In re R1 RCM Inc. Merger Litigation

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE R1 RCM INC. MERGER CONSOLIDATED LITIGATION C.A. No. 2025-1067-JTL OPINION ADDRESSING MOTION TO DISMISS COUNT I Date Submitted: July 7, 2026 Date Decided: October 28, 2026 Gregory V. Varallo, Thomas C. Mandracchia, Alexander J. Rigby, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, Wilmington, Delaware; Mark Lebovitch, BERSTEIN LITOWITZ BERGER & GROSSMANN LLP, New York, New York; Christopher H. Lyons, Jason M. Avellino, ROBBINS GELLER RUDMAN & DOWD LLP, Wilmington, Delaware; Randall J. Baron, David A. Knotts, ROBBINS GELLER RUDMAN & DOWD LLP, San Diego, California; Benjamin M. Potts, Margaret Rockey, JOHNSON VAN KWAWEGEN LLP, Wilmington, Delaware; Jeroen van Kwawegen, Christopher J. Orrico, Thomas G. James, JOHNSON VAN KWAWEGEN LLP, New York, New York; Lauren M. Cruz, JOHNSON VAN KWAWEGEN LLP, Los Angeles, California; Attorneys for Co-Lead Plaintiffs. Kevin R. Shannon, Berton W. Ashman, Jr., Ryan M. Crowley, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Anitha Reddy, Adam M. Gogolak, Alyssa M. Hunt, WACHTELL, LIPTON, ROSEN & KATZ, New York, New York; Attorneys for Defendants TCP-ASC ACHI Series LLLP, Ascension Health Alliance, TowerBrook Capital Partners L.P., Neal Moszkowski, Ian Sacks, Anthony J. Speranzo, and Anthony R. Tersigni. Kevin M. Coen, Jacob M. Perrone, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; James P. Smith III, Matthew DiRisio, Michelle D. Tuma, Sophia Borne, WINSTON TAYLOR LLP, New York, New York; Attorneys for Defendants Joseph Flanagan and John B. Henneman III. Joseph O. Larkin, Arthur R. Bookout, Jessica R. Kunz, Nicole A. DiSalvo, Sukhandeep Kaur, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; Attorneys for Defendants Jill Smith and Agnes Bundy Scanlan. LASTER, V.C.  A private equity firm and a nonprofit health system formed a limited liability limited partnership with the catchy name of TCP-ASC ACHI Series LLLP (“TA”). Through TA, they held a significant equity stake in a public company. TA also possessed the contractual right to nominate a majority of the company’s board of directors (respectively, the “Majority-Nomination Right” and the “Board”), and the company committed to use its best efforts to seat TA’s nominees (the “Efforts Obligation”). After TA took the company private, former stockholders filed suit. They allege that TA, the private equity firm, and the nonprofit health system (together, the “TA Defendants”) controlled the company, stood on both sides of the transaction, and breached their fiduciary duty of loyalty by extracting an unfair deal. The TA Defendants moved to dismiss the claim against them. As the sole basis for their motion, they argue that TA could not conceivably be a controlling stockholder. If true, then TA did not owe fiduciary duties, and the TA Defendants could not be sued for breaching duties they did not owe. Section 144 of the Delaware General Corporation Law1 (respectively, the “Safe Harbor Statute” and the “DGCL”) “provides powerful protection for conflicted transactions.”2 The Safe Harbor Statute replaces certain common law standards with clear and stable brightline rules. The Safe Harbor Statute also replaces the common 1 8 Del. C. § 144. 2 Dodiya v. Franklin, — A.3d —, —, 2026 WL 2517931, at *1 (Del. Ch. Aug. 26, 2026). law’s factually intensive, case-specific inquiry into the existence of control with a clear and stable definition of “controlling stockholder” (the “Controller Definition”). The Controller Definition contains three triggers. One turns on ownership or control of a majority of the stockholder voting power (the “Stock-Majority Trigger”). Another turns on the ability to cause the election of directors who can exercise a majority of the director voting power (the “Board-Majority Trigger”). A third has three requirements (the “Non-Majority Trigger”): (1) ownership or control of at least one- third of the stockholder voting power (the “One-Third Floor”), (2) power functionally equivalent to a majority stockholder, and (3) the ability to exercise managerial authority over the business and affairs of the corporation. The plaintiffs assert that TA qualified as a controlling stockholder under the Non-Majority Trigger. That attempt fails because it is not reasonably conceivable that TA cleared the One-Third Floor. The plaintiffs argue otherwise by including TA’s warrants in the calculation, but the One-Third Floor does not contemplate using fully diluted ownership. The plaintiffs also argue that just before the transaction closed, TA