Document: Morgan v. Cash, C.A. No. 5053-VCS (Del. Ch. July 16, 2010)
Morgan, a former common shareholder of Voyence, Inc., filed a claim against EMC Corporation, the acquirer of Voyence, for aiding and abetting alleged breaches of fiduciary duties by the former Voyence board. Specifically, Morgan alleged that EMC used promises of continued employment and exploited conflicts of interest between the Voyence directors and common stockholders to gain Voyence management’s support for a low cash merger price. Because none of the consideration from the sale was distributed to Voyence’s common shareholders, Morgan believed that EMC was complicit in the board’s failure to maximize stockholder value in the sale of the Voyence. The Chancery Court granted EMC’s motion to dismiss the company from the shareholder litigation. Vice Chancellor Strine determined that allegations of modest employment packages offered to two directors, standing alone, did not suggest that the Voyence board accepted a low merger price in exchange for improper personal benefits. Additionally, the fact that Voyence directors received consideration from the sale of the corporation, and common shareholders did not, was not enough to sustain a claim of collusion between EMC and the Voyence directors. Vice Chancellor Strine stressed that “[i]t is not a status crime under Delaware law to buy an entity for a price that does not result in a payment to the selling entity’s common stockholders.”