Shares in IAC surged more than 8 percent on news of the decision.
In 78-page ruling, Delaware Chancery Court Judge Stephen Lamb upheld
He also acknowledged IAC still has to work out the precise structure of
"In particular, the court rejects Liberty's claim that the proposed single-tier spinoff gives rise to any right of consent on Liberty's part," Lamb wrote. "It follows that the (Diller) proxy remains in effect."
Liberty owns about 30 percent of IAC, but retains 62 percent control through a class of super-voting shares. Diller has held the right to vote those shares under their proxy agreement.
"The simple, inescapable fact is that the IAC directors have not yet finally authorized the spinoff and have not even considered many of the essential terms of that transaction," Lamb wrote.
Liberty could still challenge those plans as they take shape, Lamb said, adding the court would retain jurisdiction for such claims if they need to be resolved at a later date.
IAC shares rose as high as $22.20 from their close Friday of $20.49 on the news.