exercised its warrants and cleared the One-Third Floor. That event happened, however, after the alleged breaches of fiduciary duty. When TA took the actions that allegedly support the plaintiffs’ claim, TA remained below the One-Third Floor. The plaintiffs succeed, however, under the Board-Majority Trigger. Although the statutory trigger is ambiguous, the Safe Harbor Statute’s legislative history indicates that the combination of the Majority-Nomination Right and the Efforts Obligation gives TA the necessary power to cause the election of a majority of the 2 Board. The TA Defendants cite two limitations on TA’s contractual right, but the Safe Harbor Statute’s legislative history indicates that they are not enough to defeat the Board-Majority Trigger. The TA Defendants also argue that the plaintiffs failed to plead that TA qualifies as a common-law controller. As they see it, the Board-Majority Trigger is not a toggle switch that flips controlling stockholder status on or off. Instead, they think it operates like a dimmer switch: satisfying the Board-Majority Trigger turns on the power, but a plaintiff must turn up the dial by pleading common-law-controller status before the light of fiduciary duties turns on. That argument is misguided. Under the plain language of the Controller Definition, all three triggers operate as toggle switches. The Stock-Majority Trigger turns on a brightline threshold; controlling stockholder status flips on when that threshold is met. The Non-Majority Trigger incorporates a brightline threshold (the One-Third Floor) and two explicitly qualitative elements; controlling stockholder status flips on when all three requirements are met. The Board-Majority Trigger operates in parallel fashion; when its requirements are met, controlling stockholder status flips on. Assuming for the sake of argument that the Controller Definition was ambiguous as to this point, evidence of legislative intent supports the toggle-switch interpretation. 3  The TA Defendants have not advanced any other basis for pleading-stage dismissal. The claim against them for breach of fiduciary duty can therefore move past the pleading stage.3 I. FACTUAL BACKGROUND The facts are drawn from the operative complaint, documents integral to the complaint or that the complaint incorporates by reference, and documents subject to judicial notice.4 At this procedural stage, the court must credit the Complaint’s well- pled allegations and draw all reasonable inferences in the plaintiffs’ favor. A. The Company R1 RCM Inc. (the “Company”) is a Delaware corporation that provides technology-enabled revenue cycle management services to hospitals and health systems across the United States. The Company traces its current incarnation to a merger in 2022 between the Company’s predecessor and a portfolio company of New Mountain Capital, L.L.C., a private equity firm (the “2022 Merger”). 3 The plaintiffs asserted claims for breach of fiduciary duty against other defendants who served as company directors. Those claims advance multiple theories, and the directors have raised diverse bases for dismissal. Those claims are also more fact intensive and require a deeper dive into the complaint’s allegations. The court will issue a separate decision addressing those claims. 4 The operative complaint is the Verified Amended Class Action Complaint (the “Complaint”). Dkt. 56. Citations in the form “AB” refer to the plaintiffs’ omnibus answering brief. Dkt. 85. Citations in the form “Ex.” refer to the exhibits submitted in support of the defendants’ motions to dismiss. Dkts. 44–46, 48–50, 63, 90. Page references cite internal pagination whenever possible. 4  Before the 2022 Merger, TA owned a majority of the Company’s equity. TA is a joint venture between TowerBrook Capital Partners L.P., a private equity firm, and Ascension Health Alliance, a Missouri nonprofit corporation and health system. After the 2022 Merger, TA owned 124,289,200 shares of common stock, reflecting 29.4% of the outstanding shares. TA also owned warrants to purchase 40,464,855 common shares. On a fully diluted basis, TA owned approximately 35.7% of the Company’s equity. B. The TA Agreement In connection with the 2022 Merger, TA and the Company entered into an amended and restated investor rights agreement (the “TA Agreement”). 5 The TA Agreement granted TA governance rights that it could exercise as long as TA met specified ownership thresholds. When measuring TA’s ownership, the TA Agreement used the defined term “Ownership Percentage” that incorporated warrants on an as- exercised basis.6 1. The Majority-Nomination Right The TA Agreement contained the Majority-Nomination Right. It provided that as long as TA’s Ownership Percentage exceeded 33%, TA was “entitled to nominate 5 Ex. 6 (cited as “TA Agr.”). 