In re Wheelabrator Technologies, Inc. Shareholders Litigation

Waste Management, Inc. acquired a 22% stake in Wheelabrator Technologies, Inc. (WTI) (defendant) in 1988, becoming its largest shareholder, and in 1990 the companies negotiated a merger that WTI's board and a majority of WTI's non-Waste shareholders approved. Some WTI shareholders (plaintiffs) sued, alleging the board breached its duty of loyalty because a majority of directors had conflicts of interest that prevented them from seeking the best possible value in the merger. The defendants moved for summary judgment, arguing the fully informed shareholder vote ratified the board's conduct and extinguished the loyalty claim entirely; the plaintiffs countered that the merger was an interested transaction warranting entire-fairness review, with shareholder ratification merely shifting the burden of proof to them.