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Delaware Courts and the Charade of Director Independence: Ryan v. Lyondell Chemical (It's Hard Being A Plaintiff in Delaware) (Part 2)

By J. Robert Brown

We are discussing the recent case, Ryan v. Lyondell Chemical.  In that case, the Delaware Chancery court found that the plaintiffs had alleged sufficient facts that the board violated its duties under Revlon to overcome a motion for summary judgment.  

The opinion is 73 pages long and, on the whole, managed to avoid casting aspersions at the plaintiffs, not always the case in Delaware.  Unfortunately, VC Noble couldn't stop himself.  In describring the allegations of incomplete disclosure, he noted in the opinion that most fell "woefully short of the mark."  Fair enough.  But the accompanying footnote noted the following:

• Merely rifling through the proxy statement and nitpicking undisclosed, marginally important details, as Ryan has done here (i.e. bullet point argument), without sponsoring specific reasons to support the materiality of the undisclosed information will not suffice to state a cognizable disclosure claim.  

The opinion addressed the matter in blunt language.  What did it add to accuse the plaintiffs of "nitpicking" or focusing on "marginally important details?"  Indeed, had the opinion been issued without the footnote, no legal principal would have been neglected or important point missed.  It was merely an opportunity to use pejorative language, once again in describing the role of plaintiffs. 

As usual, the opinion and some of the operative documents are on file at the DU Corporate Governance web site.  A number of the pleadings are, however, under seal.

Full post as published by The Race to the Bottom on August 18, 2008 (boomark / email).