Justice Charles Ramos
An action arose out of two transactions that ultimately permitted defendant Carl Icahn to acquire 100 percent of the defendant XO corporation’s shares and the use of its net operating losses (NOL) and separate return limitation year net operating losses for allegedly inadequate consideration. Icahn, the Chairman of the XO Board of Directors, and a director of XO, has since 2008 held at least 50 percent of its equity and voting power, and possessed and exercised the authority to appoint each member of the XO Board. Plaintiffs alleged that Icahn and others breached their fiduciary duty to the minority shareholders in consummating two self-dealing transactionsa 2008 super-sized preferred rights offering and a 2011 cash-out merger. Plaintiffs contended that the ultimate goal of the challenged transactions was to acquire the use of the XO NOLs for minimal consideration, to enable Icahn to offset his tax liability from his other companies. The court denied the parties’ motions for summary judgment, determining that plaintiffs’ allegations raised numerous triable issues of fact with respect to the conduct of the Special Committees, and as to the fairness of the terms of the challenged transactions.
