978-1285770178 Case Printout Case CPC-05-04 Part 1

Del.Supr.,2009.

Gantler v. Stephens

307Ak624 k. Availability of Relief Under Any State of Facts Provable. Most Cited Cases

Dismissal for failure to state a claim is appropriate only if it appears with reasonable certainty that, under any set of

facts that could be proven to support the claims asserted, the plaintiff would not be entitled to relief. Chancery Court

Rule 12(b)(6).

[3] Appeal and Error 30 919

30 Appeal and Error

30XVI Review

30XVI(G) Presumptions

30k915 Pleading

[4] Corporations 101 310(1)

101 Corporations

101X Officers and Agents

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

[5] Corporations 101 310(1)

101 Corporations

101X Officers and Agents

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

[6] Corporations 101 310(1)

101 Corporations

101X Officers and Agents

A board’s decision not to pursue a merger opportunity is normally reviewed within the traditional business judgment

framework; in that context the board is entitled to a strong presumption in its favor, because implicit in the board’s

statutory authority to propose a merger, is also the power to decline to do so. 8 West’s Del.C. § 251.

[10] Corporations 101 319(6)

101 Corporations

101X Officers and Agents

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

101k319 Actions Between Corporation and Its Officers or Agents

101k319(6) k. Pleading. Most Cited Cases

101k320 Actions Between Shareholders and Officers or Agents

101k320(7) k. Bill, Petition, or Complaint in General. Most Cited Cases

By its very nature, a board decision to reject a merger proposal could always enable a plaintiff to assert that a major-

ity of the directors had an entrenchment motive; for that reason, plaintiffs must plead, in addition to a motive to re-

tain corporate control, other facts sufficient to state a cognizable claim that the directors acted disloyally.

101k320 Actions Between Shareholders and Officers or Agents

101k320(7) k. Bill, Petition, or Complaint in General. Most Cited Cases

Shareholders alleged facts in their complaint against directors that were sufficient to establish, for purposes of a mo-

tion to dismiss for failure to state a claim, that a majority of the corporate board acted disloyally in rejecting merger

bid so as to overcome the business judgment presumption; complaint alleged that corporate president‘s failure to

101X Officers and Agents

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

101k307 k. Fiduciary Nature of Relation. Most Cited Cases

Corporate officers owe fiduciary duties that are identical to those owed by corporate directors.

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

101k310 Management of Corporate Affairs in General

101k310(1) k. In General. Most Cited Cases

Corporations 101 314(.5)

Officers of Delaware corporations, like directors, owe fiduciary duties of care and loyalty, and that the fiduciary

duties of officers are the same as those of directors.

[14] Corporations 101 314(1)

complaint alleged that officers assisted corporate director in sabotaging due diligence, which resulted in withdrawal

of merger bid.

[15] Corporations 101 310(1)

the board‘s control when it seeks shareholder action; that duty attaches to proxy statements and any other disclosures

in contemplation of stockholder action.

[16] Corporations 101 319(7)

Corporations 101 320(11)

101 Corporations

reasonable investor as having significantly altered the total mix of information made available.

[17] Corporations 101 583

101 Corporations

[18] Corporations 101 583

101 Corporations

101XIV Consolidation

101k583 k. Assent of Stockholders. Most Cited Cases

101 Corporations

101XIV Consolidation

101k583 k. Assent of Stockholders. Most Cited Cases

A corporate board is not obligated to disclose in a proxy statement the details of merger negotiations that have “gone

101XIV Consolidation

101k583 k. Assent of Stockholders. Most Cited Cases

In contemplating a merger bid, a board cannot properly claim in a proxy statement that it had carefully deliberated

and decided that its preferred transaction better served the corporation than the alternative, if in fact the board reject-

ed the alternative transaction without serious consideration.

“Voidable acts” are those beyond management‘s powers, but where they are performed in the best interests of the

101X(C) Rights, Duties, and Liabilities as to Corporation and Its Members

101k316 Dealings with Corporation or Shareholders

101k316(4) k. Ratification. Most Cited Cases

Although a disinterested majority of shareholders voted to approve reclassification, shareholder ratification doctrine

did not warrant dismissal of shareholders‘ claim against officers and directors alleging breach of duty of loyalty in

Upon Appeal from the Court of Chancery. REVERSED and REMANDED.Norman M. Monhait and Jessica Zeldin

(argued), Esquires, of Rosenthal, Monhait & Goddess, P.A., Wilmington, Delaware; for Appellants.

Donald J. Wolfe, Jr. and Brian C. Ralston, Esquires, of Potter Anderson & Corroon LLP, Wilmington, Delaware; Of

Counsel: Karen Wildau, W. Scott Sorrels and Stacey Godfrey Evans (argued), Esquires, of Powell Goldstein LLP,

The plaintiffs in this breach of fiduciary duty action, who are certain shareholders of First Niles Financial, Inc.

(“First Niles” *699 or the “Company”), appeal from the dismissal of their complaint by the Court of Chancery. The

complaint alleges that the defendants, who are officers and directors of First Niles, violated their fiduciary duties by

rejecting a valuable opportunity to sell the Company, deciding instead to reclassify the Company’s shares in order to

certain documents that the complaint incorporates by reference. See Gantler v. Stephens, C.A. 2392 (Del.

Ch. February 14, 2008), also available at 2008 WL 401124.

A. The Parties