Sciabacucchi v. Liberty Broadband Corp.
Delaware Court of Chancery
2017 WL 2352152 (2017)
As part of Charter's acquisition of Time Warner Cable and Bright House Networks, Charter signed two contracts with its largest shareholder, Liberty Broadband (defendant), issuing it shares and a proxy; Charter conditioned shareholder approval of the lucrative TWC and Bright House acquisitions on shareholders also approving the Liberty contracts as a package, and shareholders approved all three transactions together. Sciabacucchi (plaintiff), a Charter shareholder, sued, alleging the share issuance and proxy to Liberty breached the directors' fiduciary duties despite the shareholder vote, and the defendants moved to dismiss, arguing disinterested shareholder approval had ratified the transactions.
Whether shareholder ratification cleanses a transaction if the shareholder vote is structured in such a way that the shareholders were required to approve a self-interested transaction so as not to lose the benefit of another independent transaction.