The recent Delaware Chancery Court decision finding that Elon Musk didn’t breach his fiduciary duty or improperly influence the Tesla board to accept an overpriced buyout in its 2016 acquisition of SolarCity was interesting for more than just the players.
Corporate transactions lawyers may find several practical lessons about the “entire fairness” standard in Vice Chancellor Joseph Slights’s 132-page decision.
In breach of fiduciary duty claims involving business transactions, the standard of review applied by the court often is outcome-determinative. Plaintiffs generally lose when the business judgment rule applies and win when the more strict “entire fairness” review standard is ...