruled on a motion to expedite filed by Plaintiff Ehlen, in connection with his request to preliminarily enjoin a merger. Through the Complaint, Plaintiff alleged that the Conceptus directors breached their fiduciary duties of care, loyalty, and candor in approving a merger and in filing the accompanying 14D-9 with the SEC. The Complaint alleges three types of claims: a Revlon claim, a challenge to the merger agreement’s package of deal protections, and numerous disclosure claims.

Analysis

The Court recited the standard of review for a motion to expedite, stating that the plaintiff has the burden of demonstrating that good cause exists to “justify imposing on the defendants and the public the extra (and sometimes substantial) costs of an expedited preliminary injunction proceeding.” The Court further explained that a plaintiff meets this burden if he is able to demonstrate “a sufficient possibility of threatened irreparable injury” and a “colorable claim.”

In denying Ehlen’s motion to expedite, the Court found that Ehlen failed to state a colorable claim and improperly delayed in filing his motion.  While Ehlen initially asserted numerous causes of action through the Complaint, between the filing of the Complaint and the motion to expedite (8 days), Plaintiff determined that only the disclosure counts were colorable, and therefore only advocated those counts before the Court at the hearing on the motion to expedite. 

The Court was not persuaded by Ehlen’s disclosure claims in connection with the merger.  In analyzing the claims, the Court reiterated that Delaware directors have a duty of candor, under which they must fully and adequately disclose all material information to stockholders when seeking stockholder action.  Under Delaware law, an omitted fact is material “if a reasonable stockholder would consider it important in a decision pertaining to his or her stock.”  The Court determined that each of Ehlen’s disclosure claims were not colorable, and therefore denied the motion to expedite.

Of significance, the Court also found that Plaintiff’s 8 day delay in filing his motion to expedite after filing the Complaint added to Plaintiff’s burden in demonstrating the necessity in expediting the proceedings.  The Court found that with only three weeks before the filing of the Complaint and the closing of the merger, an eight day delay is significant.  The Court went on to state that while it did not deny the motion based on this delay, it added to the burden of expedition, an added burden created by the Plaintiff which he must overcome through the strength of his allegations of wrongdoing.

Conclusion

This decision demonstrates the importance of immediately seeking a motion to expedite a proceeding.  Here, the Court found that Plaintiff’s 8 day delay was significant given the timing of the closing of the merger, and that such delay added to Plaintiff’s burden in seeking expedited consideration of the lawsuit.  Accordingly, a plaintiff should take all steps necessary to file a motion to expedite contemporaneously with its complaint.

In the case of The Ravenswood Investment Company, L.P. v. Winmill & Co. Inc., C.A. No. 7048-VCN (Del. Ch., Jan. 31, 2013), the Court of Chancery analyzed motions filed by both plaintiff and defendant in a Section 220 action that was filed simultaneously with a breach of fiduciary duty claim.

Background

Plaintiff Ravenswood Investment Co., L.P. (“Ravenswood”) filed a Section 220 action and a fiduciary duty claim against Defendant, Winmill & Co., Inc. (“Winmill”) for declining to provide books and records to Ravenswood.  Ravenswood’s litigation efforts are premised on the belief that Winmill’s board withholds information with the expectation that Winmill’s share price will fall because of investor reluctance to acquire shares in a company that refuses to disclose corporate documentation. 

Winmill filed a motion with the Court, objecting to the comingling of a Section 220 action with a fiduciary duty action.  Winmill also sought dismissal of the fiduciary duty claim, based on the fact that Delaware law does not impose reporting or disclosure requirements on a corporation’s board of directors except when seeking shareholder approval.  Additionally, Ravenswood filed a motion to compel, seeking to depose Winmill’s board members in support of its Section 220 action.  In addition to the corporate representative produced by Winmill, Ravenswood also seeks to depose two of its directors.

Analysis

The Court stated that the Section 220 and fiduciary duty claim should not have been brought together, and therefore could have dismissed the fiduciary duty claim.  However, the Court determined that the more pragmatic approach would be to separate the Section 220 claim from the fiduciary duty claim.   After adjudicating the Section 220 claim, it will then move onto the fiduciary duty claim, if it remains.  As a result, the Court deferred, for the time being, on the sufficiency, as a matter of pleading, of Ravenswood’s fiduciary duty claim.

