From our private database of 14,000+ case briefs...
Carmody v. Toll Brothers, Inc.
Delaware Court of Chancery
723 A.2d 1180 (1998)
Toll Brothers, Inc. concluded in the late 1990s that it had become an attractive takeover candidate. In June 1997, the company adopted a poison pill defense plan (the Rights Plan). Toll Brothers was not facing a specific threat, but stated that it wanted to protect its shareholders from coercive or unfair tactics that might accompany a takeover bid. The Rights Plan granted options to all shareholders that would trigger the dilution of the company’s stock if any acquiror obtained or made a tender offer to obtain 15 percent of Toll Brothers’ stock. The Rights Plan was accompanied by a dead hand provision, which stated that the Rights Plan could not be redeemed by anyone other than the current board members or their designated successors. Toll Brothers’ certificate of incorporation did provide that directors may have varying degrees of voting authority. A Toll Brothers shareholder (plaintiff) sued the company and its board members, arguing that the dead hand provision unlawfully restricted the power of future boards and was therefore invalid as ultra vires. The shareholder claimed in the alternative that the directors breached their duty of loyalty by approving the dead hand provision because it violated the Blasius rule and the Unocal test. The board members moved to dismiss the complaint for failure to state a claim.
Rule of Law
Holding and Reasoning (Jacobs, 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 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read 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. Read more about Quimbee.
Here's why 203,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 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.