Archives: Chancery Court Updates

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Chancery Finds Breach of Obligation to Use “Diligent Efforts”

A recent Delaware Court of Chancery opinion is useful for commercial litigators who encounter the frequent situation where one party is required to use some variation on the standard of “best efforts” to either sell a product or reach certain revenue milestones, for example, in connection with a joint venture or a post-closing earn-out. In … Continue Reading

Chancery Refuses to Seal Courtroom for Allegedly Confidential Trial Exhibits

The Court of Chancery recently rejected a request by a non-party to seal certain trial exhibits so that they would not become part of the public trial record.  The court also rejected a request to close the courtroom to the public during trial for any testimony or argument regarding those exhibits.  ADT Holdings, Inc. v. Harris, … Continue Reading

Chancery Reviews Fiduciary Duties of Independent Board of Directors

A recent Delaware Court of Chancery decision addressed how the court will review claims against an independent and disinterested board for breach of the duty of loyalty in connection with a merger transaction. The opinion styled Kahn v. Stern, C.A. No. 12498-VCG (Del. Ch. Aug. 28, 2017), involved allegations made unsuccessfully, that the board of directors breached their duties … Continue Reading

Court Rejects Post-Closing Adjustment Claims

The Delaware Court of Chancery recently addressed a common type of claim in commercial litigation: Post-closing adjustments to the purchase price. Sparton Corporation v. O’Neil, C.A. No. 12403-VCMR (Del. Ch. Aug. 9, 2017). Basic Facts: The claims in this case involved an assertion that the defendant directors changed the selling company’s accounts receivable after an amount was … Continue Reading

Court Rejects Claims for Post-Closing Milestone Payments

A recent decision of the Delaware Court of Chancery deals with a recurring source of litigation: Claims for post-closing contingent payments based on allegations that the requisite milestone was triggered.  The merger in Fortis Advisors LLC v. Shire US Holdings, Inc., C.A. No. 12147-VCS (Del. Ch. Aug. 9, 2017), involved novel pharmaceutical products that were … Continue Reading

Claims Allowed to Proceed Based on Entire Fairness Standard

The recent Chancery decision in Buttonwood Tree Value Partners, L.P. v. R.L. Polk & Co., Inc., C.A. No. 9250-VCG (Del. Ch. July 24, 2017), is noteworthy for its application of the entire fairness standard to a controlling stockholder transaction, and the observation that exculpatory provisions barring director liability for violations of the duty of care … Continue Reading

Chancery Awards Advancement Fees for Defense of Similar Claims Pending Against Non-Covered Parties

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Court of Chancery recently awarded an applicant, Eric Pulier, all of his requested fees and expenses for advancement even though some of the expenses incurred related to the defense of claims asserted against SRS, a defendant not seeking advancement. In Pulier v. … Continue Reading

Fiduciary Duty Claims of Start-up Co-Founder Denied

A recent Delaware Court of Chancery opinion analyzed claims that are not uncommon: one of two founders of a start-up, that failed to launch, claimed that the other co-founder breached fiduciary duties by launching another start-up venture with a third-party who then pursued the business plan of the original start-up, but without the original co-founder.  In McKenna v. … Continue Reading

Chancery Refuses to Apply Garner Exception to Attorney/Client Privilege

A recent Delaware Court of Chancery decision is essential reading for anyone who seeks to apply the exception to the attorney/client privilege known as the Garner exception. Salberg v. Genworth Financial, Inc., C.A. No. 2017-0018-JRS (Del. Ch. July 27, 2017). Garner is known to corporate litigation practitioners as an exception to the general prohibition on the … Continue Reading

Lawyer Not Barred from Testifying as Witness

The latest Chancery decision in hotly contested litigation captioned In re Oxbow Carbon LLC Unitholder Litigation, Consol., C.A. No. 12447-VCL, (Del. Ch. July 28, 2017), addresses several issues that are of practical importance for all trial lawyers. Several prior Delaware decisions in this case that have been highlighted on these pages  provide additional background.  Among the … Continue Reading

Chancery Proposes Bright-Line Rule for Issue Preclusion Analysis in Derivative Actions

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans The Court of Chancery has recently proposed, on remand from a Supreme Court reversal, that “issue preclusion” in the demand futility context should only apply after the prior plaintiff’s derivative claims have survived a Rule 23.1 motion to dismiss. In In re Wal-Mart … Continue Reading

Chancery Rules that Sufficiently High Deal Price Overcomes Strong Evidence of Unfair Dealing

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Court of Chancery recently ruled against plaintiffs, after trial, in a breach of fiduciary duty case, and in a related appraisal action. In ACP Master, Ltd., v. Sprint Corp., C.A. No. 8508-VCL (Del. Ch. July 21, 2017), and its companion case … Continue Reading

Stock Transfer Restrictions Explained

A recent decision of the Delaware Court of Chancery needs to be consulted by anyone who seeks to fully understand the prerequisites under the Delaware General Corporation Law for effective restrictions on the transfer of stock. Henry v. Phixios Holdings, Inc., C.A. No. 12504-VCMR (Del. Ch. July 10, 2017). The prerequisites under DGCL Section 202 … Continue Reading

Equitable Jurisdiction Found Lacking in Debt Action

The Delaware Court of Chancery is a court of equity with limited jurisdiction. Contrary to what some may assume, not all corporate and commercial litigation can be heard in this famous court. (Delaware’s trial court of general jurisdiction is the Superior Court.) A recent opinion has practical application for litigators to the extent that it applies the well-traveled, … Continue Reading

Corwin Cleansing Not Always a Sure Defense For Director Misconduct in the Merger Realm

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans A recent article in Law 360 surveys three recent opinions in which the Court of Chancery rejected the Corwin cleansing doctrine in the merger context, in which the directors’ misconduct created various forms of coercion upon the stockholders.  The article entitled When Delaware … Continue Reading

Chancery Opinion Reviews Voting Agreements and Director Compensation

The recent decision from the Delaware Court of Chancery in Williams v. Ji, C.A. No. 12729-VCMR (Del. Ch. June 28, 2017), provides important insights into the Delaware law applicable to challenges to voting agreements among stockholders, as well as to director compensation packages. (By the way, Happy July 4th to all my loyal readers. We should all … Continue Reading

Vice Chancellor Laster Opines on the Evolving Standard of Enhanced Scrutiny

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. In a post on the Harvard Law School Forum on Corporate Governance and Financial Regulation site, Vice Chancellor Travis Laster addressed the evolving standard of the enhanced scrutiny doctrine as applied to Delaware M&A litigation over the last 3 decades.  In Changing Attitudes: … Continue Reading

Chancery Resolves Board Composition Dispute

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Court of Chancery preliminarily resolved a board composition conflict arising under DGCL §225 during a hearing to impose a status quo order. In Master Com Group Holding USA, Inc. v. Ribeiro, C.A. No. 2017-0406-SG, (transcript)(Del. Ch. June 14, 2017), Vice Chancellor Glasscock … Continue Reading

Challenge to State Bid Dispute Denied

Justin M. Forcier, an associate in the Delaware office of Eckert Seamans, prepared this overview. A recent Chancery decision provides guidance for attorneys seeking injunctive relief in connection with a bid dispute for a state contract pursuant to 9 Del. C. § 4725.  Charlie’s Waste Services, LLC v. Kent County Levy Court, C.A. No. 2017-0283-JRS … Continue Reading
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