Ash v. McCall

2000 WL 1370341 (2000)

From our private database of 46,100+ case briefs, written and edited by humans—never with AI.

Ash v. McCall

Delaware Court of Chancery
2000 WL 1370341 (2000)

Facts

In January 1999, McKesson Corporation and HBOC & Co. merged to form McKesson HBOC, Inc. (MergeCo). McKesson hired an expert accounting firm, DeLoitte Touche, and an expert investment bank, Bear Stearns, to conduct due diligence on HBOC and provide financial advice on the proposed transaction. The expert financial advisors reviewed HBOC’s books and records and recommended approval to the McKesson board of directors. The McKesson board then approved the merger. The board of directors of MergeCo was made up of six directors from McKesson and six directors from HBOC. A few months after the merger, MergeCo publicly issued a downward revision of its earnings for the prior three financial years to reflect material earnings overstatements by HBOC. A total of three downward adjustments were issued by MergeCo following the merger. Arlene Ash (plaintiff) was a shareholder of MergeCo and brought a derivative claim on behalf of MergeCo. The complaint alleged that McKesson’s and HBOC’s directors should have discovered the financial accounting issues during the pre-merger due-diligence process and thus had breached their duty of care by failing to inform themselves of all reasonably available information before approving the merger. The complaint did not allege, however, that the directors (1) had knowledge of any accounting issues or error in the experts’ review, (2) did not believe the experts were particularly qualified, (3) did not rely on the experts in good faith, or (4) should have detected the financial overstatements themselves because they were so obvious. Director Charles McCall (defendant) and the other director-defendants filed a motion to dismiss the claim.

Rule of Law

Issue

Holding and Reasoning (Chandler, J.)

What to do next…

  1. 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 747,000 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
  2. 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 747,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,100 briefs, keyed to 987 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.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 747,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,100 briefs - keyed to 987 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership