Richards Layton and Cyrulnik Fattaruso Secure Delaware Supreme Court Affirmance of Entire Fairness Victory on behalf of Controller
December 3, 2025
Publication| Corporate & Chancery Litigation| Corporate Transactions| Corporate Governance
Cyrulnik Fattaruso LLP and Richards, Layton & Finger, P.A. achieved a significant victory in the Delaware Supreme Court today for clients IDT Corporation, Howard Jonas, and the Patrick Henry Trust, with the Supreme Court affirming the Delaware Court of Chancery’s decision rejecting class action claims asserted on behalf of a class of former stockholders of Straight Path Communications Inc., seeking approximately $1.2 billion in damages.
The trial and appellate team was led by Jason Cyrulnik, Paul Fattaruso, and Matthew Henken of Cyrulnik Fattaruso, and Rudolf Koch, Kevin M. Gallagher, Daniel E. Kaprow, and John M. O’Toole of Richards, Layton & Finger.
The lawsuit, filed by the plaintiffs’ counsel in 2017, alleged an unfair settlement of legal claims between Straight Path and its former parent company, IDT, in connection with the sale of Straight Path to Verizon Communications for $3.1 billion. Plaintiffs accused Howard Jonas of using his control of both IDT and Straight Path to cause claims worth over $1.2 billion to be settled for only $10 million. Following a two-week trial that included testimony from dozens of witnesses, the Court of Chancery applied the entire fairness standard of review but found that the challenged settlement in fact exceeded the value of the settled claims, and that there was no harm to Straight Path stockholders, awarding plaintiffs no damages.
The Court of Chancery also denied plaintiffs’ counsel’s post-trial application for a partial recovery of their expended attorneys’ fees, concluding that Howard Jonas had acted based on what he had believed to be in the best interests “of both Straight Path and IDT,” and that Howard Jonas’s “instincts proved correct” when litigated through trial.
In the face of incredible structural hurdles—including top stockholder plaintiffs’ law firms that spent over $25 million in resources pursuing the claims, as well as a special committee of the Straight Path board of directors who, after being voluntarily dismissed by plaintiffs, cooperated with plaintiffs’ counsel, including in testifying at trial—Howard Jonas maintained that he always acted in Straight Path’s best interest and trusted his lawyers to prove those facts at trial, which they did.
Sitting en banc, the Delaware Supreme Court affirmed the Court of Chancery’s judgment, upholding the defendants’ success in the Court of Chancery.