Frieda H. Rabkin v. Philip A. Hunt

These consolidated class actions were filed in the Court of Chancery on behalf of the minority stockholders of Philip A. Hunt Chemical Corporation (Hunt), challenging the merger of Hunt with its majority stockholder, Olin Corporation (Olin). For the first time since our decision in Weinberger v. UOP, Inc., Del. Supr., 457 A.2d 701 (1983), we examine the exclusivity of the appraisal remedy in a cash-out merger where questions of procedural unfairness having a reasonable bearing on substantial issues affecting the price being offered are the essential bases of the suit. The Vice Chancellor ordered these cases dismissed on the ground that absent deception Weinberger mandated appraisal as the only remedy available to the minority. The plaintiffs sought and were denied leave to amend their complaints. They appeal these rulings. In our view, the holding in Weinberger is broader than the scope accorded it by the trial court. The plaintiffs have charged, and by their proposed amended complaints contend, that the merger does not meet the entire fairness standard required by Weinberger. They aver specific acts of unfair dealing constituting breaches of fiduciary duties which is true may have substantially affected the offering price. These allegations, unrelated to judgmental factors of valuation, should survive a motion to dismiss. Accordingly, the decision of the Court of Chancery is reversed, and the matter is remanded with instructions that the plaintiffs be permitted to amend their complaints.