Delaware Litigation Lawyer & Attorney : Francis G. X. Pileggi : Corporate, Business, Commercial, Delaware Chancery Court

Judges on all Delaware courts (including the Chancellor and Vice-Chancellors on the Chancery Court) are appointed by the Governor and confirmed by the State Senate. Thus, to that extent, campaigns for Governor have some relevance to this blog. I thus refer readers to a story by veteran political reporter Celia Cohen with her insights on one night in the gubernatorial campaign of one candidate. Celia's general Delaware political commentary can be found at www.delawaregrapevine.com.

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Prof. Bainbridge comments on the Bebchuk and Fried book about executive compensation. As the first footnote in Chancellor Chandler's recent Disney decision quoted a law review article by Bainbridge on executive compensation, anyone interested in corporate goverance would/should have an interest in his views on the topic.
UPDATE: Bainbridge recently wrote an extensive post discussing whether perks such as use of corporate jets for executives is in the best interest of shareholders, in light of an article in the Wall Street Journal on the topic. Several comments to the post provide opposite views.

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This just in from CNN

The Senate today voted 78-22 to confirm Judge John Roberts as the nation's 17th chief justice. Senate approval capped a two-month process surprisingly free of the partisan rancor widely expected when President Bush nominated Roberts in July. All of the Senate's Republicans, and about half of the Democrats, voted for Roberts. Roberts is the successor to William Rehnquist, who died earlier this month.

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Several new Chancery Court cases were published recently on the court's website. Here are a few quick summaries of the issues addressed in those cases.
Zimmerman v. Braddock (Noble, VC, September 8, 2005) - The very limited issue addressed in this case is whether the court should grant a Motion for Leave to File a Second Amended Derivative Complaint. The only issue that the court had to decide regarding the amendment was whether such amendment would be futile because (1) the plaintiff's claim against the defendants for breach of their fiduciary duties by engaging in insider trading and misappropriating confidential information, failed to state a claim as a matter of law, and (2) whether the Second Amended Complaint failed to assert well pled allegations to show that demand upon the Board would have been futile. The court determined that the plaintiff would be allowed to amend his Complaint. The court had previously dismissed the First Amended Complaint but despite Rule 15(aaa), the court determined that dismissal with prejudice would not "be just under the circumstances", and therefore the dismissal of the First Amended Complaint was made without prejudice.

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Bloglines has a post about potential federal regulations that may try to affect blog content.

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Google now has a search engine to allow searches for blogs, and Kevin O'Keefe of LexBlog has a post about finding my blog using that new search engine.

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The Electronic Discovery Law Blog announced today that:

The Judicial Conference today approved the package of proposed rule amendments addressing the discovery of electronically stored information. It was approved unanimously, without question or objection, and will now be considered by the Supreme Court. If promulgated by May 1, it will become effective on December 1, 2006 absent intervention by Congress.

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Larry Ribstein gives his view of Professor Steve Bainbridge's presentation on the Unocal case, and the abstract of the article on which Bainbridge based the 21st Annual F.G. Pileggi Distinguished Lecture in Law to the Delaware Bench and Bar last week. Several members of the Delaware Chancery Court and Delaware Supreme Court, in addition to members of the Bar, were in attendance to hear Bainbridge's positive perspective on the case. Ribstein has also presented the Pileggi Lecture in years past.

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Gordon Smith comments on the proposal by the University of Chicago to start a blog and the post has generated a number of replies.

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Professor Bainbridge posts that he will present tomorrow in Wilmington the 21st Annual Francis G. Pileggi Distinguished Lecture in Law to the Delaware Bench and Bar. He provides a preview of his topic, Unocal at 20: Director Primacy in Corporate Takeovers, as well as link to the history of the Annual Pileggi Lecture, including the prior speakers since 1985.

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In Andaloro v. PFPC Worldwide, Inc., download pdf file, the Chancery Court addressed an appraisal claim after a merger that was putatively consummated under 8 Del. C. Section 253. A separate fiduciary suit alleging breach of fiduciary duties to minority shareholders was later consolidated, but this is the court's opinion after a trial on the appraisal action only. The court determined the appropriate valuation, and though it was influenced by the trial testimony of the two economic experts, as the law requires, the court made its own determination of the appropriate value and therefore did not attempt to justify the differences between the decision of the court and the two experts of the parties. The court gave a two-thirds weight to its determination of PFPC's valuation under the discounted cash flow method of valuation and one-third weight to the court's determination of PFPC's value under the comparable companies method of valuation.

