In September 2012, Dole sold the Asian operations of its Fresh Fruit division to ITOCHU Corporation. On the day of the announcement of that sale, Dole's stock increased to over $14.00 per share. In its fairness presentation to the board of directors in connection with that transaction, Deutsche Bank advised that Dole could achieve $50 million in annual cost savings. Dole reiterated this guidance to the market in November 2012 and again in December 2012. But on January 2, 2013, Carter issued a press release announcing that Dole expected only $20 million in cost savings in 2013. Dole's stock dropped by 13% following the announcement.

Carter issued two more press releases on January 24, 2013, and February 22, 2013, each providing renewed guidance for lower revenues than had been announced before. Meanwhile, on January 11, 2013, Deutsche Bank had sent a presentation about a freeze-out to Dole's treasurer and asked her for comment. Deutsche Bank did not share this presentation with the board. The sending of the presentation to an officer without showing it to the board illustrated the gray area in which Deutsche Bank worked, seemingly representing Murdock himself even as it was engaged by Dole Food. The coincidence of the renewed interest in a freeze-out with Carter's press releases also evidenced that Carter had set out to intentionally drive down the stock price.

In February 2013, Deutsche Bank made a new presentation to Dole's management, analyzing a choice between a self-tender program and a program of open-market purchases. Murdock and Dole's management favored the self-tender while two of the board's five independent directors, Andrew J. Conrad and Dennis Weinberg, opposed it. The bank hired to advise on the share repurchase, Bank of America Merrill Lynch (BAML), also opposed the self-tender. Following an executive session of the independent directors, the full board met without Murdock and unanimously approved the open market repurchases program.

Angered over the board's insubordination towards Murdock, Carter subsequently issued a press release announcing the company's purchase of new ships—as approved by the board—while adding that the share repurchases would be suspended indefinitely. Dole's stock dropped by 10% on the announcement. The board was not informed that the repurchase program would be suspended and had never been aware of any connection between the ships and the repurchase program. The court described the episode as a way for Murdock and Carter to make sure that if they could not have their way, neither would the board.

On June 10, 2013, Murdock finally made his initial proposal to the board to take the company private. He offered $12 per share and, in light of the Court of Chancery's then-recent MFW decision (since upheld by the Delaware Supreme Court), conditioned the offer on the approval of a special committee of independent directors and a majority of the unaffiliated stockholders. At the same time, Murdock applied pressure on the committee by setting a July 31 deadline and, to dissuade the board from seeking a superior third-party offer, emphasized that he was not interested in selling his shares. The board formed a committee consisting of its four outside directors: Conrad, Elaine Chao, Rolland Dickson and Sherry Lansing (Weinberg having been forced out as a result of the fallout over the share repurchase program). The court determined that the four directors were independent, despite Conrad's business ties to Murdock that had given the court pause before trial. The court was satisfied after trial that the committee had performed its functions to the best of its ability.

Once the committee was formed, Murdock and Carter did not step back and allow the committee to consider the proposal. Rather, they interfered in many ways, including by:

Most seriously, Carter fabricated and provided false financial projections to the committee and its financial advisor, Lazard. In particular, the projections provided by Carter contained two major issues that the committee's "Herculean efforts" could not overcome:

The next day, at a meeting of at least 14 members of Dole's senior management, Carter and three of Murdock's bankers, Carter announced that they would in fact realize "well over" the $50 million in cost savings. The meeting was a violation of the procedures established by the committee, which required that any communications by Murdock and his advisors regarding the going private proposal with Dole had to go through the committee. The committee and its advisors were not informed that the meeting was taking place and would not have permitted it. In any event, they were not made aware that the $50 million in savings were in fact feasible.

Carter flouted the special committee's procedures in other ways as well, including by allowing Deutsche Bank access to the data room over the committee's counsel's objections.

On August 1, 2013, Murdock increased his offer to $13.25 per share (following a contentious meeting between Murdock and Conrad five days earlier where he had increased his offer to $13.05). The committee countered with $14 per share and Murdock offered $13.50. This final offer fell within the higher end of Lazard's range of values of $11.40 to $14.08 per share, as based on a discounted cash flow analysis (and relying on incomplete information). The offer price in fact exceeded the range of values that Lazard arrived at based on comparable-companies and comparable-transactions analyses. Feeling that Murdock could not be convinced to go higher, the committee's advisors accepted the offer and began negotiating the merger agreement.

The parties then turned to the merger agreement, with Murdock pushing for a front-end tender offer structure with tight deal protections. The special committee countered with a proposal for a single-step merger structure, a go-shop, a low break-up fee for superior offers accepted during the go-shop period, and a larger equity commitment from Murdock. The committee won on these points, as reflected in the final merger agreement.

While those negotiations were taking place, Carter started Dole's annual budgeting process. He instructed management to ignore the July projections he had assembled for Lazard and instead provided improved numbers that management was instructed to not circulate outside of the e-mail group. The committee was not made aware of the improved projections. In the meantime, Murdock became increasingly agitated about the special committee's delay in approving the merger, at one point lashing out in a voicemail to Conrad about the "woman lawyer" who was advising the committee.

