Archives: Delaware Supreme Court Updates

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Top Three Delaware Corporate Decisions for 2015

For the last ten years or so on these pages, I have selected annually the top Delaware corporate law decisions. This is a somewhat subjective exercise in light of the estimated 200 or more notable corporate and commercial decisions issued each year by Delaware’s Supreme Court and Court of Chancery. This year the top three … Continue Reading

Delaware Supreme Court to Hear Argument on When Stockholders Can Demand Records of Aborted Merger

Tomorrow, the Delaware Supreme Court will hear oral argument on an appeal of the decision of the Court of Chancery which denied a request by a stockholder for books and records, pursuant to DGCL Section 220, related to the aborted merger of AbbVie, Inc., a pharmaceutical spin-off of Abbott Labs, and Shire, a pharmaceutical company based in Ireland. … Continue Reading

Delaware Supreme Court Rules on Director Independence

The Delaware Supreme Court issued two decisions a few days ago, in the Sanchez and Corwin cases. The Sanchez case addressed the topic of director independence and when pre-suit demand is excused in the context of long-term personal relationships. Prof. Usha Rodrigues provides scholarly insights on the Sanchez case that she graciously shared with us.  By way … Continue Reading

Delaware Supreme Court Addresses Standard of Review for Board’s Consideration of Stockholder Demand

The Delaware Supreme Court’s opinion in Espinoza v. Dimon, et al., No. 425, 2015 (Del. Sept. 15, 2015), addressed a certified question of corporate law from the United States Court of Appeals for the Second Circuit. Although the Delaware Supreme Court refused to provide a complete answer to the precise question presented, based on factual issues that … Continue Reading

Independent Directors Have New Ammunition to Obtain Dismissal of Suits

A recent Delaware Supreme Court decision that provides independent directors with a new basis to be dismissed from lawsuits against them, was highlighted in my latest article published in Directorship, the magazine of the National Association of Corporate Directors. The case is styled:  In re Cornerstone Therapeutics Inc. Stockholder Litigation, No. 564, 2014; Leal et al. … Continue Reading

Supreme Court Rejects Malicious Prosecution/Fee-Shifting Claim

Blue Hen Mechanical, Inc. v. Christian Brothers Risk Pooling Trust, Del. Supr., No. 589, 2014 (Del. June 15, 2015). This Delaware Supreme Court opinion has practical application for corporate litigators and civil litigators generally, due to the manner in which it addresses: (i) how to deal with suits filed allegedly in bad faith; and (ii) how to deal with a … Continue Reading

New Rules for Delaware Rapid Arbitration Act

Delaware’s newly adopted Rapid Arbitration Act, as previously explained on these pages, is intended to provide a procedure for expedited resolution of major commercial disputes, as an alternative to conventional corporate and commercial litigation, with assistance from the Court of Chancery to implement the parties’ agreement to follow the new procedure, subject to limited challenges on an expedited … Continue Reading

Delaware Supreme Court Clarifies Law on Dismissal of Claims Against Directors

The Delaware Supreme Court clarified the types of claims against independent directors that are eligible for a motion to dismiss regardless of the standard of review that applies to those claims. In re Cornerstone Therapeutics Inc. Stockholder Litigation, No. 564, 2014; Leal et al. v. Meeks et al., No. 706, 2014, opinion issued (Del. May … Continue Reading

Divided Supreme Court Upholds First-Filed Rule

The Delaware Supreme Court provided this week the latest iteration of Delaware law on the first-filed rule and whether a particular issue is covered by an arbitration clause. Over a vigorous dissent, Delaware’s high court affirmed a decision of the Delaware Court of Chancery that applied the first-filed rule to an arbitration proceeding that preceded … Continue Reading

