Triggering Delaware’s entire fairness review in stockholder litigation was once considered outcome determinate, but that view has waned. Numerous decisions have shown that defendants can overcome the unified fair process and fair price components of entire fairness review and avoid sizeable judgments. Despite a finding of liability against a controlling stockholder arising out his overreach into a committee’s process, the defense in In re Straight Path Communications Consolidated Stockholder Litigation, 2023 WL 6399095 (Del. Ch. Oct. 3, 2023) followed a well-worn path to success: proving the transaction’s fair price.

Background

A decade ago, a telecommunications firm, IDT Corp., created Straight Path Communications as a spin-off to hold certain assets. IDT’s founder and chairman, Howard Jonas, controlled both companies. During the spin-off, IDT also transferred to Straight Path certain broadcast spectrum licenses, which were considered inconsequential and were included for tax benefits.