No, the first judge did not make an unfair decision. The judge in the lower court has the power to decide what's fair in this situation. As long as the judge carefully thought about everything and didn't just pick a number out of a hat, a higher court won't step in. The judge's written decision shows he was careful, so we are letting his decision stand.

No, the judge didn't make a wrong choice because he thought very carefully about everything in the case before deciding. His long explanation shows he considered what would happen if he made different choices. When we look at it the way we're supposed to, we see the judge's decision wasn't random and made sense, so we'll let it stay the same.

<?xml version="1.0" encoding="utf-8"?>
<opinion type="majority">
<author id="b663-19">
  PER CURIAM:
 </author>
<p id="b663-20">
  This is a derivative action by a stockholder to enjoin his corporation, The Signal Companies, Inc., from selling all outstanding capital stock of Signal Oil &amp; Gas Company, its wholly owned subsidiary, to Burmah Oil Incorporated. In an exhaustive opinion, the Chancellor ruled that a preliminary injunction would issue restraining the sale on condition that plaintiff give security in the amount of $25 million.
  <a class="footnote" href="#fn1" id="fn1_ref">
   1
  </a>
  Del.Ch., 316 A.2d 599 (1974). The Chancellor denied plaintiff’s application for an alternative order which would have permitted the transaction to be completed upon a “hold separate” basis without requiring a bond of such large amount.
  <a class="footnote" href="#fn2" id="fn2_ref">
   2
  </a>
</p>
<p id="b664-3">
<span citation-index="1" class="star-pagination" label="620"> 
   *620
   </span>
  Plaintiff appeals on two grounds: First, the amount of security required by the Court was unreasonable, and, second, the Court should have implemented its conclusion by a hold separate order.
 </p>
<p id="b664-4">
  As the opinion of the Chancellor shows, the facts of the case are complex; but the legal issues, as we see them, are relatively plain. In making our judgment we have assumed without deciding that the issues (as to form of order and amount of security) are appealable. And we have also assumed that the Chancellor had the power to grant relief in the form of a hold separate order as plaintiff requested.
  <a class="footnote" href="#fn3" id="fn3_ref">
   3
  </a>
</p>
<p id="b664-5">
  We have concluded that the Chancellor did not abuse his discretion in refusing to issue a hold separate order or in fixing the amount of security. Cf. Data General Corp v. Digital Computer Controls, Inc., Del.Supr., 297 A.2d 437 (1972); Richard Paul, Inc. v. Union Improvement Co., Del.Supr., 33 Del.Ch. 113, 91 A.2d 49 (1952); and see Detroit Trust Co. v. Campbell River Timber Co.. 9 Cir., 98 F.2d 389 (1938). His opinion shows a careful concern for all aspects of these matters and a full weighing of their implications. Under these circumstances, his judgment was not arbitrarily made, nor was the result unreasonable.
 </p>
<p id="b664-8">
  Applying the traditional standards applicable to review of a ruling by the Court of Chancery in an appeal of the type involved here, the judgment is affirmed. Compare Daniel D. Rappa, Inc. v. Hanson, Del.Supr., 209 A.2d 163 (1965); General Foods Corporation v. Cryo-Maid, Inc., Del.Supr., 198 A.2d 681 (1964).
 </p>



<div class="footnotes"><div class="footnote" id="fn1" label="1">
<a class="footnote" href="#fn1_ref">
   1
  </a>
<p id="b663-12">
   . Chancery Rule 65(c) states:
  </p>
<blockquote id="b663-13">
   “No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. Any security given as a condition to the issuance of a restraining order shall also constitute security for any preliminary injunction subsequently issued and requiring security.”
  </blockquote>
</div><div class="footnote" id="fn2" label="2">
<a class="footnote" href="#fn2_ref">
   2
  </a>
<p id="b663-22">
   . In this context “hold separate” means, in substance, that the parties could consummate the proposed sale but each would be restrained from taking any action which would have the effect of preventing rescission (if ordered).
  </p>
</div><div class="footnote" id="fn3" label="3">
<a class="footnote" href="#fn3_ref">
   3
  </a>
<p id="b664-6">
   . Because of the time urgencies this appeal was heard on an accelerated briefing and argument schedule and a ruling was announced shortly after the hearing was completed. Under these circumstances we made the assumptions stated and considered the appeal on the issues argued.
  </p>
</div></div></opinion>

To obtain a preliminary injunction, a plaintiff must demonstrate both a reasonable probability of success on the merits and some irreparable harm which will occur absent the injunction.

In order to require shareholder approval of a sale of corporate assets under section 271 of Tit. 8 of the Delaware Corporation Code, the sale must be of assets "quantitatively vital to the operation of the corporation" and "strike at the heart of the corporate existence and purpose."

Additionally, the plaintiff must show that the harm it would suffer absent an injunction outweighs the harm to the defendant if relief is granted.

—the Chancellor, after expressly reiterating the Highland-Western Glass standard, framed the question, "Or to put the question in its legal context, did the Signal directors act without the bounds of reason and recklessly in approving the price offer of Burmah?"

For the board's actions to be outside the scope of the business judgment rule, plaintiff must prove that the board "acted so far without information that they can be said to have passed an unintelligent and unadvised judgment."

Board's decision to sell conglomerate's oil and gas holdings did not amount to sale of substantially all of corporation's assets so as to require shareholder approval, even though oil and gas business continued to be listed as corporation's principal purpose, and even though oil and gas assets were quantitatively substantial within conglomerate.

Shareholder notice and consent requirements... and dissenters' rights statutes... are intended to [e] nsure that directors do not fundamentally change the nature of the shareholders' investments without the check and balance of informed shareholder approval, and the opportunity for dissenters to withdraw from the corporation.

—was faced with a board decision to sell a corporate subsidiary for $280 million less than its alleged value.

—the court criticized the facts that (1) the "board meeting was called on only one-and-a-half days' notice" and (2) that the company's "outside directors were not notified of the

The courts do not specify a specific qualifying percentage, but emphasise the qualitative and quantitative characteristics of the transaction at issue

No, the Chancellor did not abuse their discretion. An appellate court applies a deferential standard of review to a Chancellor's rulings on preliminary relief. The Chancellor's opinion demonstrated a careful concern for all aspects of the matter and a full weighing of their implications. Under these circumstances, the judgment was not arbitrarily made, nor was the result unreasonable, and therefore it must be affirmed.

No, the Chancellor did not abuse his discretion because his decision was made with careful consideration of all aspects of the case and was not arbitrary or unreasonable. The Chancellor's opinion shows a full weighing of the implications of refusing a hold separate order and setting the security amount. Applying the traditional standards of review, the judgment is affirmed because the Chancellor's decision was within the bounds of reason and not arbitrarily made.

Gimbel v. Signal Companies, Inc.

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