News Corp was sued over rights plan

• Plaintiffs alleged that News Corp contracted, or else promised, that any extension of its poison pill would be put to a shareholder vote

• Promises were made in context of News Corp seeking shareholder approval for its reincorporation in Delaware from Australia
• News Corp later adopted a rights plan without shareholder approval to address share accumulations by Liberty Media

Initial Delaware Chancery decision  Dec 2005

• Plaintiffs claimed that News' board breached its agreement

• Not to use a poison pill shareholder rights plan
• In exchange for the shareholders' voting in favor of
  News Corp's reincorporation in Delaware from Australia

• News' board argued that any such agreement was void

• Because it would unduly restrict the board's inherent duty to manage the firm per DGCL § 141(a)
• Relying on three Delaware Supreme Court decisions (Paramount, Quickturn, and Omnicare)

• Chancery didn't agree; Denied defendant's motion to dismiss

• So that plaintiffs breach of contract and
  promissory estoppel claims survived motion to dismiss
• Chancellor Chandler held that board agreements with third parties were distinguishable from agreements with all the shareholders
• December 2005 Chancery opinion

Interlocutory appeal to Supreme Court  Jan 2006

• Certified by Chancery per Supreme Court Rule 42

• January 2006 Chancery opinion

• But Delaware Supreme Court refused interlocutory appeal

• January 2006 Supreme  Court opinion

Parties settled  April 2006

• Will put rights plan to shareholder vote in October 2006
• Liberty Media challenged this settlement
• Court approves settlement subject to changes

• See Settled

Rights plan will be put to a shareholder vote in Oct 2006

• Press release 4.13.06
• Form 8-K
• Settlement stipulation

Liberty Media challenges settlement

• News item 5.16.06

Court approves settlement subject to changes

• Opinion 5.31.06

Opinion - Chandler  1.27.06

Opinion

• Rejected interlocutory appeal

Opinion - Chandler 

Background I

Interlocutory Review - Analysis II

• Two substantial legal issues II.A

• DGCL §141(a) II.A.1
• Fiduciary duties II.A.2

• Opinion established a legal right II.B
• Appeal would serve interests of justice II.C

Conclusion and Order III

Opinion - Chandler

Background I

Analysis II

• Standard on a motion to dismiss II.A
• Count I Breach of Contract II.B

• Allegations of a written agreement II.B.i
• Allegations of an oral contract II.B.ii
• Unenforceability II.B.iii
  ◊ Section 141(a) II.B.iii.a
  ◊ Paramount, QVC, and Omnicare II.B.iii.b

• Count II Promissory estoppel II.C
• Count III Fraud II.D
• Count IV Negligent misrepresentation / Equitable fraud II.E
• Count V Breach of fiduciary duty II.F

ConclusionIII

Ruling on motion to compel discovery 3.02.06

• Letter opinion

Law firms

• Morris Nichols 12.28.05
• Fried Frank 1.01.06
• Wachtell Lipton 1.20.06

Delaware General Corporation Law