Also known as: enhanced scrutiny tests · enhanced scrutiny · heightened scrutiny test · intermediate scrutiny
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A heightened standard of judicial review applied to directors' defensive measures taken in response to a threat to corporate control. The directors bear the burden to demonstrate that they were adequately informed and that their actions were reasonable in relation to the threat posed.
A heightened standard of judicial review applied to directors' defensive measures taken in response to a threat to corporate control. The directors bear the burden to demonstrate that they were adequately informed and that their actions were reasonable in relation to the threat posed.
Select any source to read its text and confirm it supports the definition.
An intermediate standard of review applied to gender or illegitimacy classifications. The government must demonstrate an exceedingly persuasive justification showing the classification is substantially related to an important governmental objective.
Select any source to read its text and confirm it supports the definition.
An intermediate standard of review applied to gender or illegitimacy classifications. The government must demonstrate an exceedingly persuasive justification showing the classification is substantially related to an important governmental objective.
Each sense below has its own examples, sources, and questions.
Everest Holdings receives a hostile takeover bid. Its board adopts a rights plan and lock-up option favoring a white-knight bidder. A competing bidder sues. The court applies the enhanced scrutiny test and requires the directors to prove both an adequate decision-making process and that their actions were reasonable in light of the threat to shareholder interests.
Eclipse Manufacturing faces competing bids during a sale process. The board grants a lock-up to one bidder that ends active bidding. A disappointed bidder sues. The court applies the enhanced scrutiny test and finds the lock-up unreasonable because it destroys rather than fosters the auction process for shareholder benefit.
Directors must prove they were adequately informed and that their actions were reasonable in relation to the threat. The test examines both the decision-making process and the substantive reasonableness of the response.
Supporting sources
The business judgment rule presumes directors acted properly. Enhanced scrutiny shifts the burden to directors to justify their actions with evidence of an adequate process and reasonable response to a control threat.
Supporting sources
The test applies whenever a board adopts defensive measures in response to a threat to corporate policy and effectiveness that touches on issues of control, such as a hostile bid or proxy contest.
Supporting sources
Ezra Eastman and his wife jointly own their home. A state statute designates the husband as head of household and permits him to sell the property without her consent. Ezra sells the home to a developer. His wife sues, claiming the statute violates equal protection. The court applies the enhanced scrutiny test and strikes down the statute because the gender classification lacks a substantial relationship to an important governmental objective.
Enigma Technologies operates a cable system. A federal rule requires carriage of local broadcast channels, displacing some of the company's preferred programming. Enigma sues, alleging a First Amendment violation. The court applies the enhanced scrutiny test and upholds the rule after finding that it advances important interests unrelated to speech suppression and does not burden substantially more speech than necessary.
Ella Emerson applies to a state military academy that excludes women. The academy defends the policy as necessary to preserve its distinctive educational method. Ella sues under the Equal Protection Clause. The court applies the enhanced scrutiny test and invalidates the policy because the state fails to provide an exceedingly persuasive justification substantially related to an important objective.
Eric Espinoza seeks support for his nonmarital child six years after birth. State law bars such suits after six years while allowing marital children to seek support indefinitely. Eric challenges the statute. The court applies the enhanced scrutiny test and invalidates the limitation because it is not substantially related to the state's interest in preventing stale claims.
…personal liability for consequences stemming from the adoption of previous defensive measures, the action cannot withstand the enhanced scrutiny which Unocal requires of director conduct. See Unocal , 493 A.2d at 954-55. In addition to the lock-up option, the Court of Chancery enjoined the no-shop provision as part of the…