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Fairness Compendium

The Fairness Compendium

The Fairness Compendium consists of 21 landmark court cases over the last 50 years that relate to issues of fairness and standard of value. These rulings have significantly raised the stakes for Boards of Directors and Special Committees when fulfilling their fiduciary duties.

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FAIRNESS COMPENDIUM

Fairness CompendiumThe Fairness Compendium consists of 21 landmark court cases over the last 50 years that relate to issues of fairness and standard of value. These rulings have significantly raised the stakes for Boards of Directors and Special Committees when fulfilling their fiduciary duties.

  1. Tri-Continental Corp. v. Battye, 74 A.2d 71 (Del. 1950) - The Appraisal Statute: Stockholder is Entitled to be Paid for that Which has Been Taken From Him, His Proportionate Interest In a Going Concern
  2. Sterling v. Mayflower Hotel Corp., 93 A.2d 107 (Del. 1952) - Controlling Shareholders Participating on Both Sides of a Transaction Bear the Burden of Proving Entire Fairness
  3. Treadway Cos. v. Care Corp., 638 F.2d 357 (2d Cir. 1980) - A Factually Supported Fairness Opinion from an Investment Banking Firm Can Be a Strong Defense for a Board of Directors Under the Business Judgment Rule
  4. Bell v. Kirby Lumber, 413 A.2d 137 (Del. 1980) - Specific Circumstances of the Corporation Determine the Methodology by Which “Fair Value” Should Be Appraised
  5. Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983) - Burden of Proof May Shift to Complaining Minority Shareholder if a Merger is Approved by a Majority of the Minority Shareholders
  6. Aronson v. Lewis, 473 A.2d 805 (Del. 1984) - Demand Futility and the Business Judgment Rule
  7. Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985) - The Business Judgment Rule Prohibits Courts from Second-Guessing the Wisdom of Disinterested Corporate Directors’ Substantive Decisions
  8. Kahn v. Lynch, 669 A.2d 79 (Del. 1995) - Court Case Emphasizes the Use of an Independent Committee and Outside Independent Counsel to Negotiate a Transaction on Behalf of the Board of Directors
  9. Cede & Co. and Cinerama, Inc. v. Technicolor, Inc., 684 A.2d 289 (Del. 1996) - Minority Shareholders are to be Cashed-Out Assuming a Going-Concern Basis, Considering All Nonspeculative Information
  10. Matador Capital Management Corp. v. BRC Holdings, Inc., 729 A.2d 280 (Del. 1998) - Thorough and Complete Analysis Validates a Fairness Opinion
  11. Crescent/Mach I Partners v. Turner, 846 A.2d 963 (Del. 2000) - Seeking of Independent Fairness Opinion Dismisses Plaintiff’s Claim of Gross Negligence by a Board of Directors Under its Duty of Care
  12. Glassman v. Unocal Corporation, 777 A.2d 242 (Del. 2001) - In the Case of a Short-Form Merger, a Dissatisfied Shareholder’s Only Recourse, Absent Fraud or Illegality, is Appraisal
  13. In re Pure Resources, Inc. Shareholders Litigation, 808 A. 2d 421 (Del. Ch. 2002) - Controlling Shareholders Held to Stringent Disclosure Requirements for Fairness Opinions
  14. In re Cysive, Inc. Shareholders Litigation, 836 A.2d 531 (Del. 2003) - Burden of Proof Shifted to Minority Shareholders With the Use of a Special Committee and Independent Legal Counsel and Financial Advisors
  15. Omnicare v. NCS Healthcare, 818 A.2d 914 (Del. 2003) - Merger and Acquisition Targets can no longer follow a “Pre-commitment Strategy,” Offering Contractual Certainty as a Means of Negotiating a Better Deal for Shareholders
  16. In re Tele-communications, Inc. Shareholders Litigation, 2005 Del. Ch. Lexis 206, 2005 WL 3642727 (Del. Ch. 2005) - Financial Advisors May Need to Consider “Relative Fairness” Under the Entire Fairness Standard
  17. In re New York Stock Exchange v. Archipelago Merger Litigation, 824 N.Y.S.2d 764 (N.Y. Sup., 2005) - A Fairness Opinion Must Be Free From Conflicts of Interest If a Shareholder is to Make a Truly Informed Decision
  18. Gesoff v. IIC Industries, 902 A.2d 1130 (Del. 2006) – Court Emphasizes the Responsibilities of the Special Committee and its Duty to Exercise their Authority and Appoint Truly Independent Advisors
  19. In Re Netsmart Technologies, Inc. Shareholders Litigation, 2007 Del. Ch. Lexis 35 (Del. Ch. 2007) – Failure to Market to Strategic Buyers as Well as Private Equity is a Breach of Fiduciary Duty
  20. In Re Topps Company Shareholders Litigation, 926 A. 2d 58 (Del. 2007) – Boards of Directors Must Take Reasonable Steps to Maximize Shareholder Value
  21. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) – Under the Business Judgment Rule, a Board of Directors has a Fiduciary Duty to its Shareholders to Receive the Most Advantageous Terms Reasonably Attainable for the Company