The committee meeting went forward and it and the full board approved the transaction. After the merger agreement was signed, Dole made presentations to the rating agencies in September 2013 and to its lenders in October 2013 that utilized forecasts significantly higher than the projections that Carter had given Lazard.

No superior offers materialized during the go-shop period. On October 31, 2013, Dole held a special meeting of the disinterested stockholders to vote on the merger. The vote won 50.9% approval of the unaffiliated stockholders and the transaction subsequently closed. After the closing, Dole realized more than the $50 million in cost savings originally predicted from the ITOCHU transaction, while the farm purchases ended up costing less and yielding higher savings than expected.

The plaintiffs subsequently brought an appraisal suit and an action alleging breach of fiduciary duties, alleging that the merger failed under the entire fairness standard of review. They also claimed that Deutsche Bank aided and abetted the breach. The court, following the guidance of the Delaware Supreme Court, ruled on the claim of breach of fiduciary duty, which can have the effect of rendering the appraisal suit moot (see Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1189 (Del. 1988)).

Under the well-known test for entire fairness, a self-dealing transaction between a corporation and its controlling stockholder must be fair to the stockholders in terms of both fair dealing and fair price. Although the court analyzes each aspect discretely, the transaction must satisfy a unitary determination of fairness. The court found here that the fraud perpetrated by Murdock and Carter undermined both prongs.

Directors are not automatically found liable upon a finding that entire fairness was not met. For instance, directors may have defenses to liability under the exculpation clause of Section 102(b)(7) of the DGCL or for reliance on advisors under Section 141(e) of the DGCL. Dole's certificate of incorporation includes an exculpation clause, which exculpates the company's directors for breaches of the duty of care.

Breaches of the duty of loyalty, however, cannot be exculpated. As a result, when a corporation has an exculpatory provision and a self-dealing transaction has been found unfair, the directors (other than the self-dealing director) can be found liable if they are found to have approved the transaction in bad faith—a finding that requires an inquiry into the director's state of mind. By contrast, the self-dealing director is subject to damages without an inquiry into his state of mind (In re Cornerstone Therapeutics Inc. S'holder Litig., 115 A.3d 1173, 1181 (Del. 2015)). In addition, under the Court of Chancery's ruling in Emerging Communications, exculpatory provisions do not benefit controlling stockholders in their role as controllers (In re Emerging Commc'ns S'holder Litig., , at *38 (Del. Ch. May 3, 2004)).

The court found that Murdock was liable for damages as both a director and as a controlling stockholder under the standards articulated in Cornerstone and Emerging Communications. Murdock derived an improper benefit, stemming from an unfair, self-interested transaction. He therefore breached his duty of loyalty to Dole's unaffiliated stockholders and was not entitled to exculpation under Section 102(b)(7).

The court also found Carter liable for damages as both a director and as an officer, in his roles as president, COO and general counsel. The court ruled that Carter was also not entitled to exculpation under Section 102(b)(7) because in his capacity as director, he breached his duty of loyalty to Dole and its stockholders by not acting in good faith. The court found that Carter did not advance the best interests of Dole or its stockholders, but was motivated instead by securing the best outcome for Murdock in his going private transaction. Carter also owed the same duties to the company and its stockholders in his capacity as an officer, and was found to have equally breached his duty of loyalty. Most of Carter's interactions with the special committee were committed in his role as an officer, and in that role, he was not protected by the 102(b)(7) exculpation clause (Gantler v. Stephens, 965 A.2d 695, 709 nn. 36-37 (Del. 2009)).

The court next analyzed whether Deutsche Bank aided and abetted Murdock and Carter's breaches of fiduciary duty. For this claim, the plaintiffs had to show that:

While the first, second and fourth elements had been proved as a result of the findings concerning Murdock and Carter, the court found that the "knowing participation" element had not been proven at trial. "Knowing participation" required a showing that Deutsche Bank provided "substantial assistance" to Murdock and Carter in the breaches that had caused their fiduciary liability. The court ruled that while Deutsche Bank had provided assistance to them to help formulate the going-private bid, it had not knowingly participated in the actions that formed the basis for liability, especially the creation of the false projections. The court allowed that Deutsche Bank might have had cause for concern, for example, when it found itself at the meeting arranged by Carter with no one from the special committee present. But the court held that that oversight did not rise to the level of knowingly participating in the breach. The court offered that the bankers could have reasonably assumed that Carter would relay to the committee the more positive information and projections that they received at that meeting. Deutsche Bank was not required to confirm independently with the committee and its advisors that all actions and communications were permissible. That duty lay principally with Carter.

In arguing for a finding of liability on the part of Deutsche Bank, the plaintiffs argued that the bank should be liable for acting as Murdock's de facto advisor, for advancing his interests, and for assisting him with preliminary planning for the freeze-out beginning in 2012. The court acknowledged that this theory "might present problems for Deutsche Bank" if Murdock's sharing of confidential information constituted a breach in and of itself, because that was an action that Deutsche Bank knowingly participated in. However, the court held that the act of sharing information with advisors, standing on its own, did not form the basis for a finding of breach that would capture Deutsche Bank.