6 See id. § 1 (defining “Ownership Percentage”). 5 such number of individuals to the Board constituting a majority of directors” (the “TA Designees”).7 The TA Agreement placed two limitations on the Majority-Nomination Right. First, the TA Agreement included provisions designed to ensure that if applicable listing standards required an independent Board majority, then the Board would satisfy that requirement (the “Independent-Majority Procedures”). The Company was listed on the Nasdaq Global Select Market, and Nasdaq requires that listed companies have a majority of independent directors, unless an exception applies.8 The Company did not qualify for an exception. Under the Independent-Majority Procedures, the Company committed that unless “otherwise directed or agreed by [TA],” all nominees to the Board who were not TA Designees would qualify as independent directors under Nasdaq listing standards and “applicable law.”9 The TA Agreement carved out an exception to that 7 Id. § 2.1(a)(i). At lower levels of ownership, TA had the right to nominate fewer members of the Board. As long as TA’s Ownership Percentage was more than 10% but less than 33%, TA could nominate a proportionate number of directors, rounded down, but never less than two. Id. § 2.1(a)(ii). As long as TA’s Ownership Percentage was more than 5% but less than 10%, TA could nominate a proportionate number of directors, rounded down, but never less than one. Id. § 2.1(a)(iii). 8 Nasdaq R. 5605(b)(1) (“A majority of the board of directors must be comprised of Independent Directors as defined in Rule 5605(a)(2).”). 9 TA Agr. § 2.1(a) (“For so long as the Ownership Threshold is met, . . . except (i) with respect to one (1) designee to the Board designated by [New Mountain] and (ii) as otherwise directed or agreed by [TA] and to the extent required by applicable listing standards (including any requirements for initial listing), the Company agrees to cause all members of the Board that are not [TA] Designees (other than the chief executive officer of the Company) to be ‘independent’ as defined in the listing 6 requirement for the Company’s CEO and one New Mountain designee. The Company therefore had to ensure that all but two of the nominees who were not TA Designees qualified as independent directors under Nasdaq listing standards and applicable law. For its part, TA committed to nominate a mix of directors so that, when its nominees were combined with all other nominees, the Board would have a majority of directors that qualified as independent directors under Nasdaq listing standards and applicable law (the “Conditional Floor”).10 Second, the TA Designees had to be “reasonably acceptable to the Board’s Nominating and Corporate Governance Committee” (the “Acceptability Condition”).11 The TA Agreement did not specify who served on the Nominating and Corporate Governance Committee (the “Nominating Committee”), but it provided generally that “subject to applicable law and . . . listing standards[,] . . . the Company will offer the [TA] Designees (to be selected by [TA]) an opportunity to, at [TA’s] option, either sit on each regular committee of the Board in relative proportion to the number of [TA] standards of the Nasdaq Global Select Market (or other United States national securities exchange that the Common Stock is listed upon, if any) and applicable law (and all non-[TA] Designees other than the chief executive officer of the Company and any designees described in clause (i) of this clause (B) have agreed to resign if necessary to effectuate the foregoing).”). 10 Id. (“To the extent required by applicable listing standards (including any requirements for initial listing), [the TA] Designees shall include a number of persons that qualify as ‘independent’ directors as defined in [listing standards] and applicable law such that, together with any other ‘independent’ directors serving on the Board that are not [TA] Designees, the Board is comprised of at least a majority of ‘independent’ directors.”). 11 Id. § 2.1(b). 