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In American Legacy Foundation v. Lorillard Tobacco Company, download pdf file, a Chancery Court decision arising in connection with the historic settlement among the tobacco companies and the attorney generals of 46 states in 1998, the issue decided by the court was whether the foundation funded by the tobacco companies pursuant to the settlement constituted a breach of the terms of the Settlement Agreement that prohibited "personal attacks on," or "vilification of" any person or company. The court describes in detail the various advertising campaigns that were allegedly in violation of the agreement and found that the specific advertisements in question did not violate the relevant provisions of the Settlement Agreement.

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Gordon Smith reports that oral argument for the appeal of Chancellor Chandler's Disney decision is expected to be heard by the Delaware Supreme Court in December or January with a decision to be rendered within about 60 days thereafter.

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For those interested in learning more about blogging by lawyers, see this link for interviews taken of me and others by someone who is studying the topic.

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In a short letter opinion, Chancellor Chandler ruled on a Rule 26(e) motion for protective order regarding a deponent who lived in Denver, Colorado. The parties wanted him deposed in either New York or Wilmington. The court ruled that the inconvenience of counsel, and incurring expenses, are part of the litigation process and not determinative. Rather, the court ruled that by having the deposition in Denver, all counsel would be equally inconvenienced and would all incur travel expenses, and neither party would obtain an unfair advantage. The case is FMAC Loan Revocable Trust 1997 v. Ostrie, download pdf file.

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In one of the few decisions to directly interpret the Delaware LLC statutory provision allowing for involuntary judicial dissolution of an LLC, the Chancery Court opinion of In Re: Silver Leaf, LLC, download pdf file, seems to be saying "a pox on both your houses". Though dissolution was granted, the court was displeased with both parties who sought dissolution, and refused to appoint a receiver to oversee the dissolution as well as prohibiting the parties from pursing further litigation without prior approval of the court. More importantly, at pages 27 and 28, the court explains the statutory phrase "reasonably practicable to carry on business" as a basis to dissolve an LLC, and refers by analogy to the LP statute. Also included is a discussion of the equitable defense of "unclean hands".

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As a reminder to infrequent readers, the purpose of this blog is to highlight key decisions of the Court of Chancery and Delaware Supreme Court, primarily in the areas of corporate and commercial law. In order to maintain my practice at the same time I maintain this blog, time constraints often require that I merely note the case and the key issues addressed in the case, and invite the reader to access the entire opinions for their own further review. This is such a time. Here below are blurbs on 4 recent Chancery Court decisions:

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President Bush reportedly has nominated Judge John Roberts to become the next Chief Justice of the U.S. Supreme Court. Thanks to Instapundit.com for the tip. Much can happen over a holiday weekend. Many people had hardly heard of the passing of Chief Justice Rehnquist before Bush announced that instead of replacing Justice O'Connor, he was choosing Roberts to replace Rehnquist.

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In the Chancery Court decision of Gibson v. Sussex County Council, the opinion includes a detailed factual and legal analysis regarding the issues and standards to apply when County Council denies a building permit. Very briefly, the case involved the attempt by a landowner to build townhouses on a waterfront lot. The local zoning commission granted the necessary approval but the County Council denied the request. In sum, the court found that the Council's decision was arbitrary and capricious. That is, there was no substantial evidence to support their decision to deny the conditional use application based on the standards set forth in the County code. The court found that the applicant only needed to meet the statutory requirements for a special exception as described in the code for a conditional use and that they had done so. The court concluded that the County Council's rejection of the project was driven by a desire to please the opponents of the project and not by rational factors pertinent to the decision before the Council. The court reasoned that the Council was not free to bend to the prevailing breeze in a land use approval decision of this type, but must rationally and fairly apply its zoning code and regulations. Instead the court found that the applicant was subject to an ad hoc exercise of power and reversed the ruling of the Council. The opinion is available at the court's website here.

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