Cinerama v. Technicolor: The Anticlimax

Corporate law's version of Jarndyce v. Jarndyce - Cede & Co. v. Technicolor, Inc. (a.k.a., Cinerama, Inc. v. Technicolor, Inc.) - has dragged on for over two decades. Technicolor got bought out in a going private transaction in which Technicolor's shareholders got $23 per share. Plaintiffs claimed that $23 was too little and sued. The resulting litigation featured five remands from the Delaware Supreme Court to the Chancery Court, two full trials, and countless judicial opinions. The case generated one of the worst Delaware Supreme Court opinions in history - Cede & Co. v. Technicolor, Inc., 634 A.2d 345 (Del. 1993), in which the court eviscerated the business judgment rule (see my article The Business Judgment Rule as Abstention Doctrine). The legal fees must amount to zillions by now. After all of which, the Delaware chancery court has finally awarded the plaintiffs the whopping sum of $4.6 million, which works out to a measly 22 cents per share. And people wonder why I'm such a skeptic of shareholder litigation.