7 Designees on the Board or attend (but not vote) at the meetings of such committee as an observer” (the “Committee Composition Provision”).12 The Committee Composition Provision made it likely that TA Designees would comprise a majority of the Nominating Committee. In fact, the Company’s 2023 proxy statement disclosed that three of the four members of the Nominating Committee (including the Chair) were TA Designees.13 Towerbrook’s co-CEO and its Managing Partner were two of those designees.14 Under the Efforts Obligation, the Company committed to “nominate the [TA] Designees for election to the Board and use all commercially reasonable efforts to cause the [TA] Designees to be elected as directors of the Board.”15 The Company also committed that if any TA Designee died, became disabled, resigned, or was removed, then the Board would promptly elect a replacement TA Designee.16 12 Id. § 2.2. The same provision states that “[i]f [a TA] Designee fails to satisfy the applicable qualifications under law or stock exchange listing standard[s] to sit on any committee of the Board, then the Board shall offer such [TA] Designee the opportunity to attend (but not vote) at the meetings of such committee as an observer.” Id. 13 See Dkt. 114 at 2. 14 Id. 15 TA Agr. § 2.1(a). 16 Id. § 2.1(c). 8  2. The Approval Requirements The TA Agreement separately identified eleven matters that required TA’s approval in its capacity as a stockholder (the “Approval Requirements”). 17 Those matters included: • Approving the Company’s annual budget; • Hiring or firing the Company’s CEO; • Appointing or removing the Board Chair; • Disposing of assets or businesses exceeding $10 million in the aggregate during any fiscal year (with stated exceptions); • Making capital expenditures exceeding $25 million in the aggregate during any fiscal year; • Making any loans or investments in other entities exceeding $25 million in the aggregate during any fiscal year; • Acquiring any assets exceeding $100 million in the aggregate during any fiscal year (with stated exceptions); • Incurring any debt exceeding $100 million in the aggregate during any fiscal year (with stated exceptions); • Creating, authorizing, or issuing any securities in a way that would adversely affect the rights of holders of the Company’s common stock; • Amending or modifying the Company’s certificate of incorporation or bylaws in a way that would adversely affect the rights of holders of the Company’s common stock; and • Amending Ascension’s services agreement. 17 Technically, the Approval Requirements “require[d] the approval of the holders of a majority of the shares of Common Stock that are held by [TA] or any [of its affiliates] to proceed with such a transaction.” Id. § 2.4(a). 9 TA could exercise the Approval Requirements as long as its Ownership Percentage exceeded 25%.18 The granularity of the Approval Requirements gave TA blocking power beyond what the holder of a majority of the outstanding voting power could exercise. A stockholder with majority voting power can block actions requiring a stockholder vote, but cannot intervene on more targeted issues.19 3. Other Provisions The TA Agreement contained other governance rights, such as the right to designate the chair of the Board20 and preemptive rights so TA could preserve its ownership position.21 Reciprocally, the TA Agreement imposed a standstill restriction on TA. A comparable standstill bound New Mountain. 18 See id. §§ 1 (defining “Ownership Threshold”), 2.4(a). 19 See J. Travis Laster, How to Evaluate Non-Majority Control: What History and Statutes Tell Us–Part Two: The Definitional Consensus, 31 FORDHAM J. CORP. & FIN. L. 395, 400–01 (2026) [hereinafter Definitional Consensus] (“A majority holder can elect and remove directors, adopt bylaws, and veto major transactions that the board initiates and that require stockholder approval, but that is it. The majority stockholder principally wields influence indirectly based on the voting power it can potentially exercise.”). 20 TA Agr. § 2.1(a) (“For so long as the Ownership Threshold is met, (A) [TA] shall be entitled to designate the chairperson of the Board.”). 21 Id. § 5.1 (granting TA “the right to purchase from the Company an amount of any New Securities that the Company may, from time to time, propose to issue and sell up to [TA’s] Ownership Percentage (calculated as of the date of delivery of such Notice of Issuance) to the extent such New Securities are actually issued.”). 