Corwin v. British American Tobacco PLC

The Supreme Court reversed the decision of the Court of Appeals reversing the conclusion of the Business Court that British American Tobacco PLC (BAT) did not owe fiduciary duties to other Reynolds American, Inc. shareholders in the context of Reynolds’ acquisition of Lorillard, Inc. and granting BAT’s motion to dismiss, holding that the Business Court properly dismissed Plaintiff’s breach-of-fiduciary claim against BAT.BAT owned forty-two percent of the stock in Reynolds and agreed to fund a portion of the Lorillard transaction by purchasing enough of the newly acquired shares to maintain its forty-two percent ownership interest. This agreement diluted the voting power of Reynolds’ other minority shareholders, including Plaintiff. Plaintiff filed a putative class action suit on behalf of similarly situated stockholders. The Business Court granted BAT’s motion to dismiss. The Court of Appeals reversed, concluding that Plaintiff’s allegations, if true, would satisfy the actual control test as elucidated in Delaware caselaw. The Supreme Court reversed, holding that because BAT was not a majority or controlling stockholder, it did not owe fiduciary duties to the other Reynolds stockholders. View "Corwin v. British American Tobacco PLC" on Justia Law