Nemec v. Shrader

In Nemec v. Shrader (2009 WL 1204346 [Del Ch 2009], affd 991 A2d 1120 [Del 2010]) the court discussed plaintiff's allegations of breach of the fiduciary duty of loyalty. In that case, plaintiffs alleged that, by redeeming the plaintiffs' shares before selling a portion of the business to a private equity firm, the defendant directors acted to further their own economic interest, at the expense and to the detriment of plaintiffs interest, thereby breaching their fiduciary duty of loyalty to plaintiff. There, the court found that the breach of fiduciary duty cause of action should be dismissed because, inter alia, the complaint did not adequately plead facts sufficient to establish that the timing of the directors' redemption decision was not in the best interests of the company or its shareholders or that the directors failed to exercise sound and good faith business judgment.