Archives: Chancery Court Updates

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Doctrine of Laches Bars Quasi-Appraisal Remedy

In Houseman v. Sagerman, C.A. No. 8897-VCG (Del. Ch. Nov. 19, 2015), the Delaware Court of Chancery described the form of remedy known as a quasi-appraisal. The Court of Chancery explained that quasi-appraisal is not itself a cause of action, but is instead a remedy that, where appropriate, awards stockholders damages based on the going-concern value … Continue Reading

Director Who Was Tricked into Resigning Reinstated

In Martin v. Med-Dev Corp., C.A. No. 10525-VCP (Del. Ch. Oct. 27, 2015), the Court of Chancery  invalidated the resignation of a director who was tricked into resigning from his board position, and the Court reinstated him as chairman. The Court’s opinion is also notable for its discussion of what steps must be taken for … Continue Reading

Chancery Determines that BJR Applies Instead of Revlon Standard

The Court of Chancery in the recent decision styled In re Zale Corporation Stockholders Litigation, C.A. No. 9388-VCP (Del. Ch. Oct. 29, 2015), in a rare grant of a motion for reargument pursuant to Rule 59, dismissed a financial advisor after the court had previously denied the same motion to dismiss the financial advisor. The current ruling is … Continue Reading

Chancery Enforces Covenant Not To Compete

The Chancery opinion in Revolution Retail Systems, LLC v. Sentinel Technologies, Inc., C.A. No. 10605-VCP (Del. Ch. Oct. 30, 2015), discusses many issues in connection with the breach of contract for the sale of a business. The sale involved an ongoing collaborative relationship. Although Texas law applied to many aspects of the case, the court cited … Continue Reading

Facebook’s Mark Zuckerberg Required to Follow Corporate Formalities

The Delaware Court of Chancery yesterday held, on a question of first impression, that a controlling stockholder must formally ratify a self-dealing transaction by a vote at a meeting of stockholders or by written consent in order to shift the standard of review from entire fairness to the business judgment rule.  In Espinoza v. Zuckerberg, … Continue Reading

Chancery Dismisses Challenge to Board Decision to Settle Claims

In Shaev v. Adkerson, C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015), the Delaware Court of Chancery dismissed claims for breach of fiduciary duty including the disclosure obligations of the board which granted stock units valued at approximately $35 million in connection with its decision to settle potential claims that could have been brought for … Continue Reading

Chancery To Be Less Likely to Approve Fees in Disclosure Only Cases

In re Riverbed Technology, Inc., Stockholders Litigation, Cons. C.A. No. 10484-VCG (Del. Ch. Sept. 17, 2015). This Delaware Court of Chancery opinion is noteworthy because it provides notice to corporate litigators in Delaware that any future requests for court approval of a class action settlement, or for attorneys’ fees in connection with a class action … Continue Reading

Court Strikes Impertinent Portion of Complaint

In Carlyle Investment L.L.C. v. Moonmouth Company S.A., C.A. No. 7841-VCP (Del. Ch. Sept. 10, 2015), the Delaware Court of Chancery grants the rare motion to strike a part of the complaint that the court considers scandalous or impertinent pursuant to Court of Chancery Rule 12(f). See Slip op. at 45-46. In addition, the court addresses other topics of interest … Continue Reading

Court of Chancery Addresses Discovery Conduct

The Court of Chancery recently reiterated its expectations of Delaware discovery conduct at a hearing in Medicalgorithmics S.A. v. AMI Monitoring, Inc., C.A. No. 10948-CB (Transcript).  Notable among the Court’s comments at the hearing were: The Court stressed the importance of attorney review of documents before production, saying that, absent a “quick-peek” agreement, attorney involvement should … Continue Reading

Post-Trial Intervention Denied

The Court of Chancery rejected a request for post-trial intervention under Court of Chancery Rule 24, in the matter styled Shawe v. Elting, et al., C.A. No. 9686-CB (Del. Ch. Sept. 2, 2105). Rule 24 is a useful rule to be familiar with for corporate and commercial litigation in general. This is the third decision in this case … Continue Reading

Rare Rejection of Advancement Claim

In the recent Chancery decision of Lieberman v. Electrolytic Ozone, Inc., C.A. No. 10152-VCN (Del. Ch. Aug. 31, 2015), the court rejected claims for advancement by former officers and directors who sought to have their former company pay for the attorneys’ fees they incurred in defending a suit brought against them by the company for whom … Continue Reading

Chancery Determines Proper Board Members in Section 225 Action

The Delaware Court of Chancery in Kerbawy v. McDonnell, C.A. No. 10769-VCP (Del. Ch. Aug. 18, 2015), addresses whether written consents of stockholders were effective in replacing the board members of the company involved.  The case features the interplay between DGCL § 225 and § 228 in this corporate litigation over control of the company. DGCL … Continue Reading

Short Observation on Long Delaware Chancery Decisions

Based on the more than ten years that I have been highlighting corporate and commercial decisions on these pages, primarily from Delaware’s Supreme Court and Court of Chancery, I am aware that the main reason busy readers visit these pages is not for metaphysical ruminations. This short observation has at least some practicality. Over the last three weeks or … Continue Reading

Chancery Appoints Custodian to Break Deadlock of Profitable Corporation

In re: Shawe & Elting LLC, C.A. No. 9661-CB (Del. Ch. Aug. 13, 2015). There are many important principles of Delaware corporate law addressed in this 104-page post-trial opinion, but for the benefit of busy readers, I will highlight those aspects of this decision that have the widest practical applicability to those involved in corporate and … Continue Reading

Chancery Imposes Fees for Errant Deposition Conduct

The Delaware Court of Chancery recently imposed penalties on a non-Delaware attorney for behavior during a deposition that was not in compliance with the applicable Delaware deposition standards. The letter decision in the matter styled In Re: Shawe & Elting LLC, C.A. No. 9661-CB (Del. Ch. Aug. 14, 2015), provides helpful guidance on the types of obstructionist … Continue Reading

Chancery Declines To Allocate Expert Expenses in Advancement Action

In the third ruling by the Court of Chancery in the advancement action styled Holley v. Nipro Diagnostics, Inc., C.A. No. 9679-VCP (Del. Ch. Aug. 14, 2015), the court addressed a request that expenses for third-party vendors of nearly $300,000 be allocated between a criminal action in which the former CEO pled guilty, and which was not … Continue Reading

Chancery Invalidates Attempt of Majority Stockholder to Appoint Officers

In Gorman v. Salamone, C.A. No. 10183-VCN (Del. Ch. July 31, 2015), the Court of Chancery affirms the board-centric foundation of Delaware corporate law, and describes the limitation on the ability of a majority stockholder to appoint officers directly–even though a majority stockholder might have the ability to appoint board members. In sum, the majority stockholder … Continue Reading

Chancery Awards Damages Related to Intentionally Low Valuation

The Delaware Court of Chancery’s opinion in Fox v. CDx Holdings, Inc., C.A. No. 8031-VCL (Del. Ch. July 28, 2015), addresses a complex set of facts relating to the liability resulting from the intentionally inaccurate valuation of a spin-off in order to avoid tax consequences to the controlling stockholders, which wrongly minimized the value of stock … Continue Reading

Equitable Standing Exception For Derivative Suits Not Applied

In Re AbbVie Inc. Stockholder Derivative Litigation, C.A. No. 9983-VCG (Del. Ch. July 21, 2015). This Court of Chancery decision addresses the rare situation where equitable circumstances will allow an exception to the standing requirement for filing a derivative suit, which otherwise necessitates stock ownership at the time of the challenged transaction, based on Chancery … Continue Reading