Delaware Supreme Court Reaffirms Denial of Corwin Deference When Material Information Is Not Fully Disclosed

The Supreme Court of Delaware denied dismissal of a shareholder action brought against Ray Berry, the founder and former CEO of The Fresh Market, in Morrison v. Berry (July 9, 2018). A shareholder sued Berry and The Fresh Market’s board of directors, alleging that Berry cooperated with The Fresh Market’s purchaser, Apollo Management, to deceptively induce the board to sell the company. The defendants claimed Corwin deference and sought protection under the business judgment rule, but the court held that Corwin deference cannot be awarded when the defendant has not fully disclosed material facts to shareholders before they vote on the future of the corporation. The court cited its recent decision in Appel v. Berkman (February 20, 2018), where it refused to award Corwin *deference when material facts regarding meeting minutes were omitted from a recommendation statement to shareholders, and effectively reaffirmed the Chancery Court’s decision in *Lavin v. West Corporation (December 29, 2017), where it held that Corwin does not preclude shareholders from using DGCL Section 220 to inspect books and records to investigate corporate wrongdoing.