The Delaware Court of Chancery issued a post-trial opinion on August 27, 2015, finding Dole Food Co. Inc. CEO David Murdock and general counsel C. Michael Carter liable for $148 million in damages as a result of their conduct in connection with a 2013 transaction in which Murdock—then Dole's 40 percent shareholder, chairman, CEO, and "de facto controller"—acquired all of the company's common stock. Vice Chancellor Laster found that Murdock and Carter fraudulently drove down the share price and deprived the board and shareholders of information necessary to fairly consider the transaction.
Although Murdock conditioned his proposal on approval from a board committee of disinterested and independent directors and a vote in favor by a majority of the unaffiliated shares, the court, applying an entire fairness standard of review, found these steps insufficient under the circumstances, where Murdock and Carter “sought to undermine the Committee from the start.” The court held that “what the Committee could not overcome, what the shareholder vote could not cleanse, and what even an arguably fair price does not immunize, is fraud.”
The court found that Murdock and Carter took various steps to depress the share value, including suspending a share repurchase program, while Carter gave the merger committee “lowball management projections” and provided Murdock’s advisors with more positive and accurate numbers the following day. These actions “deprived the Committee of the ability to negotiate on a fully informed basis and potentially say no to the Merger.” They also “deprived the stockholders of their ability to consider the Merger on a fully informed basis and potentially vote it down.” Moreover, these acts “were not innocent or inadvertent, but rather intentional and in bad faith.”
Under the circumstances, the court found, even if the $13.50 per share transaction price was fair, the stockholders "are not limited to a fair price. They are entitled to a fairer price designed to eliminate the ability of the defendants to profit from their breaches of the duty of loyalty." As a result, the court award damages of $2.74 per share, which it noted was "conservative relative to what the evidence could support," with pre- and post-judgment interest compounded quarterly.
The court found no evidence that the remaining defendants, including Murdock's financial adviser, Deutsche Bank, were liable. The court determined that the bank was not liable for aiding and abetting because it did not knowingly particulate in the fraudulent conduct or causally contribute to damages.