The Delaware Supreme Court’s 2015 decision in Corwin v. KKR Financial Holdings LLC1 reshaped the landscape of merger and acquisition litigation by establishing a powerful defense for Delaware companies. Under the Corwin doctrine, a transaction will not be subject to the entire fairness standard of review if it is approved by a fully informed, uncoerced majority of disinterested stockholders — the transaction is insulated by the business judgment rule, leaving only claims of waste (which rarely ever gain traction).
This high bar for stockholder-plaintiffs has made Corwin a cornerstone of Delaware corporate law. The doctrine has been applied in a number of cases in the past year, which demonstrate Corwin’s continuing vitality as a tool to dismiss post-closing fiduciary duty claims.
This article examines several cases — Anaplan, Krevlin v. Ares, Zendesk, and Desktop Metal2 — which exemplify how Delaware courts have applied Corwin to dismiss matters, and provide insights for practitioners navigating deal-related disputes. Most importantly, these cases demonstrate that, even amidst important statutory changes like newly-amended Section 144 of the Delaware General Corporation Law (which provides safe harbors for conflicted transactions), Corwin remains a potent weapon in the corporate arsenal and complements the new safe harbors with a potential, alternate route for dismissal.
Anaplan: The Delaware Supreme Court Unanimously Approves a Corwin Dismissal
On June 21, 2024, the Delaware Court of Chancery dismissed all claims against the former officers and directors of Anaplan, Inc. in a case arising from Anaplan’s $10.4 billion acquisition by Thoma Bravo. The plaintiff sought damages for the stockholder class, alleging that revisions to the merger agreement, prompted by a disagreement that lowered the merger price, breached fiduciary duties.
Anaplan issued an extensive 11-page supplemental proxy disclosure that set forth the background that led to the lower merger price, along with summaries of the Anaplan board’s reasons for accepting the reduced price. The defendants moved to dismiss, arguing that the claim was derivative, that the plaintiff failed to plead a viable Revlon claim or challenge the full board’s decision to approve the revised merger, and — in light of the significant additional disclosure — that the Corwin doctrine warranted dismissal.
Vice Chancellor Nathan Cook relied exclusively on Corwin to dismiss the claims, finding that the stockholder vote approving the merger was fully informed and free from situational or structural coercion. The court further held that the plaintiff failed to plead waste in connection with the board’s decision to renegotiate the merger agreement rather than pursue costly and uncertain litigation to enforce the original terms. Notably, the court stated that, “it is not at all clear to me that the correct response [to this case] is to open a new route for director and officer liability.”
On appeal to the Delaware Supreme Court, the plaintiffs argued that Corwin could not apply since the stockholders were not specifically asked to release claims related to the alleged breach of fiduciary duties. Anaplan argued that the plaintiffs themselves acknowledged that the purported breaches were “part and parcel to the merger process,” and the plaintiffs had abandoned any disclosure argument. Even so, the defendants argued, Corwin was fully complied with because the stockholders were fully informed and not coerced.
The plaintiffs also challenged the Corwin doctrine itself, suggesting that such a strong defense was no longer needed or viable. Anaplan pushed back, arguing that the plaintiffs challenge to Corwin failed to “raise any compelling argument to alter Corwin” and, based on Corwin’s “laudable policy goals that benefit Delaware corporations,” contended it would “be a mistake” to alter Corwin. Ultimately, the Delaware Supreme Court, sitting en banc, agreed by unanimously affirming the dismissal and the Corwin doctrine.
The Court of Chancery Rejects Several Merger Complaints Under the Corwin Doctrine
Around the same time as the Anaplan Supreme Court ruling, a number of cases in the Court of Chancery resulted in Corwin dismissals, furthering the doctrine’s momentum. In Krevlin v. Ares, a stockholder challenged the sale of Smart & Final Stores, Inc. (S&F) to Apollo Global, alleging that the transaction was a conflicted controller transaction tainted by the private equity firm Ares’ undisclosed, liquidity-driven conflicts. The plaintiff claimed that Ares, as S&F’s controller, was in “harvest mode” due to the lifecycle of a private equity fund and that the merger proxy omitted material information. The plaintiff sued the S&F board and Ares for breach of fiduciary duty and two financial advisors for aiding and abetting, asserting that these deficiencies precluded Corwin cleansing.
Chancellor Kathaleen McCormick granted the defendants’ motion to dismiss, relying on Corwin. First, the court rejected the plaintiff’s argument that the entire fairness standard applied, finding that the merger was not a conflicted controller transaction. The court reiterated Delaware’s skepticism about liquidity-based conflict theories, noting that “when a fiduciary owns a material amount of common stock, that interest gives the fiduciary a ‘motivation to seek the highest price’ and a ‘personal incentive… to think about the trade off between selling now and the risks of not doing so.’”
