Maffei v. Palkon

Court of Chancery of the State of Delaware · 2024 · Corporations

Updated August 22, 2026

CorporationsInterlocutory appealStandard of reviewEntire fairnessRule 42motion to dismisssubstantial issuematerial importance

Facts

TripAdvisor, Inc. and Liberty TripAdvisor Holdings, Inc., both Delaware corporations, each had high-vote and low-vote shares, and Gregory Maffei controlled both entities through voting power. Their boards approved conversions to Nevada corporations without special committee approval or an unaffiliated stockholder vote, and Maffei delivered the necessary control votes. In the earlier opinion, the court held that the complaint adequately alleged the conversions were interested transactions because plaintiffs alleged defendants sought materially reduced stockholder-litigation risk under Nevada law. The earlier opinion therefore applied entire fairness at the pleading stage, found the conversions inferably unfair, but dismissed the request for injunctive relief.

Issue

Should the Court of Chancery certify its order denying most of defendants' motion to dismiss for interlocutory appeal under Rule 42? More specifically, did the prior pleading-stage ruling decide a substantial issue of material importance and otherwise merit appellate review 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. A denial of a motion to dismiss generally does not satisfy that requirement, especially when it only determines at the pleading stage that a plaintiff may proceed to discovery, and certification is disfavored unless the likely benefits of interlocutory review outweigh its certain costs after consideration of the Rule 42 factors.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A stockholder sued the controllers of Harbor Vale Media, a Delaware corporation based in Seattle, after the company converted into an Arizona entity. The Delaware trial court denied the defendants' motion to dismiss, holding only that the complaint adequately alleged an interested transaction and that the case could proceed to discovery under entire fairness.

The defendants seek certification of an interlocutory appeal, arguing that the order decided the key legal issue because it selected the likely standard of review. Should certification be granted?

Explanation. Rule 42 requires that the order decide a substantial issue of material importance. Under the majority opinion, a denial of a motion to dismiss generally does not meet that threshold when it only determines at the pleading stage that the plaintiff may proceed to discovery. A likely standard-of-review ruling is not final on the merits.