In the now-familiar case, Corwin v. KKR Financial Holdings, 125 A.3d 304, 305-06 (Del. 2015), the Delaware Supreme Court affirmed the Court of Chancery’s holding “that the business judgment rule is invoked as the appropriate standard of review for a post-closing damages action when a merger that is not subject to the entire fairness standard of review has been approved by a fully informed, uncoerced majority of the disinterested stockholders.”
In In re Columbia Pipeline Group Stockholder Litigation, C.A. No. 12152-VCL, transcript (Del. Ch. Sept. 6, 2016), the stockholder plaintiffs argued that they should be allowed to take discovery to support their post-merger disclosure claims because, they argued, the defendants should have the burden to show that a stockholder vote was fully informed in order to secure the benefit of the business judgment rule under Corwin. The plaintiffs argued that “we are in a brave new world” following Corwin, that “abuse” of disclosure settlements has added a “taint” to plaintiffs’ ability to get pre-closing discovery, and that it was “a question of first impression” whether such post-closing discovery should be allowed. They argued that Corwin was “devastating” to the plaintiffs’ bar and that the court should provide “balance” to Corwin by requiring defendants to bear the burden of showing that a stockholder vote was fully informed.