10 C. A Potential Transaction In January 2024, New Mountain asked the Board to waive its standstill and expressed interest in making a proposal to acquire the Company for $13.75 per share. The Board instructed New Mountain to explore a joint transaction with TA. The plaintiffs attack the Board for permitting New Mountain to breach its standstill by conveying a specific price. They also contend that the Board favored TA’s interests by telling New Mountain to explore a joint deal with TA rather than seeking to generate competition between them. After a month of discussions with TA, New Mountain again asked the Board to waive its standstill and reiterated its interest in making a proposal to acquire the Company at $13.75 per share. New Mountain also disclosed its proposal publicly. The Board again declined New Mountain’s request. The Board formed a special committee to evaluate the Company’s alternatives, negotiate any proposal, and make a recommendation to the Board (the “Committee”). A months-long process ensued during which TA, the members of the Committee, and Company director Joseph Flanagan made decisions and took actions that the plaintiffs challenge. The plaintiffs single out Flanagan for allegedly bargaining for lucrative post-transaction employment with TA and then supporting TA’s acquisition bid against the Company. The plaintiffs claim that one of the Committee’s financial advisors had close ties to both Flanagan and TA that aligned the advisor’s interests with TA. 11 D. The Solo Bids On June 30, 2024, New Mountain told the Company that it wanted to make a solo bid. On July 1, New Mountain proposed to acquire the Company for $13.25 per share, a $.50 decrease from its prior expressions of interest. After the Committee countered at $15.00 per share, New Mountain increased its proposal to $13.80 per share. The Committee then asked for $14.40 per share, and New Mountain increased its proposal to $14.05 per share. Meanwhile, TA teamed up with another private equity firm to make a competing bid. The Committee gave TA time to develop its bid and told TA and New Mountain to submit their best and final bids by July 31, 2024. On the bid deadline, New Mountain stood pat at $14.05 per share. TA bid $14.30 per share. The Committee recommended TA’s bid to the full Board, and the Board unanimously authorized a transaction with TA. The deal was announced on August 1, 2024. The Company filed its definitive proxy statement on October 16, 2024. Stockholders holding a majority of the Company’s outstanding voting power approved the merger on November 14. The transaction was not conditioned on approval by a majority of the disinterested stockholders. The merger closed on November 19 (the “2024 Merger”). E. This Action The plaintiffs filed this action on September 22, 2025. Count I asserts a claim for breach of fiduciary duty against the TA Defendants as the Company’s controlling stockholders. The plaintiffs asserted other claims against individual Company 12 directors. All of the defendants moved to dismiss the claims against them. This decision addresses the motion to dismiss Count I. II. LEGAL ANALYSIS The TA Defendants have moved to dismiss Count I of the Complaint under Rule 12(b)(6). When considering that type of motion, “a trial court should accept all well-pleaded factual allegations in the Complaint as true, accept even vague allegations in the Complaint as ‘well-pleaded’ if they provide the defendant notice of the claim, [and] draw all reasonable inferences in favor of the plaintiff.”22 The court should “deny the motion unless the plaintiff could not recover under any reasonably conceivable set of circumstances susceptible of proof.” 23 Delaware’s “governing ‘conceivability’ standard is more akin to ‘possibility,’ while the federal ‘plausibility’ standard falls somewhere beyond mere ‘possibility’ but short of ‘probability.’”24 Count I of the Complaint asserts a claim for breach of fiduciary duty against the TA Defendants in their capacity as the Company’s controlling stockholders. In seeking dismissal, the TA Defendants argue that TA was not the Company’s controlling stockholder and therefore did not owe fiduciary duties. They do not seek dismissal on other grounds. 22 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011). 23 Id. 24 Id. at 537 n.13. 13  Enacted in 2025, the Safe Harbor Statute provides greater certainty, predictability, and protection against litigation than the common law offered. The Safe Harbor Statute achieves that goal by taking common-law doctrines, tweaking them to make the requirements easier to meet, and then providing remedial immunity when those requirements are met. 25 When a safe harbor applies, a transaction “may not be the subject of equitable relief, or give rise to an award of damages.”26 The Safe Harbor Statute also replaces the common law’s factually intensive, case-specific inquiry into control27 with the clear, stable, and predictable Controller Definition: “Controlling stockholder” means any person that, together with such