The court also dismissed the plaintiff’s “grab-bag” of disclosure claims, including allegations regarding Ares’ liquidity-driven motives, management’s continued employment and S&F’s financial projections. Finding that the stockholder vote was fully informed and uncoerced, the court applied the business judgment rule under Corwin and dismissed the claims without addressing the defendants’ additional arguments.
Similarly, Vice Chancellor J. Travis Laster granted a Corwin-based dismissal of claims challenging the sale of Zendesk to a private equity consortium for $77.50 per share. The plaintiffs alleged a “paradigmatic Revlon claim,” asserting that Zendesk’s CEO, fearing job loss in an activist proxy fight, improperly influenced the board — a majority of whom were concededly disinterested and independent — to approve the sale.3 The defendants countered that Corwin barred the claims, as the stockholder vote was fully informed and uncoerced.
The plaintiffs attempted to avoid Corwin by alleging three disclosure deficiencies: (1) the activist’s impact on the sale process, (2) upside financial projections, and (3) purported financial advisor conflicts. In a summary order, the court rejected these claims, finding that the disclosures contained no material misstatements or omissions. With the stockholder vote deemed fully informed, the court applied the business judgment rule under Corwin and dismissed the claims, reinforcing the doctrine’s ability to shield directors from speculative fiduciary duty challenges.
Desktop Metal: Upholding Arm’s-Length Transactions
Vice Chancellor Lori Will also had the opportunity to address Corwin in Desktop Metal, which involved a challenge to an arm’s-length, third-party merger between Desktop Metal and ExOne, where ExOne was acquired for a mix of cash and stock at a 47% premium. An ExOne stockholder sued, arguing that the board should have postponed the stockholder vote to conduct additional diligence and make supplemental disclosures regarding two issues: (1) Desktop Metal’s disclosure, on the eve of the vote, of an internal investigation prompted by a whistleblower complaint about manufacturing and product compliance at a subsidiary, and (2) the resignation of the subsidiary’s CEO from both the subsidiary and Desktop Metal’s board.
The Court dismissed the claims under Corwin and the aiding-and-abetting claims for lack of a predicate breach. The Court found no facts suggesting that the product subject to the internal investigation was material to Desktop’s business or the merger vote, or that the CEO’s resignation required additional disclosure. With ExOne’s board being disinterested and independent, no controlling stockholder present and a majority of stockholders approving the merger, the court held that the fully informed, uncoerced vote triggered the business judgment rule, insulating the transaction from challenge.
Key Points
All of these cases, issued within a short period of time nearly a decade after the Corwin decision, illustrate the doctrine’s continued potency as a merger-related defense. These cases also provide certain nuances in how the court approaches these issues.
- Robust disclosure claim requirements. Courts closely scrutinize disclosure claims, with the burden on plaintiffs to identify material misstatements or omissions. Vague or speculative allegations, such as those in Krevlin and Zendesk, are unlikely to defeat Corwin cleansing.
- Skepticism of conflict theories. Delaware courts remain reluctant to credit liquidity-driven or other speculative conflict theories, as seen in Krevlin, particularly when directors or controllers receive pro rata consideration aligned with other stockholders.
- High bar for waste. The Anaplan decision underscores Delaware’s high threshold for pleading waste, a threshold rarely met when boards make reasoned decisions to avoid risky litigation or other uncertainties, especially when paired with a significant premium.
- Applicability to arm’s-length transactions. Anaplan and Desktop Metal both confirm that Corwin applies robustly to arm’s-length deals, even when late-breaking developments arise that affect stock prices or merger price adjustments, provided disclosures are adequate and the vote is uncoerced.
Former associate Grace Platt assisted in preparation of this article.
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1 125 A.3d 304, 308–14 (Del. 2015).
2 In re Anaplan, Inc. S’holders Litig., 2025 WL 369753, at 1 (Del. Feb. 3, 2025) (Table), aff’g, 2024 WL 3086013 (Del. Ch. June 21, 2024), and 2024 WL 3160955 (Del. Ch. June 24, 2024); Krevlin v. Ares Corp. Opportunities Fund III, L.P., 2025 WL 395035 (Del. Ch. Feb. 3, 2025); Amethyst Arbitrage Int’l Master Fund v. Svane, C.A. No. 2023-1139-JTL, at 79 (Del. Ch. Jan. 22, 2025) (Transcript) (Zendesk); and Campanella v. Rockwell, 2025 WL 519554, at 10 (Del. Ch. Feb. 18, 2025) (Desktop Metal).
3 Amethyst Arbitrage, C.A. No. 2023-1139-JTL, at 6, 57.
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