In connection with Ravenswood’s motion to compel, the Court noted that the discovery obligation confronted by a corporate defendant is “relatively minimal,” which has been described as “narrow is purpose and scope.”  Accordingly, the deposition of the corporate representative of the corporation, and not its directors, should suffice.  If such representative is not in possession of the requisite knowledge, then deposition of the directors may become necessary.  If Winmill continues to deny Ravenswood the opportunity to depose its directors, however, then Court ruled that they will not be allowed to testify at trial on the Section 220 claims.

Conclusion

This case is significant because it shows the need to assert a Section 220 claim prior to bringing more substantive claims against a company or its directors, such as for breach of fiduciary duty.  See, e.g., our prior post summarizing Central Laborers Pension Fund v. News Corporation, C.A. No. 6287-VCN (Del. Ch. Nov. 30, 2011), which dismissed a Section 220 claim filed after a derivative action.   Not only is it improper to bring such claims simultaneously, but by bringing a books and records action simultaneously with a breach of fiduciary duty claim, a plaintiff will slow the pace of the books and records action, which is intended to be a summary proceeding.   For more information concerning summary proceedings, see our Directors’ and Shareholders’ Reference Guide to Summary Proceedings in the Delaware Court of Chancery.  

It is doubtless troubling to New Media that Delaware law provides no statutory basis for exercising jurisdiction over the manager of a Delaware limited liability partnership for breaches of fiduciary duty in the course of his work for the partnership, absent acts taken in Delaware itself in furtherance of the  alleged wrongdoing.  But this is the state of our law, and I must apply it as it is.

The Delaware Court of Chancery in New Media Holding Company, LLC  v. Brown, C.A. No. 7516-CS, addressed the issue of whether personal jurisdiction can be exercised over a manager of a limited liability partnership based solely upon an applicable consent statute and absent specific acts taken by the manager in Delaware to further the alleged wrongdoing.  
The case involved a dispute between two businessmen over the ownership of a television station.  One of the businessmen created a Delaware limited liability company, Iolta Ventures LLC, to hold the television network and thereafter, converted the company into a limited liability partnership.  The other businessman, through his company New Media Holding, purchased a 50% stake in the partnership.  The partnership was managed by a fiduciary services company,  Capita Fiduciary Group and its employee Grant Brown.  New Media brought a claim against Brown and Capita alleging that they abused of their management position which reduced New Media’s stake in the Partnership from 50% to 0.3%.  Brown and Capita moved to dismiss the complaint against them based upon a lack of personal jurisdiction.
The Court of Chancery granted the motion to dismiss, and held that New Media did not sustain its burden of demonstrating that the court had specific jurisdiction over Brown and Capita under Delaware’s long arm statute, 10 Del. C. sec. 3104(c )(1).  The Court reasoned that New Media did not demonstrate that its claims of dilution were related to acts that Brown and Capita carried out in Delaware, and no act in Delaware was necessary to, or done in connection with the alleged dilutive scheme. 
The Court further held that New Media could not assert jurisdiction over the defendants under 6 Del. C. sec. 18-109(a), which provides for service of process on the managers of limited liability companies.  The Court so held because the Iota Ventures LLC was converted into a limited liability partnership before the alleged wrongdoing by the defendant managers took place.  Notably, the Court held that there was no comparable provision to 6 Del. C. sec. 18-109(a) under which a manager of a limited liability partnership could be subject to personal jurisdiction where the alleged wrongful acts did not occur in Delaware in furtherance of the wrongdoing.   In so holding the Court stated, “It is doubtless troubling to New Media that Delaware law provides no statutory basis for exercising jurisdiction over the manager of a Delaware limited liability partnership for breaches of fiduciary duty in the course of his work for the partnership, absent acts taken in Delaware itself in furtherance of the alleged wrongdoing.  But this is the stat of our law, and I must apply it as it is.”
Application:
This case is important for practitioners who might be unaware of the lack of statutory authority to assert personal jurisdiction over a manager of a limited liability partnership absent specific acts of wrongdoing conducted in the state in furtherance of the wrongdoing.  It would make sense that such a provision be enacted to address this loophole, particularly since statutory authority exists in the limited liability context to assert personal jurisdiction over a manager even where acts in furtherance of alleged wrongdoing did not occur in Delaware.  See  6 Del. C. sec. 18-809(a) (“A manager’s . . . serving as such constitutes such person’s consent to the appointment of the registered agent of the limited liability company (or, if there is none, the Secretary of State) as such person’s agent upon whom service of process may be made as provided in this section.”)  See also, 6 Del. C. sec. 15-114(a) (providing for service of process on the partners and liquidating trustees of a partnership, but not on managers). 

