No, the leaders did not do their job properly. Selling a company is a massive decision. The board was shockingly careless—they rushed the decision in a two-hour meeting, didn't ask how the CEO came up with the price, didn't ask for any reports on the company's true value, and didn't even read the contract. This is like a doctor deciding to do major surgery after a 20-minute chat without looking at any X-rays. Because they were so careless, they can't be protected by the 'bosses know best' rule and can be held responsible for their bad decision-making process.

Yes, they did their job just fine. These leaders were all incredibly smart and experienced business people who knew the company inside and out. They didn't need a stack of reports to know a good deal when they saw one. The court is just acting like a backseat driver, second-guessing experts who have to make decisions in a fast-paced world.

Yes, their decision should be protected. Looking at everything that happened, the leaders acted reasonably. They also told the owners everything they needed to know. The lower court got it right the first time.

The directors didn't do their duty to carefully study important facts before saying yes to the merger. They messed up by (1) not finding out enough about Van Gorkom's role in picking the $55 price; (2) not learning the real value of the company; and (3) approving the sale too fast without enough info or an emergency. Their attempts to change the deal and look for other buyers later didn't fix the problem. They also hid important facts from shareholders before the vote. So the rule protecting careful director choices doesn't apply here, and the Court has to decide if the deal was fair.

The main opinion is unfair and only looks at the bad stuff, not the good. The Trans Union directors were very qualified and knew a ton about the company. They weren't sloppy in saying yes to the merger. They got the deal changed so they could take a better offer if one came. They then looked for other buyers to check if the price was fair, and it was an okay way to do that even if not perfect. The voting info given to shareholders was good enough. Overall, the rule protecting careful business decisions should apply to the directors here.

Looking at the whole record and the review rules, there's enough to say the directors' actions are protected by the rule for careful business decisions. The record also shows the directors were fully honest as required by Delaware law. So the lower court's ruling should stand.

Trans Union's directors didn't do their duty to carefully study important facts before agreeing to the merger. They failed by (1) not finding out enough about Van Gorkom's role in picking the $55 price; (2) not learning the real value of the company; and (3) approving the sale too fast without enough info or an emergency. Their attempts to change the deal and look for other buyers later didn't fix the problem. They also hid important facts from shareholders before the vote. Therefore, the rule protecting careful director choices doesn't apply here, and we have to decide if the deal was fair.

No, the Trans Union directors did not break their duty to be careful by not fully looking into important facts before approving the merger deal with Pritzker, so they should get protection from the rule that protects careful director decisions. The main opinion is unfair and only looks at the bad stuff, not the good. The Trans Union directors were very qualified and knew a ton about the company. They weren't sloppy in saying yes to the merger. They got the deal changed so they could take a better offer if one came. They then looked for other buyers to check if the price was fair, and it was an okay way to do that even if not perfect. The voting info given to shareholders was good enough. Overall, the rule protecting careful business decisions should apply to the directors here.

Upon reviewing the whole record and the applicable standards, the directors' actions are protected by the rule for careful business decisions. The record also shows the directors were fully honest as required by Delaware law. Therefore, the lower court's ruling should stand.

The business judgment rule "is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

Corporate directors owe their corporation a fiduciary duty to make informed decisions—a duty which imposes upon them an affirmative responsibility to "protect [the shareholders'] interests and to proceed with a critical eye."

—the Delaware Supreme Court held that the directors of Trans Union Corporation breached their fiduciary duty of care by approving a merger without adequate information on the fairness of the merger price.

We do not imply that an outside valuation study is essential to support an informed business judgment, nor do we state that fairness opinions by independent investment bankers are required as a matter of law

In addition to any contractual limitations upon fiduciary duties that the members of an LLC might agree upon, the business judgment rule protects directors from spurious claims against their exercise of discretion in an effort to "promote the full and free exercise of the managerial power granted to Delaware directors."

The duty of care requires that directors inform themselves, before making a business decision, of all the material information reasonably available to them

We think the concept of gross negligence is also the proper standard for determining whether a business judgment reached by a board of directors was an informed one

—directors did not make an informed decision and thus had no business judgment rule defense when they approved a merger hastily in a two-hour special board meeting without the board having had time to consider the intrinsic value of the corporation' s stock.

