IDT Vindicated: Delaware Court Ends Billion-Dollar Straight Path Lawsuit

NEWARK, NJ – December 03, 2025 – The Delaware Supreme Court today put a definitive end to a contentious, years-long legal battle against IDT Corporation (NYSE: IDT), affirming a lower court’s dismissal of all claims related to the 2017 sale of its former subsidiary, Straight Path Communications, to Verizon for $3.1 billion. The decision marks a complete vindication for IDT, removing a significant legal and financial overhang that has shadowed the company since the class action lawsuit was first filed in 2017.

In a brief order, the state's highest court upheld the detailed post-trial decision from the Delaware Court of Chancery, which found that while the process surrounding a key pre-merger settlement was flawed, Straight Path’s former shareholders suffered no actual financial damages. The ruling concludes a complex corporate saga involving a spin-off, valuable 5G spectrum assets, a multi-billion-dollar bidding war, and allegations of breached fiduciary duties against a controlling shareholder.

“We are very pleased by today’s decision from the Delaware Supreme Court, which puts to rest this lawsuit by affirming the post-trial decision of the Court of Chancery,” said Shmuel Jonas, IDT’s CEO, in a statement. “We have said all along that this class action suit was without merit, and today’s decision upholding the Court of Chancery’s decision vindicates IDT’s position.”

The Genesis of a High-Stakes Dispute

The dispute traces its roots back to 2013, when IDT, a global fintech and communications firm, spun off Straight Path Communications. The newly independent company held a vast and highly valuable portfolio of millimeter-wave (mmWave) spectrum licenses, particularly in the 28 GHz and 39 GHz bands, which were becoming critical for the impending rollout of 5G wireless networks.

However, these assets came with a significant liability. In early 2017, Straight Path entered into a consent decree with the Federal Communications Commission (FCC) to settle charges of “spectrum squatting.” The FCC found the company had failed to meet its obligations to build out wireless infrastructure on its licensed frequencies. The settlement included a multi-million dollar fine and a crucial stipulation: Straight Path had to sell its spectrum assets, with 20% of the gross sale proceeds going to the U.S. Treasury as an additional penalty.

This forced sale triggered a fierce bidding war between AT&T and Verizon, both eager to acquire the spectrum to bolster their 5G ambitions. After AT&T’s initial $1.6 billion offer, Verizon ultimately prevailed with a blockbuster $3.1 billion all-stock deal. The 20% FCC penalty resulted in a staggering $614 million payment to the government, but the deal still delivered what the court would later call a “huge windfall” for Straight Path shareholders, who received approximately $184 per share.

A Flawed Process, But No Harm Done

The class action lawsuit, filed on behalf of former Straight Path stockholders, did not contest the value of the Verizon merger. Instead, it focused on a separate, preceding transaction. The plaintiffs alleged that IDT’s founder and chairman, Howard Jonas, who was also the controlling shareholder of Straight Path, breached his fiduciary duties. They claimed he used his influence to force Straight Path’s board to release IDT from a potentially massive indemnification claim for a mere $10 million.

This claim originated from the 2013 spin-off agreement, under which IDT had agreed to indemnify Straight Path for certain liabilities arising from pre-spin-off conduct—conduct that included the actions leading to the FCC penalty. Plaintiffs argued this indemnification claim was worth hundreds of millions of dollars and that Jonas had improperly diverted this value from Straight Path shareholders to IDT just before the lucrative Verizon sale closed.

In a detailed 83-page opinion in October 2023, Delaware Court of Chancery Vice Chancellor Sam Glasscock III delivered a nuanced and surprising verdict. He found that Howard Jonas had indeed breached his duty of loyalty, writing that Jonas “used his control to seize the corporate machinery” and acted in “a manifestly unfair manner” to secure the release of the indemnification claim. The process was deeply flawed.

Despite this finding, the court concluded that the plaintiffs had suffered no actual damages. The Vice Chancellor determined that the underlying indemnification claim itself was “a flawed asset” and likely had “no economic value.” This was because Straight Path had failed to provide formal, timely notice to IDT of its intent to seek indemnification, a critical requirement under the spin-off contract. Without this notice, the court reasoned, the claim was contractually unenforceable. Therefore, the $10 million settlement, while unfairly obtained, did not deprive shareholders of any value they would have otherwise received. The court awarded only nominal damages, establishing a breach of principle but no tangible harm.

Market Vindication and a Clear Path Forward

The market’s reaction to the Chancery Court’s initial ruling was swift and decisive. In October 2023, IDT’s stock (NYSE: IDT) surged 19% in a single day, reflecting investor relief as the threat of a potential billion-dollar judgment evaporated. For years, the lawsuit had represented a significant overhang, creating uncertainty and risk that is now fully resolved with the Supreme Court’s affirmation.

With this legal chapter closed, IDT can direct its full attention to its diverse portfolio of core businesses. The company operates in high-growth fintech and communications sectors, including its National Retail Solutions (NRS) point-of-sale platform, BOSS Money international remittances, and net2phone cloud communications services. Free from the distraction and potential liability of the Straight Path litigation, management is now better positioned to execute its strategic growth initiatives and build on its recent performance, which has seen its stock deliver an annualized return of over 19% over the past decade.

Lessons in Corporate Governance

The final outcome of the Straight Path saga offers important insights for corporate governance, particularly within the influential sphere of Delaware law. The case serves as a powerful illustration of the “entire fairness” standard, which requires a controlling shareholder in a conflicted transaction to prove both fair process and fair price.

Here, the court found the process to be patently unfair but was ultimately swayed by the lack of economic harm, effectively finding that the “fair price” component—or in this case, the lack of lost value—outweighed the procedural failings. This reinforces a pragmatic approach by Delaware courts, which, while policing fiduciary conduct, remain focused on actual economic outcomes for shareholders.

The decision also serves as a stark reminder of the heightened scrutiny placed on controlling shareholders and the critical importance of adhering to contractual formalities. Straight Path’s failure to simply provide proper notice ultimately rendered a potentially valuable legal claim worthless. For corporate boards and legal teams, it underscores that procedural diligence is not just a matter of good practice but can be determinative in high-stakes corporate disputes.