Familial Relationships and Controlling Stockholders

An appeal pending before the Delaware Supreme Court addresses the impact of familial relationships on the independence of directors, as well as the classification of a group of stockholders as controlling stockholders for purposes of determining both pre-suit demand and the standard of review.  See Delaware County Employees’ Retirement Fund v. Sanchez, No. 702, 2014, … Continue Reading

Delaware Supreme Court: Mexican Law Applies

Bell Helicopter Textron, Inc. v. Arteaga, No. 333,2014 (Del. Supr., Apr. 6, 2015). This Delaware Supreme Court decision provides a useful application of principles that determine which jurisdiction’s laws apply to a particular suit with facts involving multiple fora. This split opinion concludes that the law of Mexico should apply to a lawsuit pending in Delaware state … Continue Reading

Delaware Supreme Court’s Latest Iteration of Implied Covenant of Good Faith and Fair Dealing

Nationwide Emerging Managers, LLC v. Northpointe Holdings, LLC, No. 441, 2014 (Del. Supr., Mar. 18, 2015). This Delaware Supreme Court opinion is notable for at least the following reasons: (i) it provides the latest iteration of Delaware law on the amorphous but important contract provision imposed by law on every Delaware contract: the implied covenant … Continue Reading

Delaware’s Chief Justice Pens M&A Article

Delaware’s Chief Justice, Leo Strine, Jr., has written an article entitled: “Documenting the Deal:  How Quality Control and Candor Can Improve Boardroom Decision-Making and Reduce the Litigation Target Zone”. Abstract:  This article addresses what legal and financial advisors can do to conduct an M&A process in a manner that: i) promotes making better decisions; ii) reduces … Continue Reading

Annual Review of Key Delaware Corporate Decisions

This is the tenth year that we are providing our annual review of the key corporate and commercial decisions from Delaware’s Supreme Court and Court of Chancery. This year we decided to pick only the top five among the more than 200 or so opinions that we highlighted. We encourage readers to suggest cases that … Continue Reading

Appeal Pending on Ability of Independent Directors to Be Dismissed Early in Suit

Two recent cases involving the ability of independent directors to be dismissed early in a case involving a challenged transaction are the subject of two separate interlocutory appeals from Chancery to the Delaware Supreme Court. Frank Reynolds of Thomson Reuters frames the question in his helpful article about the cases in the following manner: The … Continue Reading

Supreme Court Reverses Chancery on Section 220 Forum Issue

United Technologies Corp. v. Treppel,  Del. Supr., No. 127, 2014 (Dec. 23, 2014). This Delaware Supreme Court decision reversed a Chancery decision on the issue of whether a company could insist as a prerequisite, prior to producing documents pursuant to DGCL Section 220, that any suits arising from the documents be filed only in a court within the … Continue Reading

Delaware Supreme Court Clarifies Revlon Standard and Reverses Chancery’s Injunction

C&J Energy Services, Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust, Del. Supr., No. 655/657, 2014 (Dec. 19, 2014). This Delaware Supreme Court opinion is noteworthy because it clarifies the version of fiduciary duties known as the Revlon standard that apply to a board of directors when they are selling their company, … Continue Reading

Delaware Supreme Court Determines Whether Agreement Provides for Per Capita or Per Share Voting

Salamone v. Gorman, Del. Supr., No. 343, 2014 (Del. 9, 2014). This Delaware Supreme Court decision interprets a voting agreement to determine whether it provides for a method of voting to elect directors based on a per capita, or a per share, framework.  This appeal was based on a summary proceeding under Section 225 of … Continue Reading

Permanent Injunction Denied Where it Would be Ineffective at Protecting From the Risk of Harm

The Delaware Supreme Court, in North River Ins. Co. v. Mine Safety Appliance Co., — A.3d –, 2014 WL 5784588 (Del. Nov. 6, 2014), addressed a failed attempt to control multi-forum litigation.  Delaware’s high court affirmed the Court of Chancery’s denial of a permanent injunction barring Mine Safety from prospectively assigning its rights under North … Continue Reading