Account v. Hilton Hotels Corp.
Delaware Supreme Court
780 A.2d 245 (2001)
Hilton Hotels Corp. (Hilton) (defendant) was a Delaware corporation that owned and managed hotels. In 1999 Hilton’s board of directors adopted a poison-pill rights plan under which a dividend of a preferred-share purchase right was automatically attached to each share of common stock. A common shareholder could purchase one one-hundredth of a share of preferred stock for $80, and if a triggering event occurred, the shareholder could purchase two shares of common stock at half price. The purpose of the plan was to place the board of directors between Hilton’s shareholders and an entity attempting to acquire Hilton, allowing the board to oppose an unwanted acquisition by diluting the acquirer’s holdings in the corporation through the rights attached to Hilton’s common stock. The Leonard Loventhal Account (the trust) owned Hilton common stock and opposed the rights plan. After the trust received a new stock certificate indicating that the rights had been attached to its Hilton stock, it filed a lawsuit in Delaware state court against Hilton seeking to invalidate the rights plan. The trust argued that the board of directors could not adopt the plan without shareholder consent and that the plan improperly altered certificates for Hilton common stock and Hilton’s certificate of incorporation, restricted the transfer of the common stock, and shielded the board against liability from claims brought under the rights plan. The chancery court dismissed the case, arguing that the trust could not challenge the rights plan. The chancery court relied on the doctrine of stare decisis for its holding, finding that such a challenge was prohibited under Moran v. Household International, Inc. The trust appealed.
Rule of Law
Holding and Reasoning (Walsh, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.