Under the Corwin doctrine, the business judgment rule will apply when a transaction is approved by a fully informed uncoerced vote of disinterested stockholders. In this case, a company was acquired for a mix of cash and stock. The plaintiff sued for breach of fiduciary duty alleging that the board failed to make certain disclosures to the stockholders before the merger vote. In particular, the plaintiff alleged the board failed to disclose the presence of an internal investigation into the manufacturing of one set of the acquirer’s products, and also that one of acquirer’s directors planned to resign following the merger. The Court disagreed. It reasoned there were no pleaded facts that the product that was under investigation was material to the acquirer’s business. Furthermore, the plaintiff did not plead facts supporting that the departure of one member of the acquirer’s board, who was also the CEO of one of its roughly twelve operating subsidiaries, would be a material fact to the stockholders. As a result, the Court held that the business judgment rule applied and dismissed the complaint.
