## Facts

- Telxon Corporation, a Delaware company producing portable hand-held computers, faced operational problems beginning in 1989.
- Robert F. Meyerson, Telxon’s former CEO, served as board chairman and provided part-time consulting services through his wholly owned entity, Accipiter Corporation, under an agreement that assigned his work product for Telxon to Telxon.
- In 1991, Meyerson pursued pen-based computer (PBC) technology; the record was disputed as to whether the opportunity was fully disclosed to Telxon’s board, and whether any rejection was informed and corporate (as opposed to a conversation with only the CEO).
- Meyerson developed the PBC technology through his company Teletransaction, for which the PBC technology became the principal asset.
- Telxon’s board later caused Telxon to purchase a minority interest in Teletransaction and, in 1992, approved acquiring Teletransaction entirely for $17.3 million; Meyerson abstained.
- After Telxon’s CEO resigned, the Teletransaction acquisition was connected to the board’s desire to have Meyerson return as full-time CEO.
- Telxon’s directors received compensation reportedly averaging about $90,000 per year; Telxon alleged the amounts were excessive and that certain directors lacked independence due to personal/professional ties to Meyerson.
- In the Court of Chancery, directors obtained summary judgment on (i) excessive compensation claims and (ii) duty of loyalty claims (including corporate opportunity and conflicted-transaction theories); the court denied summary judgment on two duty-of-care claims.
- Because Telxon’s charter included a statutory exculpation provision for duty-of-care monetary liability, Telxon dropped the remaining duty-of-care claims to obtain a final judgment and appealed.

## Issues

1. Whether summary judgment was proper on claims that Meyerson usurped a corporate opportunity or corporate property relating to PBC technology.
2. Whether summary judgment was proper on claims that directors breached the duty of loyalty by approving Telxon’s acquisition of Teletransaction, a company owned by the board chairman, including disputes about director independence and transaction fairness.
3. Whether summary judgment was proper on claims that director compensation was excessive and implicated loyalty concerns.

## Decision

- The Delaware Supreme Court reversed the grant of summary judgment for the directors on the duty-of-loyalty/corporate-opportunity claims and the excessive compensation claims.
- The court held the record contained material factual disputes and credibility questions that could not be resolved on summary judgment.
- The case was remanded for further proceedings to resolve factual conflicts, including through trial-level factfinding.

## Legal Principles

- Summary judgment is improper when the record shows genuine disputes of material fact, particularly where credibility, motive, and incomplete documentation affect resolution of fiduciary-duty claims.
- Corporate opportunity and related invention/asset-allocation disputes require fact-intensive inquiry into disclosure, corporate decisionmaking, and whether the corporation validly rejected the opportunity through disinterested governance.
- In conflicted-controller or conflicted fiduciary transactions, questions of director independence and transaction fairness often turn on detailed evidence of relationships, process, and valuation, making paper-record resolution difficult.
- A charter-based exculpation for duty of care does not eliminate potentially actionable duty-of-loyalty theories; loyalty claims remain subject to full evidentiary testing.

## Conclusion

The Delaware Supreme Court held that unresolved factual and credibility disputes about the PBC opportunity, the Teletransaction acquisition, director independence, and alleged excessive compensation required further fact development, so summary judgment for the directors on the loyalty and compensation claims was reversed and the case remanded.


Telxon Corp. v. Meyerson, 802 A.2d 257 (Del. 2002)