Federal Circuit Court Judge Richard Posner has an article in The New York Times about the impact of blogs on the mainstream media. Thanks to Instapundit for the tip. Posner himself has a blog that is done jointly with economist Gary Becker. In addition to his duties as a judge, Posner teaches at the University of Chicago Law School and is the publisher of an extraordinary number of publications on many areas of the law.
The Conglomerate blog has a post today in which they report a source that indicates the Disney opinion expected by Chancellor Chandler may be published in another week, at which time the Conglomerate blog will begin an online symposium to discuss the decision.
The blog called Overlawyered has a post about a state court judge in Atlanta who granted the full amount of fees requested by attorneys for shareholders in the Cox Communications litigation. This can be contrasted sharply with the 85-page decision by VC Strine in which he sharply reduced the request for attorneys' fees, as noted in my short post about the case. This is a good insight into different outcomes despite what appears to be a substantially similar issue and similar facts, depending on which forum is chosen.
Cavaliere means "knight" in Italian. At this link is a copy of a Certificate that I just received, in which both the President and the Prime Minister of Italy, memorialize that they have conferred upon me the title of "Cavaliere" as a member of the Order of Merit of the Italian Republic. Such membership is given in recognition for service in the arts, law, science, economics, literature and/or public service. I am honored and humbled to receive this recognition from the Prime Minister and President of the Republic of Italy.
The California Supreme Court recently ruled in Miller v. Dept of Corrections, No. 05C.D.O.S. 6268, that a manager's sexual liaisons with subordinates to whom favoritism was shown, created a hostile work environment for the other subordinates who did not sleep with the boss, and therefore, subjected the employer to liability.
In a recent Chancery Court decision applying Section 220 of the DGCL, the court reiterated the requirements that must be satisfied in a demand for books and records. The proper purpose prerequisite in the statute requires that the stockholder establish a credible basis for the allegations of misconduct on which the demand is asserted (i.e., to establish a purpose related to status as a stockholder). The court also addressed the effect of a merger of the company after the demand was made. After a trial, which took place about a year after the initial demand was made, the court determined that a limited scope of documents (fewer than requested) should be produced. The opinion, Deephaven Risk Arb Trading, Ltd. v Unitedglobalcom, Inc., is available via downloaded pdf file.
Since the scope of this blog includes corporate law, a post concerning the social responsibility of corporations, by the prolific and influential federal Circuit Judge Richard Posner, and multiple comments about his post and his co-blogger's post on the same topic, is likely of interest to readers of my blog. For those interested, click on this link.
Here is a link to the 2005 Update to Prof. Ribstein's book entitled Unincorporated Business Entities, including the latest cases and commentaries on agency and LLCs, for example.
In the current issue of The Business Lawyer, that I just received today, Vice Chancellor Leo Strine, Jr., publishes his latest article on far-reaching insights about key aspects of Delaware corporate law and public policy. Must reading for anyone interested in this area of the law. Here is the cite (though I have not found it online): Strine, If Corporate Action is Lawful, Presumably There Are Circumstances in Which It Is Equitable to Take That Action: The Implicit Corollary to the Rule of Schnell v. Chris-Craft, 60 Bus. Law. 877 (2005).
A recent Delaware Supreme Court decision includes a useful primer on statutory interpretation principles as well as an analysis of why it allowed a reverse merger of existing LLCs to transfer ownership of real estate without being subject to local and state real estate transfer taxes. The decision in Acadia Brandywine Town Center, LLC v. Acadia Brandywine Holdings, LLC, download pdf file, will undoubtedly be addressed in the next session of the Delaware General Assembly, but in the meantime, it may be of interest to those who can avail themselves of the relatively underutilized Series LLC. To my knowledge, the Series LLC is unique to Delaware law. Here is a short article about the Delaware Series LLC. Download file.
In denying a defendant's motion for reargument of the denial of a motion to dismiss, Chancellor Chandler applied the entire fairness standard, and not the business judgment rule, to a reverse stock split, for 3 separate reasons. Assuming, as required on a motion to dismiss, that all well-pleaded allegations were true and resolving all inferences in plaintiff's favor, the 3 reasons were as follows:
First, a majority of the board was not independent; second, the board allegedly approved the reverse stock split and the valuation of plaintiff's stock, without adequate consideration--suggesting an issue regarding possible breach of the duty of care to consider all material information before making a business decision. Lastly, there were allegations about lack of good faith. The court also distinguished other cases involving a higher pleading standard based on derivative claims, not applicable here. In addition, the court held that the business judgment rule did not apply to a determination of fair value, in light of claims that fair value was not paid for a fractional share pursuant to Section 155 of the DGCL. The full opinion in iXcore, S.A.S. v. Triton Imaging, Inc., et al., is available at this link: download pdf file
Prof. Christine Hurt at the Conglomerate blog posts about ethical issues related to blogging, and links to several others who discuss the topic.
