“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. (more…)