Recent developments in Delaware State corporation law suggest, for example, that its courts are increasingly willing to impose liability on corporate fiduciaries for omissions, that is, for failure to act in the face of an affirmative duty to do so

They were not tools designed with post-closing money damages claims in mind, the standards they articulate do not match the gross negligence standard for director due care liability under Van Gorkom

No. The business judgment rule does not protect the board's decision because it was not the product of an informed judgment. Directors have an affirmative fiduciary duty to protect the financial interests of the corporation and its stockholders, which requires them to act on an informed basis. The Trans Union board was grossly negligent in approving the sale of the company after only two hours of consideration, without prior notice and without any information on the intrinsic value of the company other than the CEO's representations. The directors did not know how Van Gorkom arrived at the $55 price, failed to request any valuation study, and approved the merger without ever reading the agreement. Their subsequent actions, including amendments to the agreement, did not cure this fundamental failure to reach an informed decision on September 20. Therefore, the board breached its duty of care.

Yes. The business judgment rule should protect the board's decision. The majority opinion unfairly second-guesses the actions of a highly qualified and experienced board of directors. These directors were intimately familiar with Trans Union's business, its financial position, and its underlying problems with tax credits. Their collective business acumen and knowledge of the company provided a sufficient basis for them to make an informed, on-the-spot judgment. The board secured the right to accept a better offer, commissioned a market test, and ultimately the shareholders approved the deal, all of which supports the conclusion that their decision was reasonable and made with due care.

Yes. The business judgment rule should protect the board's actions. The record, taken as a whole, supports the conclusion that the directors' actions were protected by the business judgment rule. Furthermore, the directors acted with the complete candor required by law when communicating with the shareholders. The judgment of the lower court should have been affirmed.

The directors breached their fiduciary duty of care by failing to adequately inform themselves of Trans Union's intrinsic value and the fairness of the $55 per share price before approving the merger agreement. The board's decision was not the product of an informed business judgment because (1) the directors did not adequately inform themselves as to Van Gorkom's role in setting the $55 price; (2) they were uninformed as to the intrinsic value of the company; and (3) they approved the sale after only two hours of consideration, without prior notice, and without the exigency of a crisis. The directors' subsequent efforts to amend the agreement and test the market were ineffectual. They also failed to disclose all material information to shareholders before the vote. Therefore, the business judgment rule does not protect the directors here, and the Court must conduct a fairness analysis.

The majority opinion unfairly emphasizes only the negative aspects of this case and fails to give credit to the positive. The Trans Union directors were highly qualified and well-informed about the company's affairs. They did not act in a grossly negligent manner in approving the merger. The board secured important changes to the merger agreement that allowed them to accept a superior offer. They then conducted a market test which, although imperfect, was a reasonable way to confirm the fairness of the price. The proxy materials adequately informed shareholders under the circumstances. Overall, the directors' actions should be protected by the business judgment rule.

Considering the standard and scope of review, the record as a whole supports a conclusion that the directors' actions are protected by the business judgment rule. The record also supports a conclusion that the directors acted with the complete candor required by Delaware law. Therefore, the judgment of the Court of Chancery should be affirmed.

We hold that the directors breached their fiduciary duty of care by failing to adequately inform themselves of Trans Union's intrinsic value and the fairness of the $55 per share price before approving the merger agreement. The decision was not the product of an informed business judgment because (1) the directors did not adequately inform themselves as to Van Gorkom's role in setting the $55 price; (2) they were uninformed as to the intrinsic value of the company; and (3) they approved the sale after only two hours of consideration, without prior notice, and without the exigency of a crisis. The directors' subsequent efforts to amend the agreement and test the market were ineffectual. They also failed to disclose all material information to shareholders before the vote. Therefore, the business judgment rule does not protect the directors here, and we must conduct a fairness analysis.

I disagree with the majority's emphasis on only the negative aspects of this case and their failure to give credit to the positive. The Trans Union directors were highly qualified and well-informed about the company's affairs. They did not act in a grossly negligent manner in approving the merger. The board secured important changes to the merger agreement that allowed them to accept a superior offer. They then conducted a market test which, although imperfect, was a reasonable way to confirm the fairness of the price. The proxy materials adequately informed shareholders under the circumstances. Overall, the directors' actions should be protected by the business judgment rule.

I conclude that, considering the standard and scope of review, the record as a whole supports the conclusion that the directors' actions are protected by the business judgment rule. The record also supports the conclusion that the directors acted with the complete candor required by Delaware law. Therefore, I would affirm the judgment of the Court of Chancery.

Smith v. Van Gorkom

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