Chesapeake Corp. v. Shore 771 A.2d 293 (Del.Ch. 2000) Shorewood was a Delaware corporation that made an offer to buy a Virginia corporation called Chesapeake. Chesapeake's directors rejected Shorewood's offer because they felt it was too low. In response, they made an offer to buy Shorewood. Shorewood rejected Chesapeake's offer for the same reason. Shorewood was worried that Chesapeake might try a hostile takeover, so they amended their bylaws in a number of ways to make it more difficult. They already had a poison pill, but added a few other things, including a bylaw that required a supermajority of shareholder votes to further amend the bylaws. Chesapeake made a public tender offer for Shorewood. They also sued Shorewood's directors to invalidate the supermajority requirement. Chesapeake argued that the supermajority requirement was a breach of fiduciary duty on the part of Shorewood's directors because it was done solely so they wouldn't lose their jobs. That's a breach of the duty of loyalty. Chesapeake argued that Blasius Industries, Inc. v. Atlas Corp. (564 A.2d 651 (1988)) required Shorewood's directors to have a compelling justification for their actions because the directors' primary purpose in amending the bylaws was to impede the stockholders from exercising their franchise. Shorewood's directors argued that the bylaw was a perfectly legitimate takeover defense as described in Unocal Corp. v. Mesa Petroleum Co. (493 A.2d 946 (1985)). Unocal said that when there is a takeover defense, the directors are under an "enhanced duty" to show that their decisions are meant to further the welfare of the corporation and not just to protect their jobs. The Trial Court found for Chesapeake. The Trial Court found that they should examine the problem in two steps: First they would look at the bylaw under the Unocal standard to see if the supermajority requirement was a reasonable and proportionate takeover defense considering the threat Chesapeake posed. Second, after assessing whether the bylaw was a proportionate response under Unocal, they would determine whether Blasius' compelling justification standard would be applicable. The Court applied Unocal and found that inadequacy of Chesapeake's bid posed a legitimate threat to Shorewood. So it met the first prong of Unocal, which asks if there is a legitimate threat. Then they found that the bylaw was not reasonable in relation to the threat that Unocal posed. So it failed the second prong of Unocal. The Court applied the Blasius compelling justification test and found that the primary purpose of the supermajority requirement was to interfere with or impede the shareholders. Therefore there was not compelling justification for the bylaw and it fails the compelling justification test.