by Ellen Rosen
9:01 PM PST
February 8, 2015
(Bloomberg) -- While the Delaware courts are known for deferring to the decisions made by boards of directors, deference apparently has its limits.
Delaware Chancery Judge Travis Laster last week refused to dismiss a case challenging the 2013 privatization of Dole Food Inc. by Chief Executive Officer David Murdock. Murdock, members of the board of directors and Deutsche Bank AG, which helped structure the deal, sought to have the case thrown out rather than face a trial now set for Feb. 23.
Laster seems to believe that the Dole deal requires greater scrutiny. In his Feb. 5 ruling he said that investors raised legitimate questions about how the deal was negotiated by Murdock and whether officials of Deutsche Bank AG helped him structure the transaction to the detriment of shareholders.
Investors have uncovered evidence raising doubts about whether Dole directors “were sufficiently independent from Murdock to bargain with him at arm’s length,” the judge wrote.
“Murdock had previously threatened and taken punitive action against directors who did not accede to his wishes,” he added.
Murdock is facing investors’ claims over taking the world’s largest fresh fruit and vegetable producer private while buyout deals continue to roil the industry.
William Goldfield, a spokesman for Westlake Village, California-based Dole, didn’t respond to a phone call seeking comment on Laster’s ruling. Kerrie McHugh, a U.S.-based spokeswoman for Deutsche Bank, declined to comment.
In his opinion, Laster said,“Neither Murdock nor Deutsche Bank needs to have acted with an intent to harm Dole’s stockholders. Self-interested conduct is sufficient.”
Murdock is represented by Peter Stone and Edward Han of Paul Hastings LLP, along with J. Clayton Athey of Prickett, Jones & Elliott PA. Dole directors C. Michael Carter and David DeLorenzo are represented by Andrea Neuman and William Dawson of Gibson, Dunn & Crutcher LLP along with Bruce Silverstein and Elena Norman of Young Conaway Stargatt & Taylor LLP. Deutsche Bank is represented by David Hennes of Fried, Frank, Harris, Shriver & Jacobson LLP.
The case is In Re Dole Food Co. Inc. Stockholder Litigation, Consolidated CA No. 8703-VCL, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Ellen Rosen in New York at firstname.lastname@example.org