Blasius Industries, Inc. v. Atlas Corp.

564 A.2d 651 (1988)

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Nature of the Case

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Facts

P disclosed to the Securities Exchange Commission that it owned (with affiliates) 9.1% of D common stock. It also disclosed by a Schedule 13D that it intended to encourage management of D to consider restructuring of the Company and other transactions. It also disclosed that Ps were exploring the feasibility of obtaining control of D. D was controlled by Lubin and Delano. Under Ds' new CEO (Defendant Weaver), the goal of the company was to concentrate on its mining business and the new proposal by the Ps was not welcomed. Ps arranged a meeting, which was scheduled on 12/2/1987, with D at which they proposed for D to engage in a leveraged restructuring and distribute cash to shareholders. Five days after the meeting Lubin sent a detailed letter outlining a proposed plan. On 12/30/1987 Ps caused the registered owner of the Ds' stock to deliver a signed written consent 1) adopting a recommended plan for restructuring, 2) amending the bylaws to expand the size of the board to 15 directors instead of seven and electing eight named persons to fill newly created positions. Ds called an emergency meeting with the intention of adding one or two directors to the board. At a telephone meeting, the board voted to amend the bylaws and increase the size of the board to nine directors. Ps attacked the action as selfish and conducted in a grossly negligent manner. Ds asserted that they acted in good faith, without conflicts of interest and with due care, and therefore, there is no basis to conclude that they violated a duty of fidelity.