person’s affiliates and associates: a. Owns or controls a majority in voting power of the outstanding stock of the corporation entitled to vote generally in the election of 25 See Eric S. Klinger-Wilensky, John P. DiTomo & Kyle A. Pinder, Thirty Years Later – Why Corporations Continue to Choose Delaware: General Perspectives and Thoughts on 2025 DGCL Amendments, CORP. GOVERNANCE ADVISOR, July/Aug. 2025, at 1, 13, https://www.morrisnichols.com/media/publication/15513_CorporateGovernanceAdvi sor-July-2025-ThirtyYearsLater.pdf [https://perma.cc/93F9-RKDA] (comparing common-law mechanisms with the Safe Harbor Statute and identifying key differences, explaining that the amendments “certainly changed some of the requirements for utilizing a cleansing mechanism and will likely require stronger pleadings to survive a motion to dismiss”). 26 8 Del. C. §§ 144(a), (b), & (c). 27 See generally J. Travis Laster, How to Evaluate Non-Majority Control: What History and Statutes Tell Us–Part One: The Historical Dominance of Functionalism, 31 FORDHAM J. CORP. & FIN. L. 1 (2025) [hereinafter Historical Article]. 14  directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors; b. Has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of such person and who constitute either a majority of the members of the board of directors or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors; or c. Has the power functionally equivalent to that of a stockholder that owns or controls a majority in voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors by virtue of ownership or control of at least ⅓ in voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors and power to exercise managerial authority over the business and affairs of the corporation.28 The Controller Definition thus contains three separate triggers. The Stock-Majority Tigger turns on ownership or control of a majority of the stockholder voting power.29 The Board-Majority Trigger turns on the ability to cause the election of a board majority.30 The Non-Majority Trigger has three requirements: (1) clear the One-Third 28 8 Del. C. § 144(e)(2). 29 Except where the specific language is pertinent, this decision uses “stockholder voting power” or a similar phrase as shorthand for the references in the Stock-Majority Trigger and the One-Third Floor to “voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors.” 30 Except where the specific language is pertinent, this decision uses “board majority” or a similar phrase as shorthand for the reference in the Board-Majority Trigger to “either a majority of the members of the board of directors or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors.” 15 Floor; (2) wield “power functionally equivalent” to someone who meets the Stock- Majority Trigger “by virtue of ownership or control” of stock, and (3) possess “power to exercise managerial authority over the business and affairs of the corporation.”31 Both sides accept that the Controller Definition determines whether TA qualifies as a controlling stockholder and therefore owes fiduciary duties. The plaintiffs contend that TA qualifies as a controlling stockholder under the Non- Majority Trigger and the Board-Majority Trigger. The TA Defendants contend that neither trigger applies. To address these contentions, the court must explore the meaning of the Safe Harbor Statute. That task involves statutory interpretation and construction. Both are purely legal issues suitable for resolution at this stage of the case.32 The act of construing a statute to determine whether its meaning is plain or ambiguous presents a question of law.33 So does the act of construing an ambiguous statute.34 31 8 Del. C. § 144(e)(2)(c). 32 See Richardson v. State, 673 A.2d 144, 145–46 (Del. 1996) (“Statutory interpretation involves a purely legal determination.”). 33 See Progressive N. Ins. Co. v. Mohr, 47 A.3d 492, 496 (Del. 2012) (treating as a question of law whether a statute “is plain on its face and susceptible only to the meaning [one party] ascribes to it” or “whether the statute is also reasonably susceptible to the opposite interpretation advocated by [the other party]”); see generally Colonial Ins. Co. of Wis. v. Ayers, 772 A.2d 177, 179 (Del. 2001) (“Judicial construction of a statute is a determination of law.”). 34 See Progressive, 47 A.3d at 500 (treating construction of an ambiguous statute as a question of law). 