The Court then spent most of the remainder of its memorandum opinion explaining the doctrinal underpinnings of entire fairness review for controlling-stockholder transactions and how those policies ought to influence the standard for dismissal of claims against disinterested and independent directors. Key to the Court's decision was the distinction between two sets of fiduciaries:

In the Court's view, the fundamental difference in the type of potential liability between these two groups has led to some lack of clarity in the case law. To plead a case sufficient to withstand a motion to dismiss with regard to a stockholder who has transacted with the corporation, the plaintiff must merely plead facts raising an inference that the defendant stockholder is a controller and that the transaction was not entirely fair to the minority. Once those pleadings are made, the matter must proceed to a trial at which the fairness of the transaction will be scrutinized.

However, the pleading standard for disinterested and independent directors charged with a breach of fiduciary duty in connection with that same transaction implicates separate policy questions. The defendants argued that the low pleading standard for an interested fiduciary cannot be the same standard for disinterested directors and that the plaintiff should have to plead particular facts alleging a breach of a non-exculpated duty. The Court agreed that "there is much... to recommend such a pleading requirement" because it is consistent with the treatment afforded directors in non-controller transactions. In those situations, the policy of Delaware law is to require specific pleadings of non-exculpated breaches in order to allow management of Delaware corporations to take risks and avoid frivolous litigation.

The Court added that "doctrinally it seems insufficient" to capture disinterested and independent directors with pleadings that they simply participated in a transaction with a controller and to allow a general inference of disloyalty to overcome a motion to dismiss. The Court noted that such a pleading requirement would create a disincentive for directors to serve on special committees because it would taint them with the overall unfairness of the controlling stockholder's involvement, which they could have avoided by refusing to participate in the negotiation of the transaction. This would also seem counter to the policy underpinnings of the Delaware Supreme Court's opinion in M & F Worldwide, which suggests that a motion to dismiss is available when the transaction is negotiated by a special committee of disinterested, independent directors who are empowered to reject the transaction and is conditioned on majority-of-the-minority approval.

The Court also gave credit to the plaintiffs' theory, acknowledging that directors' loyalties are often "cryptic and unknowable" at the pleading stage in controller transactions where there is no developed record. As the Court explained, holding directors who negotiated the transaction as defendants until a determination of entire fairness has been made, for purposes of determining at that point whether those directors breached a non-exculpated fiduciary duty, will sometimes catch wrongdoing by directors who would have already had the case against them dismissed under the defendants' higher pleading standard. However, that advantage involves a trade-off of the benefits identified by the Court.

In spite of its misgivings about holding the plaintiffs to a low pleading standard regarding the independent directors, and in spite of its apparent sympathy for the defendants' arguments, the Court rejected the defendants' motion to dismiss. Regardless of the split between Orchard and Southern Peru and certain other Chancery cases, the Court here ruled that the Supreme Court's ruling in Emerald Partners II is controlling precedent (Emerald Partners v. Berlin, 787 A.2d 85 (Del. 2001)). In Emerald Partners II, the Supreme Court stated that "when entire fairness is the applicable standard of judicial review, a determination that the director defendants are exculpated from paying monetary damages can be made only after the basis for their liability has been decided" (787 A.2d at 94). As the Cornerstone Therapeutics court explained, the basis for liability is decided only when there is a fully developed factual record as to whether the transaction was entirely fair, which is after a trial. (Though it did not say so explicitly, its repeated references to a post-trial determination implies that at the stage of a motion for summary judgment, the Cornerstone Therapeutics court would agree with Orchard, contra Southern Peru, that such a motion must still be dismissed.) Consequently, the plaintiffs make a sufficient pleading when they allege that:

That pleading is sufficient to withstand a motion to dismiss brought by the disinterested and independent directors, even when the certificate of incorporation has an exculpation provision under Section 102(b)(7) and even when the pleading makes no allegation that the directors breached a non-exculpated duty.

Coincidentally, the Court of Chancery recently touched on this same issue in a separate hearing on a motion to dismiss in a transaction involving a controlling stockholder. In Swomley v. Schlecht, the Court ultimately granted a motion to dismiss from the bench, but expressed its views on this issue before it determined that the transaction satisfied the M & F Worldwide six-part test (see No. 9355-VCL, (Del. Ch. Aug. 27, 2014) (TRANSCRIPT)). Speaking from the bench, Vice Chancellor Laster stated that, "When I read Emerald, not just Emerald I but also Emerald II, the Supreme Court seemed to be saying that if you had those two things [a controller context and allegations of unfairness], you had to push off that determination until later in the case."

Vice Chancellor Laster justified that outcome by noting that under Kahn v. Lynch and its progeny, just having a special committee of disinterested and independent directors, without a non-waivable condition of minority approval, is not enough to lower the standard of review to business judgment. It is only enough to shift the burden of proof to the plaintiff, but the standard of review remains entire fairness. This demonstrates that even when disinterested and independent directors are negotiating the transaction, there is still a reasonably conceivable inference that they did not act independently. It is therefore consistent with that approach that they would not be entitled to the benefit of a pleading requirement that is only available when there is no inference or specter of disloyalty.