Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Sept. 29 — Cornerstone Therapeutics Inc.'s directors can immediately appeal a ruling that denied its dismissal motion until all underlying claims were resolved at a trial regarding the fairness of a merger between Cornerstone and Chiesi Farmaceutici S.p.A., according to a Sept. 26 Delaware Chancery Court order In re Cornerstone Therapeutics Inc.
Vice Chancellor Sam Glasscock III found that all of the requirements of Delaware Supreme Court Rule 42 were met in granting the defendants' application for certification of an interlocutory appeal of his Sept. 10 decision.
Chiesi, a controlling shareholder of Cornerstone, entered into an agreement in February 2013 to purchase all of Cornerstone's outstanding stock. A full board of Cornerstone's disinterested directors approved the merger agreement (12 CARE 1133, 9/12/14).
Subsequently, plaintiff stockholders filed a complaint alleging a breach of fiduciary duty.
The approving disinterested directors moved to dismiss the complaint, arguing that because they are facially disinterested, the breach of duty had to be specifically pled and that an exculpation provision adopted in the company's bylaws should not be ignored at the motion-to-dismiss stage.
On Sept. 10, Vice Chancellor Glasscock held that under controlling precedent, the plaintiffs were not required to specifically plead a breach of duty by the disinterested directors because the standard of review of the underlying claims is entire fairness. He determined that the disinterested directors “must await a developed record, post-trial, before their liability is determined.”
On Sept. 23, the disinterested directors moved for an interlocutory appeal of the decision.
“A Rule 42 interlocutory appeal may be certified by this Court only when the appealed decision (1) ‘determines a substantial issue,' (2) ‘establishes a legal right,' and (3) meets one or more criteria further enumerated in the Rule.”
The plaintiffs first argued that the appealed decision does not involve a “substantial right.” The court, however, found that if the Sept. 10 decision was reversed, it could lead a lead to a dismissal of the disinterested directors and “thus constitutes a substantial issue in the course of litigation.”
The plaintiffs additionally argued that an interlocutory appeal is not warranted because even if the appeal was granted in the defendants' favor, it would not end the case and would interrupt the parties' progress toward trial.
Vice Chancellor Glasscock dismissed this argument as well, noting that because he did not enter a stay in the proceedings, if the Delaware Supreme Court elects to take the appeal, the parties could proceed to a trial while the higher court considers the appeal.
To contact the reporter on this story: Michael Greene in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
The opinion is available at http://www.bloomberglaw.com/public/document/In_Re_Cornerstone_Therapeutics_Inc_Stockholders_Litigation_2014_B.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)