Not New: A Response to Claims About “New Control” in Control and its Discontents

“Amicus Plato, sed magis amica veritas.” In translation, “Plato is my friend, but truth is a greater friend.” That sentiment, attributed to Aristotle, captures my response to Control and its Discontents, an article by Professors Jill E. Fisch and Steven Davidoff Solomon. Both are distinguished scholars whom I respect and whose work I often cite. But productive academic engagement requires dealing forthrightly with precedent, and Discontents does not.

Discontents asserts that three recent Delaware decisions—Match, Sears Hometown, and Tornetta—marked a sea change in Delaware law by taking a novel and theoretically unjustified approach to controlling stockholders. On that premise, Discontents urges a return to what the article characterizes as traditional limits on judicial oversight of controlling stockholders. Discontents argues that Delaware courts historically (1) only applied entire fairness to controlling-stockholder freeze-outs and asset sales, (2) always exempted stockholder-level conduct by controlling stockholders (such as voting and selling) from fiduciary review, and (3) confined findings of non-majority control to stockholders with a near majority of the voting power.

The diagnosis is wrong because the history is wrong. Prior law firmly established each of the supposedly “new” approaches that Discontents identifies. Having misapprehended the old law, Discontents mischaracterizes Match, Sears Hometown, and Tornetta as departures rather than continuations. And having mischaracterized the baseline, Discontents proposes solutions that run contrary to precedent.

Entire Fairness Was Never Limited To Freeze-Outs And Asset Sales

Discontents asserts that before 2016, entire fairness applied only to controlling-stockholder freeze-outs and, with some definitional stretching, asset sales. The article identifies EZCORP (2016) as the turning point when the law changed. That is not accurate.

Two Delaware Supreme Court decisions refute the claim. Sinclair Oil (1971) applied entire fairness to a parent’s refusal to allow its subsidiary to enforce a contract against an affiliate. Nixon v. Blackwell (1993) applied entire fairness to an ESOP stock repurchase program and key-man life insurance. Neither is a freeze-out or asset sale. Discontents discusses both decisions but fails to grapple with their implications for its counterfactual assertion.

Other decisions further refute Discontents’ claim. In TWA (1988), the Delaware Supreme Court applied entire fairness to a relational contract under which a parent prevented its subsidiary from buying aircrafts from other sources. Court of Chancery decisions also applied entire fairness to services agreements, management fees, license payments, and anti-takeover statute waivers. Those are not freeze-outs or asset sales.

The trigger for entire fairness has always been a controlling stockholder conflict, not a transactional category. EZCORP did not change the law—or at least not in the manner Discontents claims.

EZCORP did address one new issue, which Discontents and others have cleverly labeled “MFW creep.” Before EZCORP, freeze-out mergers were the only transactional setting where cleansing mechanisms could foreclose entire fairness review. Non-freeze-out controller transactions lack statutory protections like Rule 13e-3 disclosures and appraisal rights, so it was far from clear that Delaware law would authorize full cleansing outside the freeze-out setting. EZCORP reduced the scope of entire fairness exposure by extending the MFW framework to non-freeze-out transactions. Rather than starting MFW creep, EZCORP continued entire fairness retreat.

The Delaware Supreme Court decided Match against that jurisprudential backdrop. Match applied the traditional test for when entire fairness applied. Match then confirmed the reduction in the traditional scope of entire fairness by extending the MFW cleansing framework to non-freeze-out transactions.

Match did not change what Discontents claims it changed. That is not a matter of interpretive disagreement about few lines in an earlier decision. It involves looking at the transactions where prior Delaware precedent applied entire fairness and describing them accurately. It is inaccurate to claim that before EZCORP and Match, Delaware case law only applied entire fairness to controlling-stockholder freeze-outs and asset sales.

Controlling Stockholders Have Long Owed Fiduciary Duties When Voting

Discontents makes a second foundational error by asserting that controlling stockholders historically (1) only owed fiduciary duties when entire fairness applied and (2) never owed duties when exercising stockholder-level rights such as voting. Discontents claims that Sears Hometown “marks the dam breaking” by holding that a controlling stockholder owed fiduciary duties when voting.

Discontents’ first claim collapses the standard of conduct into the standard of review. Whether someone is a fiduciary and what duties they owe is a function of the standard of conduct. A court uses a standard of review to determine whether a fiduciary has breached the standard of conduct. A director is a fiduciary who owes duties. Courts presumptively review director conduct under the business judgment rule. If the board lacks a disinterested and independent majority, then courts use entire fairness. A director does not only owe fiduciary duties when entire fairness applies. The same is true for a controlling stockholder. If the controlling stockholder does not face a conflict, then entire fairness does not apply. That does not mean the controlling stockholder is not a fiduciary. Discontents fails to account for this fundamental dimension of Delaware law.

Discontents’ other claim runs into a wall of precedent dating back to 1923. That was when Allied Chemical held that controlling stockholders owed fiduciary duties when voting for a sale of assets. Over the following decades, Delaware opinions extended that principle to mergers and charter amendments.

