Delaware courts have recently ruled on the validity of a shareholder rights plan, or “poison pill,” in two situations that presented issues of first impression under Delaware law. On August 12, 2010, Vice Chancellor Strine, in Yucaipa American Alliance Fund II, L.P. v. Riggio, C.A. No. 5465-VCS (Del. Ch. Aug. 12, 2010), upheld the use of a poison pill with a 20 percent threshold to delay a possible takeover of Barnes & Noble by funds controlled by Ronald Burkle, even though the founder and chairman of Barnes & Noble, Leonard Riggio, controlled more than 30 percent of the company’s outstanding common stock.

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