Allen Nixon v. Guy C. Blackwell

VEASEY, Chief Justice: In this action we review a decision of the Court of Chancery holding that the defendant directors of a closely-held corporation
breached their fiduciary duties to the plaintiffs by maintaining a discriminatory policy that unfairly favors employee stockholders
over plaintiffs. The Vice Chancellor found that the directors treated the plaintiffs unfairly by establishing an employee
stock ownership plan ("ESOP") and by purchasing key man life insurance policies to provide liquidity for defendants and other
corporate employees to enable them to sell their stock while providing no comparable liquidity for minority stockholders.
We conclude that the Court of Chancery applied erroneous legal standards and made findings of fact which were not the product
of an orderly and logical deductive reasoning process. Accordingly, we REVERSE and REMAND to the Court of Chancery for proceedings
not inconsistent with this opinion.