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Casebook Read Credits
Corporations
Resource 8 . 1 . 1
38 minutes

William B. Weinberger, Plaintiff Below, Appellant, v. UOP, Inc., et al., Defendants Below, Appellees.

Holger Spamann

This decision introduced the modern standard of review for conflicted transactions involving a controlling shareholder. We could have read it in the general Duty of Loyalty section above, but I wanted you to read it together with the next two cases.

Review questions (answer now or while reading the opinion):

  1. What is the standard of review for conflicted transactions, generally speaking?
  2. Can the controlling shareholder do anything to obtain a more favorable standard, or at least a more sympathetic application of the standard (cf. footnote 7)?
  3. How does the judicial treatment of self-dealing by a controlling shareholder compare to that of self-dealing by simple officers and directors (as described in the Duty of Loyalty section above)?

Case questions:

  1. Why did Signal do this deal? Do any of its reasons strike you as inconsistent with Signal's corporate purposes, or with Signals fiduciary duties towards UOP?
  2. What was unfair about Signal's dealing with UOP?
  3. Why did UOP's stockholder vote not shift the burden of proof?

Policy questions:

  1. Does it make sense to treat controlling shareholders more harshly than other fiduciaries?
  2. Why allow squeeze-outs at all?
  3. Is there a connection between the Delaware Supreme Court's abandonment of the business purpose test (part III) and its refinement of the standard of review, in particular a more flexible approach to valuation (part II.E)?

Check your understanding:

  1. Why does Weinberger bother bringing a fiduciary duty action? Couldn't he have obtained the same relief through appraisal, without having to prove a violation of fiduciary duty?

457 A.2d 701

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