The Delaware Court of Chancery in New Media Holding Company, LLC  v. Brown, C.A. No. 7516-CS, addressed the issue of whether personal jurisdiction can be exercised over a manager of a limited liability partnership based solely upon an applicable consent statute and absent specific acts taken by the manager in Delaware to further the alleged wrongdoing.  

The case involved a dispute between two businessmen over the ownership of a television station.  One of the businessmen created a Delaware limited liability company, Iolta Ventures LLC, to hold the television network and thereafter, converted the company into a limited liability partnership.  The other businessman, through his company New Media Holding, purchased a 50% stake in the partnership.  The partnership was managed by a fiduciary services company,  Capita Fiduciary Group and its employee Grant Brown.  New Media brought a claim against Brown and Capita alleging that they abused of their management position which reduced New Media’s stake in the Partnership from 50% to 0.3%.  Brown and Capita moved to dismiss the complaint against them based upon a lack of personal jurisdiction.

The Court of Chancery granted the motion to dismiss, and held that New Media did not sustain its burden of demonstrating that the court had specific jurisdiction over Brown and Capita under Delaware’s long arm statute, 10 Del. C. Sec. 3104(c)(1).  The Court reasoned that New Media did not demonstrate that its claims of dilution were related to acts that Brown and Capita carried out in Delaware, and no act in Delaware was necessary to, or done in connection with, the alleged dilutive scheme. 

The Court further held that New Media could not assert jurisdiction over the defendants under 6 Del. C. Sec. 18-109(a), which provides for service of process on the managers of limited liability companies.  The Court so held because the Iota Ventures LLC was converted into a limited liability partnership before the alleged wrongdoing by the defendant managers took place.  Notably, the Court held that there was no comparable provision to 6 Del. C. Sec. 18-109(a) under which a manager of a limited liability partnership could be subject to personal jurisdiction where the alleged wrongful acts did not occur in Delaware in furtherance of the wrongdoing.   In so holding the Court stated, “[i]t is doubtless troubling to New Media that Delaware law provides no statutory basis for exercising jurisdiction over the manager of a Delaware limited liability partnership for breaches of fiduciary duty in the course of his work for the partnership, absent acts taken in Delaware itself in furtherance of the alleged wrongdoing.  But this is the stat of our law, and I must apply it as it is.”

Application:

This case is important for practitioners who might be unaware of the lack of statutory authority to assert personal jurisdiction over a manager of a limited liability partnership absent specific acts of wrongdoing conducted in the state in furtherance of the wrongdoing.  It would make sense that such a provision be enacted to address this loophole, particularly since statutory authority exists in the limited liability context to assert personal jurisdiction over a manager even where acts in furtherance of alleged wrongdoing did not occur in Delaware.  See  6 Del. C. Sec. 18-109(a) (“A manager’s . . . serving as such constitutes such person’s consent to the appointment of the registered agent of the limited liability company (or, if there is none, the Secretary of State) as such person’s agent upon whom service of process may be made as provided in this section.”)  See also, 6 Del. C. Sec. 15-114(a) (providing for service of process on the partners and liquidating trustees of a partnership, but not on managers). 

