On October 21, 2010, the Delaware Court of Chancery ruled that it would allow a shareholder lawsuit against Barnes & Noble (B&N) to proceed. The shareholders of B&N sued B&N over the purchase for $596 million of Barnes & Noble College Booksellers, a company owned by B&N Chairman Leonard Riggio. The shareholders allege that the board breached its fiduciary duties to B&N in purchasing a failing company in a sinking industry and that the main purpose behind the deal was to enrich Leonard Riggio. In his ruling to deny the motion to dismiss, the Chancery Court Vice Chancellor considered the actions of the board – including alleged conflicts among some board members. The Vice Chancellor stated that the plaintiffs pled many specific facts that, when added together, “give off a pretty fishy smell at a pleading stage” and that give the Vice Chancellor a reasonable doubt about the board’s compliance with their fiduciary duties.

http://rippmedia.com/DM102110OAS.pdf