Logourl black

Malpiede v. Townson

Supreme Court of Delaware
780 A.2d 1075 (2001)


Frederick’s of Hollywood (Frederick) was the target of a bidding contest between Knightsbridge Capital Corporation (Knightsbridge) and two other suitors. After several rounds of bidding, Knightsbridge made an offer of $7.75 per share on September 6, 1997. The offer was conditioned on Frederick’s accepting strict limitations on its ability to entertain other offers. Frederick’s board unanimously accepted Knightsbridge’s terms. On September 11, 1997, Veritas, Inc. made an offer of $9 per share. Frederick’s board rejected the offer, citing the agreed-upon restrictions among other factors. Knightsbridge ultimately completed the merger and acquired Frederick. Frederick’s articles of incorporation included an exculpatory provision pursuant to Delaware General Corporation Law (DCL) § 102(b)(7). The provision shield its directors from personal liability provided they have not acted in bad faith or breached their duty of loyalty to the corporation. Disaffected Frederick shareholders (plaintiffs) sued the directors of Frederick, arguing that they breached their fiduciary duty. They asserted that one of the four directors received improper personal benefits from the transaction, and that together they improperly favored Knightsbridge over other bidders. The trial court dismissed the suit for failure to state a claim, ruling that the directors were shielded by the exculpatory provision. The shareholders appealed.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.


The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Veasey, C.J.)

The holding and reasoning section includes:

  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

Here's why 91,000 law students rely 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.
  • 12,498 briefs - keyed to 168 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.
  • Ability to tag case briefs in an outlining tool.
  • Top-notch customer support.
Start Your Free Trial Now