In Hite Hedge LP et al. v. El Paso Corporation, C.A. No. 7117-VCG, (Del. Ch. Oct. 9, 2012), the Delaware Court of Chancery re-affirmed its longstanding commitment to the freedom of contract afforded to alternate entities through their governing agreements.    The Court was faced with a motion to dismiss an action for breach of fiduciary duties brought by limited partners against an alleged controlling partner, the general partner and its board of directors.  Specifically, the limited partners alleged that the controlling partner, through a merger, sold certain key assets to a third party, upon which the partnership relies for its growth.   

The Court relied upon the explicit waiver of fiduciary duties set forth in the partnership agreement and held that the plaintiffs failed to state a viable claim for relief.   Specifically, the Court stated that “under the circumstances here, which include an explicit waiver of any fiduciary duties owed by the controlling and general partners to the limited partners, a partnership agreement that allows the controlling partner to engage in business activities ‘to the exclusion of the [p]artnership,’ and a prospectus that declares that the controlling partner has no contractual duty to sell any assets to the partnership, I find that that the Plaintiff limited partners have failed to state a viable claim for relief.”  The Court reiterated the fact that The Delaware Revised Uniform Limited Partnership Act, DRULPA, permits the elimination of fiduciary duties by contract where the intent to do so is explicit.  See 6 Del. C. § 17-1101(d).

Notwithstanding this “seemingly insurmountable” language in the partnership agreement, the plaintiffs argued that the elimination of fiduciary duties in the agreement does not curtail those owed to the minority unitholders by the controlling unitholder under common law.   While an innovative argument, the Court found that the argument was belied by the plain language of the agreement that expanded the exclusion of fiduciary duties to “any Limited Partner”, and that the only duties owed are those created by the partnership agreement itself.  The Court further found that the partnership agreement expressly permitted the general partner to compete with the partnership and disclaims liability under the corporate opportunity doctrine.

This case is noteworthy, in that the even though the Court  disposed of Plaintiff’s claims for alleged breach of fiduciary duty  based upon the express terms of the partnership agreement,  it went on to note that when a partnership agreement eliminates fiduciary duties owed to limited partners, the available remedies, if any, are reliant on the Partnership Agreement, not the common law.

On August 27, 2012, the Delaware Supreme Court, in a lengthy, 110 page opinion, affirmed the Court of Chancery’s judgment of over $2 billion in damages in connection with a breach of fiduciary duty claim relating to the sale of a company.  The Supreme Court also affirmed the award of attorneys’ fees totaling $300 million.  For a link to the case, Americas Mining Corp. v. Theriault, No. 29, 2012 (Del. Aug. 27, 2012), click here.

In the case of Shocking Technologies v. Michael, C.A. No. 7164-VCN (Del. Ch. Apr. 10, 2012), the Delaware Court of Chancery examined whether it has the inherent authority to remove a director for breach of fiduciary duty other than through Section 225 of the Delaware General Corporation Law (“DGCL”).

Section 225 serves as a vehicle through which a shareholder may petition the Court to remove a director from a corporation.  To see a prior post regarding Section 225, click here.  In this case, however, plaintiff sought to remove the director defendant from the board based not on Section 225, but on the Court’s inherent equitable powers.  In opposition, the director defendant asserted that Section 225 serves as the only basis to remove a director, and the prerequisites under that section had not been met because the Court had not yet determined whether defendant had breached a fiduciary duty.

The Court of Chancery did not directly decide the issue of whether it has the authority to remove a director for breach of fiduciary duty other than through Section 225.  The Court did indicate, however, that based upon the facts of this case, it was not inclined to exercise such a power.  However, the Court ruled that if plaintiff succeeds at trial, and the Court holds that defendant breached his fiduciary duty, then that judgment could provide justification for his removal under Section 225.

In the case of Auriga Capital Corporation v. Gatz Properties, LLC, C.A. No. 4390-CS (Del. Ch. Jan. 27, 2012), the Court of Chancery reinforced the notion that a majority and managing member of a limited liability company can be held liable for breach of fiduciary duty in connection with the member’s management and eventual purchase of the company.

