Tripadvisor, Inc. (Tripadvisor) and Liberty TripAdvisor Holdings, Inc. (Liberty TripAdvisor) have determined to change their corporate domiciles from Delaware to Nevada. The Tripadvisor directors first discussed reincorporating and the advantages of a conversion 'including, but not limited to the following: Directors and officers of [Nevada corporations] may enjoy a higher level of protection against personal liability; Nevada has business courts that minimize the time, cost and risks of commercial litigation; and Nevada has lower taxes and fees.' For instance, 'in connection with a challenge to an interested party transaction with a controlling shareholder ... the Nevada ... statutory business judgment rule, not the entire fairness standard, is the sole standard for any analysis involving fiduciary duty claims against corporate directors and officers in Nevada.' Both corporations distributed proxy statements to vote on the Conversions. On April 21, 2023, Ps filed a Complaint seeking to enjoin the redomestication of Tripadvisor and Liberty TripAdvisor into Nevada entities. They later withdrew it, and in June 2023, Ps filed a Verified Amended Complaint contending that the Conversions were self-interested transactions and that Ds breached their fiduciary duties by entering into them. Ps sought to enjoin the closing of the Conversions. Ps argued that 'the Conversions will insulate Ds from almost any stockholder litigation, including claims that would be highly meritorious under Delaware law.' Ps claimed that Nevada has been engaged in a project to craft a no-liability corporate safe haven and has become a 'hotbed for corporate wrongdoers.' Ps then argued that 'the Conversions essentially deprive Ps and other public stockholders of [the right to sue] without any fair process and without any consideration.' Ps alleged that the market values Nevada firms less than it values Delaware firms. Ps claim the Conversions are self-interested transactions aimed to benefit the Companies' directors, officers, and conflicted controlling stockholder to the clear detriment of minority public stockholders.' Ps allege that Ds breached their fiduciary duties by entering into the Conversions. D filed a motion to dismiss under Rule 12(b)(6) in that the business judgment rule applies because Ps failed to plead a self-interested transaction. Ds then claimed that 'Delaware courts have found directors to be interested only when approving a transaction that extinguishes existing potential liability.' Ds claim that allegations about protection from potential future litigation are insufficient to plead a self-interested transaction.' Ps argue that the Conversions are subject to entire fairness because they would provide a non-ratable benefit to Ds. The Court of Chancery held that entire fairness would apply if 'the conversions conferred a non-ratable benefit on the fiduciary Ds.' It held that it was 'reasonable to infer from the complaint's allegations that Nevada law provides greater protection to fiduciaries and confers a material benefit on Ds.' The court could conduct an entire fairness inquiry and consider 'whether stockholders received the substantial equivalent of what they had before.' It also held that 'Ps have pled facts supporting an inference that the conversions were not entirely fair.' The court considered which of three standards of review would apply: business judgment, enhanced scrutiny, or entire fairness. The court held that the standard of review 'depends on whether the conversions conferred a non-ratable benefit on the fiduciary Ds.' 'Under Delaware law, a controller or other fiduciary obtains a non-ratable benefit when a transaction materially reduces or eliminates the fiduciary's risk of liability.' The court rejected Ds' attempt to differentiate between existing potential liability and future potential liability. The court criticized Ds' argument that it would not be feasible to apply entire fairness. The court reasoned that 'the true 'test of fairness' is whether the minority stockholder receives at least 'the substantial equivalent in value of what he had before.'' The court held that Ps had pled sufficient facts to make it reasonably conceivable that the Conversions were not entirely fair and, thus, Ds have the burden of demonstrating entire fairness. The court described three types of stockholders' rights: economic rights, governance rights, and litigation rights. The court discussed how curtailing economic or governance rights would trigger entire fairness and reasoned that '[t]he same should be true for litigation rights.' Ds requested a certification of Interlocutory Appeal, which was denied. In April 2024, this Court accepted an interlocutory appeal of the Court of Chancery's decision.

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