The two cases that Discontents cites for the contrary principle—Ringling Brothers (1947) and Bershad (1987)—both acknowledge that controlling stockholders can owe duties when voting. Both state that stockholders generally can vote for any reason, as long as they violate no duty owed to fellow shareholders. That statement starts with a general rule (stockholders can vote freely) followed by an exception (except when they owe duties). Discontents ignores the exception. Discontents also ignores subsequent Delaware Supreme Court cases—most notably Thorpe (1996)—which hold explicitly that controlling stockholders owe fiduciary duties when voting.

Before Sears Hometown, Delaware decisions had not tried to integrate the cases applying fiduciary duties to affirmative controlling-stockholder voting with other decisions holding that controlling stockholders could freely vote against transactions, even if the status quo benefitted them. Sears Hometown attempted to apply that precedent forthrightly by distinguishing between an affirmative change to the status quo and a defensive preservation of the status quo. Some precedent suggests that the latter is a non-fiduciary act. A better reading may be that it is a fiduciary act that is inherently fair, because minority stockholders maintain the equivalent of what they had before.

Discontents criticizes Sears Hometown for departing from the authors’ understanding of prior law. That understanding conflicts with more than a century of precedent. That again is not a matter of interpretive disagreement about a few ambiguous statements. It is a matter of looking at what cases from Allied Chemical through Thorpe consistently held, then not ignoring the exception to the general rule that Ringling Brothers and Bershad set out. It is inaccurate to claim that before Sears Hometown, Delaware case law did not treat controlling stockholders as fiduciaries when voting—at least when voting to change the status quo.

Non-Majority Control Was Always Functional

Last, Discontents claims that before Lynch (1994), the traditional test for non-majority control was “objective and binary.” For Discontents, “objective” means non-majority control turned predominantly on a single variable—voting power—and only at levels higher than the 43.3% ownership held sufficient in Lynch. “Binary” means a controlling stockholder was either a controller everywhere and always or never. Control could not be situationally specific. Discontents criticizes Tornetta for holding that Elon Musk exercised transactional control over Tesla for purposes of the decision on his compensation, despite owning just 22% of the stock.

Discontents’ specific claim that pre-1994 decisions required near-majority support at levels exceeding 43% is inaccurate. Pre-1994 Delaware decisions found or inferred control at ownership levels of 10%, 17.5%, 20%, 25%, 31%, and 32.7%. And while those decisions considered voting power, they did not treat it as the dominant criterion. Non-majority control requires a fact-specific assessment, so not every case recognized control at those levels. But enough did to disconfirm Discontents’ assertion.

Discontents’ specific claim that cases prioritized stock ownership is also inaccurate. Cases considered multiple sources of influence, including managerial roles, historical patterns of deference, and the dynamics of a given transaction.

Finally, Discontents’ specific claim about control being binary is inaccurate. Decisions like Guth (1939) and Burry Biscuit (1948) found or inferred control in the context of specific transactions,, while decisions like Puma (1971) and Kaplan (1971) found that control did not exist in the context of specific transactions. Control was not binary before 1994. It was fact-specific and situational.

Discontents’ criticisms of Tornetta ignore that history. Tornetta took a functional approach to control, consistent with longstanding precedent.

Skepticism Of Conflicts, Not Controllers

In its most expansive claim, Discontents asserts that Match, Sears Hometown, and Tornetta reveal a new and unjustified judicial hostility toward controllers. This claim differs in kind from Discontents’ assertions about prior law. Whether entire fairness applied only to freeze-outs and asset sales before 2016, whether controlling stockholders never owed duties when voting before Sears Hometown, and whether Tornetta’s functional approach to non-majority control was anomalous are questions where anyone can check the record. But even someone who gets the record right can legitimately debate the tone of more recent decisions.

Discontents principally faults recent Delaware decisions for failing to acknowledge that controllers can create value. But Delaware decisions have not missed that point. Recent opinions recognize that aligned controlling stockholders reduce agency costs and promote value. Courts only intervene when uncleansed conflicts exist. That framework is not limited to controllers. Delaware courts target conflicts, whether they involve controllers, directors, investment bankers, or plaintiffs’ counsel.

Credit Where Due

Although Discontents gets much wrong, the article deserves credit for anticipating the direction of Delaware law. In 2025, Delaware’s General Assembly enacted transactional safe harbors and a definition of “controlling stockholder” consistent with some of the positions the article advocates. The amendments do not convert the article’s errant historical claims into accurate ones. But the amendments do show that Discontents captured the practitioner zeitgeist and likely influenced the direction of the Delaware General Corporation Law.

That does not mean the debate over control is over. The safe harbor amendments establish remedial immunity for corporate fiduciaries who comply with their terms. Prior law remains relevant for aiding-and-abetting claims and for transactions that fall outside the safe harbors. The amendments also do not change the law governing LLCs, limited partnerships, or general partnerships. And the safe harbor amendments do not apply to other jurisdictions.

Scholars, commentators, and practitioners can and should continue to debate the significance of controlling stockholders, the costs and benefits of judicial oversight, and the merits of bright-line rules versus standards. But that debate should acknowledge candidly what cases have said. It should not rest on easily disconformable, ahistorical claims. Truth requires saying so.