## Facts

- David H. Murdock, Dole’s chairman/CEO and ~40% stockholder, proposed a 2013 going-private merger to acquire the remaining shares.
- The merger was conditioned from the outset on (i) approval by an independent special committee and (ii) a majority-of-the-unaffiliated-stockholders vote.
- The special committee was found independent, acted with integrity, and used effective legal and financial advisors; it negotiated an increase in price from $12.00 to $13.50 per share.
- C. Michael Carter (COO, general counsel, and director) acted as Murdock’s principal lieutenant and controlled key information flows during the process.
- Before and during the sale process, Carter issued understated earnings guidance and cancelled a stock repurchase program in ways the court found were intended to depress Dole’s market price.
- When asked for projections, Carter provided the committee with deliberately pessimistic forecasts that understated expected gains from initiatives and acquisitions, while giving lenders more favorable information and projections in a meeting that contravened the committee’s directions.
- Approximately 50.9% of unaffiliated stockholders approved the deal; the merger closed at $13.50 per share.
- Former public stockholders brought fiduciary duty class claims challenging the merger; appraisal proceedings were coordinated alongside the class action.

## Issues

1. Whether the transaction received business-judgment review under a controller-transaction framework using an independent committee and majority-of-the-minority vote, or instead remained subject to entire fairness due to misconduct.
2. Whether Murdock and Carter breached duties of loyalty and disclosure by intentionally manipulating market conditions and providing misleading information to the committee and stockholders.
3. Whether an unaffiliated-stockholder vote and an arguably fair deal price could cleanse fraud and disloyal conduct in a controller-led freeze-out.
4. What damages remedy was appropriate, including whether liability should be joint and several and whether stockholders were entitled to a “fairer price” than the merger consideration.

## Decision

- The court applied entire fairness review and held Murdock (as de facto controller) and Carter liable for breaches of fiduciary duty based on intentional, bad-faith misconduct.
- The court held that dual protections (independent committee and majority-of-the-minority vote) did not justify business-judgment deference because deception and disloyal conduct undermined the effectiveness of those protections and prevented a fully informed stockholder vote.
- Although the $13.50 price was found arguably within a range of fairness, the court awarded damages reflecting the difference between the deal price and the price that would have resulted from an untainted process.
- The court awarded $2.74 per share (approximately a 20.4% increase over the merger price), totaling more than $148 million, jointly and severally against Murdock and Carter.

## Legal Principles

- A controller squeeze-out conditioned ab initio on approval by an independent special committee and a majority-of-the-minority vote receives business-judgment review only if those protections operate without material deception or disloyal conduct.
- Under entire fairness, both fair dealing (process) and fair price are examined; serious process manipulation and informational misconduct can support monetary relief even if the deal price falls within a range of fairness.
- A stockholder vote cannot cleanse a controller transaction when the vote is not fully informed due to material misstatements, omissions, or manipulated disclosures.
- Corporate officers who knowingly participate in a controller’s wrongful scheme, including by supplying distorted projections or undermining committee authority, may be held liable, including on a joint-and-several basis with the controller.

## Conclusion

The court held that a controller-led freeze-out structured with committee and minority-vote protections still fails to obtain business-judgment deference when the controller and a key officer intentionally distort disclosures and the sale context, and it awarded stockholders a “fairer price” in damages for the value suppressed by that misconduct.


In re Dole Food Co., Inc. Stockholder Litig., 2015 WL 5052214 (Del. Ch. Aug. 27, 2015)