## Facts

- Churchill Capital Corp III was formed as a SPAC and raised about $1.1 billion in its IPO, with public proceeds placed in a trust backing a $10-per-share redemption right.
- The SPAC sponsor, led by Michael Klein, obtained founder shares equal to 20% of the SPAC’s equity for a nominal price; those shares would be worthless if no business combination closed by the deadline but highly valuable if any deal closed.
- Churchill’s directors were selected by Klein and held economic interests aligned with the sponsor, creating incentives to consummate a transaction rather than liquidate.
- Churchill pursued and completed a de-SPAC merger with MultiPlan in October 2020.
- MultiPlan allegedly depended on a single customer for about 35% of revenue, and that customer was purportedly developing an in-house alternative and expected to reduce or terminate its relationship with MultiPlan.
- The proxy disclosed customer concentration in general terms and informed public stockholders they could redeem for trust value or remain invested, but it allegedly omitted the customer’s anticipated departure and related expected revenue effects.
- After closing, the stock price fell below $10, while the sponsor’s founder shares converted into common stock and allegedly generated substantial gains.
- Public stockholders sued, asserting fiduciary-duty claims against Klein, the board, and affiliated entities, plus aiding-and-abetting claims; defendants moved to dismiss.

## Issues

1. What standard of review applies to a de-SPAC merger where the sponsor and board allegedly had incentives to complete any deal and the sponsor allegedly functioned as a controller.
2. Whether plaintiffs stated a non-exculpated claim that fiduciaries breached duties by impairing public stockholders’ ability to make an informed redemption decision.
3. Whether alleged omissions about MultiPlan’s largest customer and future revenues were material to the redemption choice.
4. Whether an affiliated entity plausibly aided and abetted alleged fiduciary breaches through knowing participation in the transaction and disclosures.

## Decision

- The court largely denied the motion to dismiss.
- At the pleading stage, the court applied entire fairness based on well-pled allegations that Klein was a controller and that the sponsor and directors were conflicted.
- The court held plaintiffs reasonably alleged fiduciary breaches by issuing or causing materially misleading disclosures that undermined stockholders’ redemption rights.
- The court found the alleged omissions about the key customer’s expected shift away from MultiPlan and resulting revenue impact were plausibly material.
- The court held the aiding-and-abetting claim against an affiliated entity was adequately pled based on its alleged deep involvement and alignment with the sponsor.

## Legal Principles

- In a conflicted controller transaction, entire fairness may apply at the pleading stage when the controller is alleged to have conflicting incentives and the board is alleged to lack independence.
- In the SPAC context, public stockholders’ redemption right is a central protection; fiduciaries must provide full and fair disclosure of material information needed to decide whether to redeem or remain invested.
- Generic risk disclosures may be insufficient if defendants allegedly omit specific, known (or knowable) facts that significantly alter the company’s risk profile and valuation.
- A charter exculpation provision under 8 Del. C. § 102(b)(7) does not bar claims based on loyalty breaches, bad faith, or knowing disclosure violations.
- Aiding-and-abetting liability can be pled where a non-fiduciary is alleged to have knowingly participated in fiduciary misconduct connected to the transaction and disclosures.

## Conclusion

The court held that stockholders plausibly alleged conflicted incentives in a de-SPAC transaction warranting entire fairness review and that alleged material omissions could have impaired the informed exercise of redemption rights, permitting fiduciary-duty and related aiding-and-abetting claims to proceed past dismissal.


In re MultiPlan Corp. S’holders Litig., 268 A.3d 784 (Del. Ch. 2022)