In re Sears Hometown & Outlet Stores, Inc. Stockholder Litig.

Court of Chancery of the State of Delaware · 2025 · Corporations

Updated August 22, 2026

Corporationsinterlocutory appealfiduciary duty remediesappraisalRule 42substantial issuematerial importancegood cause

Facts

A controller effected a squeeze-out merger at $3.21 per share, and one investment fund sought appraisal while other stockholders pursued a plenary fiduciary-duty class action. During the appraisal proceeding, the controller caused the surviving corporation and its post-merger parent to file for bankruptcy, leaving the fund's creditor-based recovery paths worthless. After trial, the court found the merger unfair and fixed fair price at $4.06 per share; because the fund had never received merger consideration, the later Remedy Opinion held that the fund was entitled to the full fair-price damages amount rather than only the incremental $0.85 per share awarded to stockholders who had already received $3.21. The controller then sought certification of an interlocutory appeal from that Remedy Opinion.

Issue

Whether the court should certify an interlocutory appeal from the Remedy Opinion under Delaware Supreme Court Rule 42. Specifically, whether the application was timely, whether the Remedy Opinion decided a substantial issue of material importance, and whether the benefits of immediate appellate review outweighed the costs before final judgment.

Rule

Under Delaware Supreme Court Rule 42, no interlocutory appeal should be certified unless the order decides a substantial issue of material importance that merits appellate review before final judgment. The application must be filed within 10 days of the order unless the trial court extends the time for good cause shown, and excusable neglect is not the same as good cause. Even if a substantial issue exists, certification is disfavored unless the likely benefits of interlocutory review outweigh its certain costs after considering the Rule 42 factors; if the balance is uncertain, certification should be refused.

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In stockholder litigation in Wilmington, the Court of Chancery issued an order on May 1 resolving a disputed damages-offset issue after a prior post-trial merits opinion had already found liability. Counsel for defendant Nora Benton filed an application to certify an interlocutory appeal on May 14, explaining that she counted time under a Chancery rule rather than the Supreme Court's timing rule.

Should the trial court most likely certify the interlocutory appeal?

Explanation. Rule 42 requires a certification application within 10 days of the order, calculated under Supreme Court Rule 11, unless the trial court extends the time for good cause shown. The majority opinion treated mistaken reliance on the wrong timing rule as, at most, excusable neglect, which is not the same as good cause. So an untimely filing based on counsel's miscalculation should be denied.