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Leonard Loventhal Account v. Hilton Hotels Corp.

In shareholders' action to invalidate issuance of plan involving stock purchase rights, judgment in favor of defendant corporation affirmed because, under the principle of stare decisis, defendant's entitlement to implement the rights plan was not subject to challenge.

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Submitted: June 20, 2001

Appeal from Court of Chancery. AFFIRMED.

In this appeal from the Court of Chancery, we revisit the question of whether the board of directors of a Delaware corporation may unilaterally adopt a poison pill rights plan. The appellant challenged the authority of the defendant, Hilton Hotels Corporation (“Hilton”), to adopt such a plan and require its common shareholders’ adherence to its terms. The plaintiff shareholders rejected participation in the plan and thereafter commenced an action in the Court of Chancery seeking to invalidate its issuance. The Court of Chancery rejected that effort, ruling that under the principle of stare decisis, Hilton’s entitlement to implement the rights plan was not subject to challenge. We agree and affirm.

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