In re Match Group, Inc. Derivative Litigation, 315 A.3d 446

Background

This appeal concerns a stockholder lawsuit challenging the fairness of IAC/InterActiveCorp's (IAC) separation from its controlled subsidiary, Match Group, Inc., via a reverse spinoff.
Plaintiffs alleged IAC, as a controlling stockholder, secured benefits for itself in the transaction at the expense of Match's minority stockholders.
The Court of Chancery dismissed the complaint, applying business judgment review because the transaction utilized both a special committee and a minority stockholder vote in accordance with the MFW framework.
The plaintiffs appealed, challenging whether the MFW framework was properly applied and if the business judgment standard was appropriate given concerns over committee independence.
The Supreme Court reversed in part, finding the special committee lacked independence and remanded for further proceedings under the entire fairness standard.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Appropriate Standard of Review in Controlling Stockholder Transaction	Entire fairness should apply unless all requirements of MFW (independent committee and minority vote) are met.	Business judgment should apply if either a special committee or minority vote is employed (not both), especially outside freeze-out mergers.	Entire fairness is presumptive unless all MFW requirements are met, even outside freeze-out mergers.
MFW Committee Independence Requirement	Every director on the special committee must be independent for MFW to apply; McInerney was conflicted and dominated negotiations.	Only a majority of the committee need be independent; any conflicts were immaterial and did not dominate the process.	All committee members must be independent for MFW to shift to business judgment review; here, McInerney's lack of independence was sufficient to retain entire fairness review.
Adequacy of Proxy Disclosures	Material information about McInerney's conflicts was not adequately disclosed to minority stockholders, making the vote uninformed.	All material information about McInerney’s affiliation was publicly disclosed or incorporated by reference; any omitted facts were immaterial.	On remand, the sufficiency of disclosures may be reconsidered in light of committee independence findings.
Derivative Standing Post-Merger	Separation was a mere reorganization, preserving right to bring derivative claims as ownership interest remained effectively the same.	Separation fundamentally changed ownership and corporate structure (not a mere reorganization), terminating standing for derivative claims.	The transaction was not a mere reorganization; no derivative standing for plaintiffs post-merger.

Key Cases Cited

Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) (sets the conditions for business judgment review to apply in controlling stockholder transactions—the MFW framework)
Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d 1110 (Del. 1994) (entire fairness is default review for controlling stockholder transactions, burden may shift if procedural protections used)
Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983) (entire fairness standard includes fair dealing and fair price analysis in conflicted transactions)
Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156 (Del. 1995) (explains burden shifting in entire fairness review)
Sinclair Oil Corp. v. Levien, 280 A.2d 717 (Del. 1971) (self-dealing by controlling stockholder requires entire fairness review)
Stone ex rel. AmSouth Bancorporation v. Ritter, 911 A.2d 362 (Del. 2006) (directors’ fiduciary duties to corporation and stockholders)
Central Mortg. Co. v. Morgan Stanley Mortg. Cap. Holdings LLC, 27 A.3d 531 (Del. 2011) (motion to dismiss standard in Delaware)
Aronson v. Lewis, 473 A.2d 805 (Del. 1984) (sets business judgment rule and circumstances for its rebuttal)
Brehm v. Eisner, 746 A.2d 244 (Del. 2000) (clarifies standard for director’s decision-making and good faith)
Marchand v. Barnhill, 212 A.3d 805 (Del. 2019) (longstanding personal/business ties may undermine director independence)
Williams v. Geier, 671 A.2d 1368 (Del. 1996) (business judgment review can apply if benefits are proportionate to all stockholders)