16  The goal of statutory construction “is to give effect to the policy intended by the General Assembly.”35 As a starting point, the court “must seek to ascertain and give effect to the intention of the Legislature as expressed in the Statute itself.”36 “Words and phrases shall be read with their context and shall be construed according to the common and approved usage of the English language.” 37 Consistent with that command, the Delaware Supreme Court has instructed courts to “give the statutory words their commonly understood meanings.”38 “If a statute is unambiguous, there is no need for judicial interpretation, and the plain meaning of the statutory language controls.”39 That is, “where the language 35 Arnold v. State, 49 A.3d 1180, 1184 (Del. 2012) (internal quotation marks omitted); accord Eliason v. Englehart, 733 A.2d 944, 946 (Del. 1999); see also Giuricich v. Emtrol Corp., 449 A.2d 232, 238 (Del. 1982) (“It is fundamental that the Courts ascertain and give effect to the intent of the General Assembly as clearly expressed in the language of a statute.”). 36 Keys v. State, 337 A.2d 18, 22 (Del. 1975); accord Stoltz v. Wilm. Tr. Co., 1992 WL 127516, at *5 (Del. Ch. June 9, 1992) (Allen, C.) (“[T]he words of the statute themselves are the first and most authoritative source of the meaning of its command.”) (citation omitted). 37 1 Del. C. § 303. 38 Kofron v. Amoco Chems. Corp., 441 A.2d 226, 230 (Del. 1982). 39 Eliason, 733 A.2d at 946; accord Hudson Farms, Inc. v. McGrellis, 620 A.2d 215, 217 (Del. 1993) (“If there is no reasonable doubt as to the meaning of the words used, the statute is unambiguous and the Court’s role is limited to an application of the literal meaning of the words.”). 17 is plain and admits of no more than one meaning, the duty of interpretation does not arise, and the rules which are to aid doubtful meanings need no discussion.” 40 Only when the words of a statute “do not convey with clarity a single meaning when applied to a particular case . . . [is] a court . . . bound to interpret them.” 41 A statute is ambiguous “if it is susceptible of two reasonable interpretations.” 42 A statute is not ambiguous “simply because the parties disagree about [its] meaning.”43 “[A] provision may be ambiguous when applied to one set of facts but not another.”44 When a statute is “‘reasonably susceptible’ of different conclusions or interpretations, [courts] normally consider extrinsic evidence, such as legislative history and any historical applications of the text at issue.” 45 “[A] court may also 40 Friends of H. Fletcher Brown Mansion v. City of Wilm., 34 A.3d 1055, 1059 (Del. 2011) (cleaned up). 41 Stoltz, 1992 WL 127516, at *5. 42 Taylor v. Diamond State Port Corp., 14 A.3d 536, 538 (Del. 2011). 43 Ross v. State, 990 A.2d 424, 429 (Del. 2010). 44 Activision Blizzard, Inc. v. Hayes, 106 A.3d 1029, 1034 (Del. 2013) (internal quotation marks omitted); accord EEOC v. Curtiss-Wright Corp., 1982 WL 602, at *2 (D.N.J. Apr. 12, 1982) (“Statutory language is sometimes unambiguous in one context and ambiguous in another.”); Sullins v. Allstate Ins. Co., 667 A.2d 617, 619 (Md. 1995) (“A term which is clear in one context may be ambiguous in another.”). 45 Jack Lingo Asset Mgmt., LLC v. Bd. of Adjustment of City of Rehoboth Beach, 282 A.3d 29, 33 (Del. 2022). 18 consider how a statute evolved.”46 When the legislative history is not definitive, a court may apply canons of statutory construction to resolve ambiguities.47 A court may also consider “the statute’s apparent purpose, including relevant considerations of public policy.”48 “In Delaware, the available legislative history is sparse and consists largely of the legislative synopsis.” 49 Delaware courts also consider contemporaneous commentary from lawyers who participate in the drafting process.50 Amendments to Delaware’s entity statutes emerge from a process overseen by the Council of the 46 Salama v. Simon, 328 A.3d 356, 389 (Del. Ch. 2024), aff’d, 342 A.3d 373 (Del. 2025); see VonFeldt v. Stifel Fin. Corp., 714 A.2d 79, 84 (Del. 1998) (tracing development of ambiguous statute). 47 See Dir. of Revenue v. Verisign, Inc., 267 A.3d 371, 377 (Del. 2021) (“If there is a legitimate ambiguity, we consult the canons of statutory construction and may consider legislative history.”). 48 Salama, 328 A.3d at 388. 49 Id.; see Bd. of Adjustment of Sussex Cty. v. Verleysen, 36 A.3d 326, 332 (Del. 2012) (“A synopsis is a proper source for ascertaining legislative intent.”). 