Delaware Vice Chancellor Travis Laster versus Corwin Cleansing

Corwin cleansing is a corporate law doctrine providing that:

the “business judgment rule is invoked as the appropriate standard of review for a post-closing damages action when a merger that is not subject to the entire fairness standard of review has been approved by a fully informed, uncoerced majority of the disinterested stockholders.”¹³ The Corwin doctrine is premised on the view that, “[w]hen the real parties in interest—the disinterested equity owners—can easily protect themselves at the ballot box by simply voting no, the utility of a litigation-intrusive standard of review promises more costs to stockholders in the form of litigation rents and inhibitions on risk-taking than it promises in terms of benefits to them.”¹⁴ The same is true of stockholders deciding whether to tender their shares, and the Corwin doctrine has been extended to these circumstances.

Morrison v. Berry, 191 A.3d 268, 274 (Del. 2018).

I was reading a new opinion by Delaware Vice Chancellor Travis Laster today (Goldstein v. Denner, CA No 2020-1061-JTL (May 26, 2022), in which VC Laster held that defendants were not entitled to Corwin cleansing. 

As I was reading, it occurred to me that I could not remember a Laster opinion finding that defendants were entitled to Corwin cleansing. Having a little time on my hands, I did a Westlaw search. I found 4 other cases in which Laster addresses Corwin cleansing defenses.

1. In re Columbia Pipeline Group, Inc., CV 2018-0484-JTL, 2021 WL 772562, at *36 (Del. Ch. Mar. 1, 2021)
2. Firefighters' Pension System of City of Kansas City, Missouri Tr. v. Presidio, Inc., 251 A.3d 212, 263 (Del. Ch. 2021)
3. In re PLX Tech. Inc. Stockholders Litig., CV 9880-VCL, 2018 WL 5018535, at *39 (Del. Ch. Oct. 16, 2018), aff'd, 211 A.3d 137 (Del. 2019)
4. Voigt v. Metcalf, CV 2018-0828-JTL, 2020 WL 614999, at *10 (Del. Ch. Feb. 10, 2020)

In every one of them, he found that defendants were not entitled to Corwin cleansing.

In sum, defendants are 0-5 in VC Laster's court on Corwin cleansing. Granted, it's a small sample. But I still find it rather curious.

One possible explanation is that cases in which Corwin cleansing is available are easier to dispose of and end up getting dismissed using oral bench opinions. In which case, the sample is simply a selection bias issue.