## Facts

- The Nostalgia Network, Inc. (TNN), a financially distressed Delaware corporation, had a four-member board.
- Two directors, Sam Oolie and Morton Salkind, were substantial creditors of TNN based on personal loans to the company and also received warrants as part of certain compensation and financing arrangements.
- As TNN’s financial difficulties continued, the board initiated a sale process soliciting numerous potential acquirers; several parties submitted proposals.
- The board unanimously voted to pursue a proposal from USA Networks that was viewed at the time as offering the highest value to shareholders and included a debt restructuring component.
- Stockholders sued asserting derivative and class claims alleging self-dealing and loyalty breaches by Oolie and Salkind.
- In a prior ruling, the court granted summary judgment on all derivative claims and most class claims, leaving only a narrow class claim for further discovery: whether Oolie and Salkind, as director-creditors, steered the company toward the USA proposal to protect their creditor interests at the expense of shareholder value.
- After additional discovery, defendants moved for summary judgment on the remaining class claim; plaintiffs also attempted to press additional new theories beyond the surviving claim.

## Issues

1. Whether director-creditors breached the fiduciary duty of loyalty by influencing the board to pursue the USA proposal to protect their creditor position rather than maximize shareholder value.
2. Whether the board’s decision to pursue the USA proposal was subject to business judgment review or a more searching standard due to alleged director self-interest.
3. Whether plaintiffs could advance additional new class and derivative claims after the court had previously narrowed the case to a single surviving class claim.

## Decision

- The court granted summary judgment for defendants on the remaining class claim.
- The court held the record did not support a reasonable inference that Oolie and Salkind caused the board to pursue the USA proposal for disloyal reasons or that the decision was unfair to stockholders.
- The court applied business judgment deference because the decision was unanimously approved by a board that included two concededly disinterested directors, with no evidence they were misled, dominated, or controlled.
- The court rejected plaintiffs’ attempt to introduce additional new class and derivative theories as beyond the claims properly remaining in the case.
- The court entered judgment dismissing all claims in the amended and supplemental complaint.

## Legal Principles

- Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law; the non-movant must present specific admissible evidence, not mere allegations.
- A board decision approved by fully informed, disinterested, and independent directors is generally reviewed under the business judgment rule absent evidence of domination, deception, or bad faith affecting the approval.
- The presence of potentially interested directors does not by itself trigger a more stringent standard of review when independent directors approve the challenged decision and the record lacks evidence that their approval was tainted.
- Post-discovery efforts to expand a case beyond claims previously preserved for adjudication may be disallowed where earlier rulings narrowed the viable theories and did not authorize re-pleading.

## Conclusion

The court concluded that stockholders failed to produce evidence raising a triable loyalty claim that director-creditors steered TNN toward the USA proposal to favor themselves, and it dismissed the action in full because the challenged decision received business judgment protection and plaintiffs could not revive or add new theories at that stage.


Cooke v. Oolie, C.A. No. 11134 (Del. Ch. May 24, 2000)