 

This opinion demonstrates that that the Court interprets the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq. (the “DLLC Act”) to impose default fiduciary obligations similar to those in the corporate context, in the absence of a clear expression otherwise in the LLC agreement.

 

Specifically in this case, Chancellor Strine rejected the assertion that traditional fiduciary duties of loyalty and care do not apply in the context of alternative entities, holding that the DLLC Act specifically states that the rules of equity shall govern unless displaced by statute or contract, and “[i]t seems obvious that . . . a manager of an LLC would qualify as a fiduciary of that LLC and its members.” Moreover, though an LLC can contractually eliminate certain fiduciary duties through its operating agreement pursuant to § 18-1101(c) of the DLLC Act (except the implied contractual covenant of good faith and fair dealing), the elimination of those duties must be clear.  Without explicit and unequivocal language, Delaware courts will apply default fiduciary duties.


Auriga makes clear that the Court of Chancery will consider LLC managers as fiduciaries in the same vein as corporate directors absent clear contractual language to the contrary. Additionally, it serves as a reminder that controlling shareholders must proceed cautiously when considering a buyout of their minority investors, because the Court will analyze the course of conduct leading to the sale in order to determine whether the price paid was entirely fair.

It is not uncommon for shareholders who seek appraisal of their shares, pursuant to Section 262 of the Delaware General Code (“DGCL”) in objection to a merger, to also pursue claims of wrongdoing against the directors or officers of the merging corporation (i.e. claims for breach of fiduciary duty, fraud, etc.).  This post will address relevant case law on whether such actions can be pursued in one complaint, or if claims for wrongdoing and appraisal must be instituted in separate actions, and then subsequently consolidated.

Relevant Cases and Analysis

In Cede v. Technicolor, Inc., 542 A.2d 1182 (Del. 1988), the Delaware Supreme Court held that claims for appraisal and corporate wrongdoing must be brought separately, and then subsequently consolidated.  In that case, the Court affirmed the Court of Chancery’s denial of Plaintiff’s motion to amend its appraisal action to include claims for wrongdoing, on the grounds that “statutory appraisal is limited to ‘the payment of fair value of the shares . . . by the surviving or resulting corporation'” . . .  and that a “determination of fair value does not involve an inquiry into claims of wrongdoing in the merger.”  Cede, 542 A.2d at 1189.  The Delaware Supreme Court further stated that allowing the plaintiff to amend its complaint to allege fraud claims would “impermissibly broaden the legislative remedy” of an appraisal action.

The Delaware Supreme Court’s holding was based upon the fact that only a small portion of shareholders usually seek appraisal.  Thus, if such shareholders are allowed to litigate claims of wrongdoing in their appraisal proceedings, those shareholders not seeking appraisal remedies would be required to litigate their claims independently.  This would create the risk of inconsistent judgments and raise issues of collateral estoppel.   Accordingly, Cede makes clear that claims for appraisal and corporate wrongdoing against directors and officers must be asserted independently in separate actions, and then subsequently consolidated.

However, the Delaware Court of Chancery in Nagy v. Bistricer, 770 A.2d 43 (Del. Ch. 2000), distinguished Cede and held that appraisal and fiduciary duty claims can be brought in the same action where there is no distinction of identity between those plaintiffs seeking appraisal and those seeking equitable claims.  In Nagy, the plaintiff who sought appraisal and asserted claims for wrongdoing was the only minority shareholder of the company.  The remaining shareholders were the directors who authorized the merger.  Therefore, the Court held that there was no risk of inconsistent judgments by trying these claims in the same action.

[In a related prior post we discussed the decision of In Re Appraisal of the Aristotle Corporation, which held that a stockholder who asserts an appraisal action cannot subsequently bring an action for failure to disclose adequate information to determine whether the stockholder should seek appraisal in the first instance].

Conclusion

Generally, claims against directors and officers for corporate wrongdoing, and appraisal actions brought pursuant to Section 262 of the DGCL should be asserted in separate complaints and thereafter consolidated.  The lone exception to this rule is where the shareholders who assert claims for corporate wrongdoing and appraisal constitute the entirety of the shareholders who could bring such claims.