In Re Cornerstone Theraputics, Inc., 115 A.3d 1173

Two consolidated appeals (Zhongpin and Cornerstone) challenge motions to dismiss by independent directors in controller going-private mergers where entire fairness presumptively applied.
In both cases special committees negotiated the deals and the transactions were approved by a majority of the minority; plaintiffs nevertheless alleged unfairness to minority stockholders and sued controlling stockholders, affiliated directors, and independent directors.
The companies’ charters contained 8 Del. C. § 102(b)(7) exculpatory provisions shielding directors from monetary liability for duty-of-care breaches; plaintiffs sought only monetary damages.
The Court of Chancery denied independent directors’ motions to dismiss, reasoning plaintiffs’ pleading of entire fairness as to interested parties required keeping independent directors as defendants (relying on portions of the Emerald Partners opinions).
The Delaware Supreme Court granted interlocutory review to decide whether plaintiffs must plead non-exculpated claims against independent, exculpated directors to survive a motion to dismiss.
The Supreme Court held that plaintiffs seeking only monetary damages must plead non-exculpated duty-of-loyalty or bad-faith claims against each independent director protected by § 102(b)(7); otherwise those directors must be dismissed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a plaintiff challenging a controller transaction subject to entire fairness may avoid pleading non-exculpated claims against independent directors protected by § 102(b)(7) at the pleading stage	Entire fairness for the transaction means independent directors must remain defendants until liability/entire fairness is resolved (Emerald II language)	Plaintiffs must plead non-exculpated claims (loyalty or bad faith) against each exculpated director or those directors are entitled to dismissal (Malpiede line)	Held for defendants: plaintiffs must plead non-exculpated loyalty or bad-faith claims against each independent director protected by § 102(b)(7) to survive dismissal; mere pleading that entire fairness applies as to interested parties is insufficient

Malpiede v. Townson, 780 A.2d 1075 (Del. 2001) (plaintiff must plead non‑exculpated loyalty or bad‑faith claims against individual directors to overcome § 102(b)(7) at pleading stage)
Emerald Partners v. Berlin, 726 A.2d 1215 (Del. 1999) (contextual discussion of intertwined loyalty and disclosure issues precluding § 102(b)(7) dismissal)
Emerald Partners v. Berlin, 787 A.2d 85 (Del. 2001) (clarifies that where viable non‑exculpated loyalty claims exist, § 102(b)(7) may not resolve entitlement to damages before trial)
Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) (describes safe-harbor special-committee/majority-of-the-minority framework for business judgment rule in controller mergers)
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) (defines enhanced scrutiny when board’s role shifts to sale of control)
Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (standards for director defensive measures and judicial review)
Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983) (entire fairness standard and burden on interested fiduciaries)