A request for a preliminary injunction was denied in connection with a claim that a former business partner had breached an agreement, and by contacting certain customers, had misappropriated trade secrets. In Nutzz.com v. Vertrue Incorporated, download pdf file, the court found that the irreparable harm prerequisite for injunctive relief, as well and the criteria of likelihood of success on the merits and balance of equities were not satisfied. Nor did the court find that there was a breach of the agreement such that the definition of a trade secret was met. Although the agreement in question was controlled by Connecticut law, the P.I. standard was analyzed under Delaware law and the court found the trade secret statute of both states to be essentially the same.
Prof. Ribstein has an insightful analysis on his blog of the recent Cox Communications decision. In addition to a decision on attorneys' fees in class actions, the opinion has a more far-reaching discussion of public policy issues raised in cases involving a majority buyout of minority shares and related concerns. I briefly posted on the case when it first was published not long ago.
Now for the human side of President Bush's announcement last night of his nominee for the U.S. Supreme Court. Anyone with children must see this link for photos of the nominee's son who did not let the fact that the President was making a big announcement spoil his fun. The nominee's calmness in this situation should give him extra points.
President Bush this evening nominated D.C. Circuit Court of Appeals Judge John Roberts to replace Sandra Day O'Connor and become the 109th justice of the U.S. Supreme Court. Here is a link to a story with his background.
The Washington Post has an article today about the press conference scheduled for tonight by the White House to announce the President's choice to replace Justice O'Connor on the U.S. Supreme Court, and the possibility of Circuit Court Judge Edith Clement.
Prof. Gordon Smith has arranged for an online symposium through his blog called Conglomerate, with a panel of law professors, who will begin their commentary on the day after Chancellor Chandler's Disney decision is made public, with details available here. One of my prior posts linked to Prof. Larry Ribstein's prediction on the decision, which will address such key current corporate issues as good faith and executive compensation.
The standard for granting a litigant's request for expedited proceedings in connection with a preliminary injunction motion was discussed in the recent opinion of In Re SunGard Data Systems, Inc. Shareholder Litigation, download pdf file. The shareholders in a purported class action had sought an expedited hearing, prior to a shareholders' meeting, to address issues about disclosure in the proxy statement (but not adequacy of price). The court did not find a sufficiently colorable claim to show threatened irreparable harm that would justify imposing the substantial cost and burden of expedited proceedings on the defendants.
Three recent Chancery decisions posted on the Court's website each addressed issues that often arise:
In Mason v. Network of Wilmington, Inc., download pdf file, the court discussed the summary judgment motion standard (prior to the recent adoption of Rule 56(h)), in connection with analyzing the following issues related to efforts to collect a judgement against the sole shareholder of affiliated entities: piercing the corporate veil; fraudulent transfers and successor liability. See below link for remaining 2 cases.
Governor Ernie Fletcher of Kentucky recently signed a proclamation appointing me as a "Kentucky Colonel". See below photograph of his emissary, Barry Johnson, presenting me with the honor. 
The Honorable Order of Kentucky Colonels is the highest honor awarded by the Commonwealth of Kentucky and, in essence, is a charitable organization that supports worthy causes. The Governor's office describes it as a group of "ambassadors of goodwill and fellowship around the world". Its membership has included President Lyndon Johnson and Prime Minister Winston Churchill. More details can be found at this link.
As I have said in prior posts, depending on the volume of cases that are the focus of this blog and the date they are published by the courts, compared with my workload, I may only have time to list the cases and a few key legal issues addressed. This is one of those posts.
About 5 decisions relevant to this blog appeared on the Chancery Court's website within the past few days, at about the same time I was working feverishly to file an expedited motion for an injunction in the same court. Here goes.
In Disney v. The Walt Disney Co. (decided shortly before the recently announced decision of Roy Disney to settle certain disputes with the company his uncle founded), the court reviewed a prior decision on remand from the Delaware Supreme Court regarding confidentiality of documents in a Section 220 case. The Chancery Court thoroughly discusses a company's right to maintain the confidentiality of documents produced in a Section 220 case, and the different standard used for a Protective Order under Rule 26 in the course of discovery issues in a conventional case.
Next is the case of In Re Toys "R" Us, Inc., Shareholder Litigation. Here the court refused to enjoin a buyout and rejected the claim that the breakup fee agreed to by the directors shut out other suitors. The remaining cases are listed below the next link.
Though not strictly a case dealing with corporate or commercial law, the recent Delaware Supreme Court opinion in Dunlap v. State Farm Fire and Casualty Co.,download pdf file, reaffirmed the contract principle, often used in business cases, of the implied covenant of good faith and fair dealing. The court made clear that when applicable, this "duty" will continue to be enforced.
