A court ruling may make it easier for companies to defend agreements to provide board representation to activist investors, including activist hedge funds. The Delaware Court of Chancery recently decided a motion in a consolidated shareholder litigation challenging alleged misconduct by the board of a publicly traded company after a planned merger was abandoned. Among other matters, the court ruled on allegations that the board’s adoption of certain takeover defenses and agreement with an activist investment firm that gave it board representation were improper. This article provides a brief history of the litigation, a summary of the plaintiffs’ claims and the Court’s reasoning in deciding the motion to dismiss. For perspectives on activist investing from the general counsel of the activist investment firm involved in this case, see “Assessing Board of Director Vulnerability, Protecting Against Activist Campaigns and Good Corporate Governance Are Themes at Activist Investor Conference” (Jan. 27, 2010). For a general look at activist investment funds, see “Structures and Characteristics of Activist Alternative Investment Funds” (Mar. 12, 2015). See also “Can Activist Hedge Fund Managers Provide Special Compensation to Nominees That Are Elected to the Board of a Target?” (Apr. 25, 2014); and “Drawbacks of Being a Lone Dissident on a Board of Directors, Starting an Activist Campaign and Targeting Retail Investors Are Themes at Activist Investor Conference” (Feb. 18, 2011).