50 See, e.g., In re Fox Corp./Snap Inc., 312 A.3d 636, 644 (Del. 2024) (giving weight to “[c]ontemporaneous commentary from two members of the Delaware Corporation Law Revision Committee, Samuel Arsht and Walter Stapleton”); Cede & Co. v. Technicolor, Inc., 758 A.2d 485, 495 n.59 (Del. 2000) (citing practitioner commentary on 1976 amendments to appraisal statute); Klotz v. Warner Commc’ns, Inc., 674 A.2d 878, 881–82 (Del. 1995) (considering “commentaries written at the time the market exception and § 228 were added to Title 8 in 1967”); Garfield v. Boxed, Inc., 2022 WL 17959766, at *5 n.41 (Del. Ch. Dec. 27, 2022) (considering “[c]ontemporaneous legal commentary on Section 242’s language”). 19 Corporation Law Section of the Delaware State Bar Association (the “Council”).51 The lawyers who serve as members of the Council and their firms issue client memoranda and other forms of commentary about statutory amendments. 52 Those materials “provide insight into the Council’s purpose and the public policy considerations its members found persuasive.”53 The Safe Harbor Statute followed a modified path.54 Former Chief Justice Leo E. Strine, Jr., former Chancellor William B. Chandler, III, and professor emeritus Lawrence A. Hamermesh led an initial process in conjunction with attorneys from Richards, Layton & Finger, P.A. (“RLF”).55 They then worked with the Council to 51 See Marcel Kahan & Edward Rock, The New Political Economy of Delaware Corporate Lawmaking, 51 J. CORP. L. 865, 870–86 (2026) (describing the Council’s traditional role); accord Salama, 328 A.3d at 388 (“The Council is principally (if not exclusively) responsible for drafting synopses for entity-related legislation.”). 52 That tradition emerged after the 1967 revision. See S. Samuel Arsht & Walter K. Stapleton, Delaware’s New General Corporation Law: Substantive Changes, 23 BUS. LAW. 75 (1967); S. Samuel Arsht & Walter K. Stapleton, Analysis of the New Delaware Corporation Law 321–45 (Prentice-Hall, Inc. 1967). It has only gained strength over the years. 53 Salama, 328 A.3d at 388 (noting that “[l]aw firms whose partners serve on the Council issued memoranda discussing the 2023 Amendments”). 54 See Klinger-Wilensky et al., supra, at 3 n.5 (noting that the Safe Harbor Statute “did not follow [Delaware’s] typical process”). 55 See Jacob Owens & Karl Baker, A Deep Dive into Landmark Changes in Corporate Law, DEL. BUS. NOW (Feb. 19, 2025), https://www.delawarebusinessnow.com/news/spotlight_delaware/a-deep-dive-into- landmark-changes-in-corporate-law/article_211743a2-ef24-11ef-aa4c- bb1dc8e970d1.html#google_vignette [https://perma.cc/9CLH-P6TW] (discussing Strine, Chandler, and Hamermesh’s leadership role); accord Lawrence Hamermesh & William Chandler III, Delaware’s Corporate Law, Proposed Amendments Play Fair, 20 prepare the final bill. 56 The General Assembly passed the bill, and the Governor signed the Safe Harbor Statute into law.57 An article that Chief Justice Strine and Professor Hamermesh co-authored with former Justice Jack B. Jacobs58 supplied foundational concepts for the statute.59 DEL. BUS. TIMES (Mar. 6, 2025), https://delawarebusinesstimes.com/news/viewpoint- sb21-chandler-hamermesh/ [https://perma.cc/K5HF-P4NV] (same); see Lisa A. Schmidt, A Message from RLF President Lisa Schmidt (Feb. 25, 2025), https://www.rlf.com/a-message-from-rlf-president-lisa-schmidt/ [https://perma.cc/YWF3-9TN9] (“Our elected officials invited one of our attorneys with extensive experience drafting corporate legislation to assist a group of highly respected former members of Delaware’s judiciary and prominent academics to help draft measured reforms that would provide additional clarity for directors, officers, and stockholders.”). 56See Klinger-Wilensky et al., supra, at 3 n.5 (describing the Council’s involvement). 57 See 85 Del. Laws ch. 6 (2025), codified at 8 Del. C. § 144. 58 Lawrence A. Hamermesh, Jack B. Jacobs & Leo E. Strine, Jr., Optimizing the World’s Leading Corporate Law: A Twenty-Year Retrospective and Look Ahead, 77 BUS. LAW. 321 (2022) [hereinafter Optimizing]. 59 See Owens & Baker, supra (“Delaware leaders turned toward a scholarly paper written by former Chancellor Leo Strine Jr., Vice Chancellor Jack Jacobs and Delaware Law School professor Lawrence Hamermesh that largely laid out many of the proposed changes that ultimately ended up in Townsend’s bill.”); Hamermesh & Chandler, supra (citing the Optimizing article as the source of “the principles underlying the current legislation”); see also Schmidt, supra (submission to Delaware General Assembly stating that S.B. 21 sought to address issues identified in the Optimizing article). In some respects, such as the possibility of single-cleansing for controller transactions, the Optimizing article synthesized concepts that had been prominent for years. The Optimizing article served a valuable functio