In a recent decision, Vice Chancellor Noble observed that the Chancery Court does not serve as an appellate court for binding arbitration awards and the threshold is high for those seeking to overturn such awards. In Daisy Construction Co. v. Mumford and Miller Concrete, Inc., download pdf file,the court granted the summary judgement motion of the defendant to confirm the arbitration award.
Prof. Larry Ribstein has a post that anyone interested in Delaware corporate law and litigation should read. He supplies the reader with what he predicts will be Chancellor Chandler's opinion in the case involving the challenge to the Ovitz contract. His description of his scholarly analysis is much more entertaining that my summary:
I have decided to post a few thoughts about the Disney case in advance of Chancellor Chandler's impending decision. Most importantly, I have taken the liberty of posting the opinion, beating the Chancellor to the punch. The tradeoff for the reader is that this version will be somewhat less authoritative than the one the Chancellor will issue later, since this one is written by me, not him. But I think that I have accurately predicted what he's going to say.
The Delaware Supreme Court recently affirmed the Chancery Court's ruling on advancement of litigation expenses for a former officer, but in Kaung v. Cole National Corporation, download pdf file, the court held that the nature of a summary proceeding for advancement is too limited to address the related but distinct issues of indemnification or recoupment of amounts voluntarily advanced. The court also spent considerable time in the opinion to reaffirm the importance to the Delaware Courts of civility in legal proceedings. In affirming the Chancery Court's shifting of fees against the plaintiff for "bad faith" tactics, the Supreme Court directly put lawyers "on notice", as it has in past cases, that it would continue to affirm the imposition of fees against lawyers who engage in "abusive litigation tactics", including inappropriate conduct by parties themselves during their depositions.
UPDATE: Here is my post about the Chancery Court's decision after remand.
Today in The New York Times it was reported that the suit by Roy Disney and Stanley Gold contesting the procedure by which the Disney Co. Board chose the successor to Michael Isner, has been settled. Two prior posts here and here summarized a recent Chancery Court decision allowing their case to proceed to trial.
Ideoblog, the blog of Prof. Larry Ribstein, recommends as must reading for all incoming law students, A Man For All Seasons, the movie/play about St. Thomas More, and the principled stand he took as the Chancellor of England, against King Henry VIII, which cost him his life (and earned him sainthood). Among many other positive aspects of the story, its a timeless reminder that some lawyers actually help the image of the legal profession.
Vice Chancellor Lamb dismissed a claim for advancement of fees due to the lack of evidence that the claimant was within the class of persons entitled to advancement for the specific entity that was sued. In Flynn v. CBIC World Markets Corp., download pdf copy, the entity sued was one of many affiliated companies owned by a multi-national parent corporation. The court found that the entity for whom the claimant was employed did not have an advancement provision in its bylaws. The separate issue of advancement was not decided by the court.
The Legal Ethics Forum blog has a post about the different rule in continental Europe concerning independence of lawyers, and their apparent obligation to accept most clients. On the heels of our July 4th weekend, it is interesting to compare that to our system and our ethical rules.
Prof. Ribstein has a post in which he describes the expansion of the blog called Conglomerate, which focuses on corporate law primarily, and was started by Professors Gordon Smith and Christine Hurt. A third blogger, Vic Fleischer, who has a tax blog, will now be joining them.
The focus of this blog is on those decisions from the Delaware Court of Chancery and Delaware Supreme Court that deal with corporate and commercial law. Many cases from both courts deal with other areas of the law that are outside the scope of this blog. From time to time, there are cases from each court that "come close to the line" of this blog's focus, and in those instances I may include some of those cases. It also happens that there may be a period of a week or more where there are no decisions handed down that fall within this blog's scope (hence the commentary), and at other times, several decisions can be published on the court's website in one day. This week 2 decisions were issued that prompted the foregoing explanation. In Libeau v. Fox, the court interpreted an agreement among erstwhile friends to buy and use a beach house. The court was called upon to interpret that agreement in light of one party wanting to "cash out" her interest. In Hionis v. Shipp, the court interpeted a document that purported to create an easement, but despite defects in the document, the court found an easement by estoppel. Both decisions are found on the court's website.
Today is July 4 and this post by Prof. Bainbridge has a historical reference that is appropriate as a reflection on this important day that recalls that Declaration of Independence and all that came after it.
As a lawyer in the U.S., one must be aware of changes in the membership of the U.S. Supreme Court. Prof. Ribstein has a post on the announcement today about Justice O'Connor retiring, as well as discussion about possible replacement candidates.
Prof. Bainbridge has a good post on civility in the blogosphere.
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