Frank Reynolds, who has been covering Delaware corporate decisions for various national publications for over 35 years, prepared this article.

Vice Chancellor Travis Laster recently denied the TripAdvisor Inc. directors’ request for a quick appeal of his decision one month earlier to let shareholders press their charge that the board’s charter change move to Nevada robs them of litigation rights in a self-interested transaction that fails the exacting entire fairness standard. Palkon et. al. v. Maffei  et. al., No. 2023-0449-JTL  opinion issued (Del. Ch. Mar. 21, 2024).

The Chancery Court’s interlocutory appeal decision found no motive for the reincorporation move other than insulation of directors and officers and no attempt at bargaining or investor compensation for Nevada’s increased litigation shielding.  He said trial could reveal whether post-move changes in stock price support the plaintiffs’ claim that their shares would lose value while insiders benefited.

The appeal opinion is recommended reading for corporate law specialists in that it applies the Supreme Court Rule 42 interlocutory appeal certification requirements to the novel issue of fiduciary duties in a reincorporation into any entity with different shareholder rights.  Vice Chancellor Laster explained in detail why he rebuffed each of the grounds the defendants submitted as justifications for immediate review.


Gregory B. Maffei, the CEO, Chairman and controlling shareholder of TripAdvisor which operates the world’s largest travel guidance platform, consulted his directors and lawyers  to produce a plan to reincorporate in Nevada to better protect the officers and directors under that state’s corporate law.  Shareholders sued, charging breach of fiduciary duty and defendants moved to dismiss.

The Feb.20 dismissal denial

Vice Chancellor Laster found that the unaffiliated stockholders’ voting pattern “supports an inference of unfairness”. Just as an informed vote by unaffiliated stockholders in favor of a conflicted transaction is evidence of fairness, an informed vote by unaffiliated stockholders against a conflicted transaction suggests unfairness, he said, noting that, “Here, the unaffiliated stockholders resoundingly rejected the conversions.” Palkon et. al. v. Maffei  et. al., No. 2023-0449-JTL  opinion issued (Del. Ch. Feb. 20, 2024).

The appeal

Vice Chancellor Laster examined the defendant’s grounds and found none sufficient.

Does the opinion involve an issue of first impression?

Defendants assert that “no other Delaware court has addressed whether and under what circumstances a company’s move to a state affording some greater litigation protection for potential future cases based on hypothetical future facts constitutes a non-ratable benefit material enough to trigger entire fairness review.”

But the vice chancellor said, “The application of entire fairness to an interested merger is not a novel issue. Nor is the application of entire fairness to a merger that confers litigation protections on the fiduciary defendants who approved it.”  He added that, “The Opinion also did not address a new issue by focusing on the materiality of a reduction in the litigation risk. Using a materiality standard to evaluate interestedness is not novel.”

Would a high court review resolve a conflict among the courts?

Defendants argued that “[t]he decisions of the trial courts are conflicting upon the question of law.” But the vice chancellor said, “Whether the  cases conflict depends how one interprets prior cases. On balance, this factor does not support interlocutory review.

Would review end the case and serve justice?

As their final basis for interlocutory appeal, the defendants invoke two factors

together: factor (G), which asks whether “[r]eview of the interlocutory order may

terminate the litigation,” and factor (H), which asks whether “[r]eview of the

interlocutory order may serve considerations of justice.” That combination does not

support interlocutory review.

The possibility that a reversal could save litigation costs “is not unique to [this] application and would otherwise warrant certification after nearly every trial court decision even in cases lacking ‘exceptional’ circumstance,”  the Vice Chancellor ruled, “Moreover, for reasons discussed previously, this matter is likely to require relatively less extensive litigation efforts than other entire fairness cases.”

“Not invited” to weigh Musk influence?

However, as to the appellants’ assertion that the Opinion decided a substantial issue thereby subtly alluding to the disproportionate media attention given to the Opinion because  “thousands of other Delaware corporations . . . need certainty as to the rules that apply to a decision to reincorporate in another jurisdiction,” the vice chancellor said that alluded to the attention the Feb. 20 opinion received after Elon Musk’s high-profile comments about “forsaking Delaware” following his loss in an unrelated decision in the Chancery Court.

“Rule 42 does not invite a trial court to consider the level of media attention that a decision has received. That does not mean that the Delaware Supreme Court could not consider it.” he said.

Not about Nevada
Finally, the vice chancellor noted that “ nothing about the ruling turns on anything about Nevada as a state. ” If the Company was converting into a Delaware LLC and paralleled Nevada law, then the outcome would be the same, he said. “The allegations about the substance of the post-conversion legal framework generate the result, not whether it was created by Nevada legislators or Delaware lawyers.”

“This is not a case where the interests of justice require early stage intervention

by the Delaware Supreme Court,” the vice chancellor concluded. It is a case where the differences between Delaware law and Nevada law have been explored. However, he noted that this certification review ruling is only a recommendation to the Delaware Supreme Court—which makes up its own mind about whether to grant an appeal.