C.A. No. 3705-CC (Del. Ch. Oct. 2, 2009) (Chandler, C.)
In this letter decision, the Court of Chancery granted defendants’ motion for partial summary judgment, dismissing claims brought by eBay Domestic Holdings, Inc. that challenged the director defendants’ approval of a new form of indemnification agreement. In January 2008, the craigslist board of directors approved (and the stockholders ratified) a series of transactions, including adoption of a rights plan and implementation of a staggered board, designed to protect craigslist from various threats, including threats posed by eBay, which is a craigslist stockholder and also a competitor. eBay brought suit to challenge those transactions as well as a form of indemnification agreement that had previously been approved by the craigslist board of directors. eBay argued that the board’s approval of the new form of indemnification agreement constituted self-dealing and waste, even though the two members of the board, Jim Buckmaster and Craig Newmark, had never entered into the form of agreement with craigslist. Defendants maintained that the new form of agreement was approved for future recruitment purposes only and therefore proper, arguing also that eBay’s claims were not ripe for adjudication because Newmark and Buckmaster, who were already entitled to indemnification and advancement to the fullest extent permitted under Delaware law, had never executed agreements based on the new form. The Court agreed and dismissed eBay’s claims. The Court further noted that, had the claims been ripe, they were mooted in light of Newmark and Buckmaster’s unrebutted affidavits confirming they had no intention ever to execute the new indemnification agreements.
The full opinion is available here.