Weinberger v. UOP, Inc. (Del 1983)

This decision introduced the modern standard of review for conflicted transactions involving a controlling shareholder. We could have read it in Chapter 4: Duty of Loyalty, but we wanted you to read it together with the next two cases.

Review questions:

1. What is the default standard of review for conflicted transactions?
2. Can the controlling shareholder do anything to obtain a more favorable standard, or at least a more sympathetic application of the standard?
3. How does the judicial treatment of self-dealing by a controlling shareholder compare to that of self-dealing by simple officers and directors (as described in Chapter 4: The Duty of Loyalty)?

Case questions:

1. Why did Signal do this deal? Do any of its reasons strike you as inconsistent with Signal's corporate purposes, or with Signals fiduciary duties towards UOP?
2. What was unfair about Signal's dealing with UOP?
3. Why did UOP's stockholder vote not shift the burden of proof?
4. Why does Weinberger bother bringing a fiduciary duty action? Couldn't he have obtained the same relief through appraisal, without having to prove a violation of fiduciary duty?

Policy questions:

1. Does it make sense to treat controlling shareholders more harshly than other fiduciaries?
2. Why allow squeeze-outs at all?
3. Is there a connection between the Delaware Supreme Court's abandonment of the business purpose test (part III) and its refinement of the standard of review, in particular a more flexible approach to valuation (part II.E)?