In In re Sirius XM Shareholder Litigation, Delaware Chancellor Strine dismissed as time-barred claims by Sirius XM shareholders that the Sirius XM board breached its fiduciary duties by failing to adopt a poison pill or taking other action to block the acquisition by Liberty Media of majority control of Sirius through open-market purchases made by Liberty as permitted by the investment agreements between the parties.

The court focused on the fact that, when Liberty invested in Sirius in early 2009, it specifically negotiated for the right to make such purchases unimpeded by the board. Accordingly, if any fiduciary breach with respect to the purchases had occurred, they occurred in 2009, more than 3 years before the plaintiffs filed their claim, which was beyond the statute of limitations period applicable by analogy to the complaint at issue through the doctrine of laches.

The Chancellor cited his decision in Hokanson v. Petty, in which he dismissed as timed-barred claims against the exercise of an option to acquire 100% of a target company at a specified price entered into more than 3 years before the actual acquisition of 100% was effected and challenged. The court also rejected the alternative argument that Liberty, as a minority but still-controlling stockholder, had a fiduciary duty not to enter into open market purchases without negotiating with the Sirius board. Among other things, the court cited cases that make the point that the exercise of a pre-existing contractual right by even a controlling stockholder cannot be a breach of fiduciary duty.