The Reconfiguring of Revlon

Research Handbook on Mergers and Acquisitions, Elgar Publishing, S. Davidoff Solomon & C. Hill, eds. (Forthcoming)

U of St. Thomas (Minnesota) Legal Studies Research Paper No. 20-22

Washington & Lee Legal Studies Paper No. 2015

27 Pages Posted: 2 Sep 2015 Last revised: 30 Nov 2015

See all articles by Lyman Johnson

Lyman Johnson

Washington and Lee University - School of Law; University of St. Thomas, St. Paul/Minneapolis, MN - School of Law

Date Written: 2015

Abstract

Three decades later, an irksome uncertainty still impedes a settled understanding of the Delaware Supreme Court’s landmark ruling in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. For such a towering doctrine, Revlon’s underlying rationales remain controversial, its exact contours and demands continue to be surprisingly unclear, and it holds out scant hope for remedial relief. In spite of these troubling features of today’s Revlon jurisprudence, however, Revlon is slowly being worked back into the larger fabric of Delaware’s fiduciary duty law and away from being a gangling, standalone doctrine. The organizing themes of this judicial project are strong deference in the deal context to decisions made by independent directors without regard to deal structure, the substantially reduced likelihood of equitable or monetary remedies in all types of deal-related lawsuits, and a nascent effort at harmonizing Revlon with Delaware’s more general, and ill-defined, doctrine on corporate purpose.

This chapter discusses the original Revlon decision and its rapid expansion before turning to lingering uncertainties surrounding the reach of Revlon, the decline of Revlon’s remedial clout, and where Revlon stands today in relation to Delaware’s overall fiduciary duty law. Revlon’s sharp focus on immediate value maximization was a breakthrough pronouncement on corporate purpose, a subject of longstanding national debate but one on which the Delaware Supreme Court had been strangely silent. However, grave reservations about whether and when corporate directors should be required to pursue short term goals found useful cover in sustained judicial murkiness over the boundaries of Revlon. Only if Delaware courts resolve the underlying issue of corporate purpose more generally will Revlon either be fitted into the larger body of Delaware law or continue to stand uncomfortably to the side as a doctrinal loner of diminished significance.

Keywords: Revlon, Delaware Supreme Court, corporations, corporate law, corporate structure, fiduciary duty, corporate directors

Suggested Citation

Johnson, Lyman P. Q., The Reconfiguring of Revlon (2015). Research Handbook on Mergers and Acquisitions, Elgar Publishing, S. Davidoff Solomon & C. Hill, eds. (Forthcoming), U of St. Thomas (Minnesota) Legal Studies Research Paper No. 20-22, Washington & Lee Legal Studies Paper No. 2015, Available at SSRN: https://ssrn.com/abstract=2654008

Lyman P. Q. Johnson (Contact Author)

Washington and Lee University - School of Law ( email )

Lexington, VA 24450
United States
540-458-8515 (Phone)
540-458-8488 (Fax)

University of St. Thomas, St. Paul/Minneapolis, MN - School of Law

MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

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