In a recent Delaware Court of Chancery opinion styled Fairstead Capital Management LLC v. Blodgett, C.A. No. 2022-0673-JTL, (Del. Ch., May 13, 2026), the court addressed claims based on the breach of an LLC agreement and an employment agreement as well as how some provisions of the related agreements overlapped in terms of their impact on the alleged forfeiture of equity. This consequential opinion addresses a recurring issue about which terms in related agreements control when there are overlapping provisions, and how to analyze when the actions at issue involve one’s role as an employee–as compared to the role of a member of an LLC.

Brief Background

The procedural background of this case involves a member of an LLC who was also subject to an employment agreement which described his role in managing the LLC. A prior arbitration decision based on claims under the employment agreement resulted in issue preclusion on some of the claims, but the court needed to address which claims were properly analyzed under the employment agreement, as compared to claims for breach of the LLC agreement, which the prior arbitration did not expressly rule on.

Highlights

  • The court determined that the prior arbitration decision on legal conclusions—based on the employment agreement—are not preclusive for claims that related to breaches of the LLC agreement, but the arbitrator’s factual findings are preclusive. Slip op. at 28.
  • The court determined that the allegations at issue relate to actions taken as an employee, not as an LLC member. Id. at 29.
  • The court in this case used definitions in the employment agreement also when analyzing the LLC agreement for purposes of “consistency” when interpreting both related documents. Slip op. at 30-31.
  • The court described the common use of “legal technology” by Delaware attorneys to insert employment-related terms as part of internal governance documents, and cited to multiple Chancery decisions over the last five years in which the court published many written decisions interpreting employment agreements involving companies or employees that were primarily operating in 16 other jurisdictions, although this number does not include court orders and transcript rulings. Id. at 34-36.
  • But the court cautioned that there is a risk to this development because the

“Delaware franchise depends on other states deferring to Delaware law to govern the internal affairs of the entities that Delaware charters. Delaware risks jeopardizing that deference if it accommodates efforts to use the internal governance documents of Delaware entities to override the law of other states on issues of great importance to them.”

Id. at 36

  • The court provided guidelines to follow when there is a tension between actions that were made in one’s capacity as an employee as compared to actions as an investor. Id. at 37.
  • The court observed that in borderline cases where the distinction is not clear, it requires the exercise of the court’s judgment. Id. at 38.
  • The court instructs on the proper method to interpret a contractual good faith requirement—as compared to a good faith obligation based on fiduciary duties. Id. at 39-41.
  • Lastly, the court illustrates helpful examples of allowable conduct, with widespread usefulness, regarding the types of actions that a departing employee may lawfully engage in just before departure from a company. Id. at 43-44.

A recent Chancery decision in Tesaro, Inc. v. Anaptyseio, Inc., C.A. No. 2025-1357-KSJM (Del. Ch. April 24, 2026), analyzed claims of repudiation or anticipatory breach of a collaboration agreement between two pharmaceutical companies regarding the development of a cancer drug. The court, in an issue of first impression, analyzed Delaware’s recently amended Anti-SLAPP statute which provides for an expedited timetable to dismiss claims based on that statute.

Highlights of Repudiation Analysis

The court described the requirements to successfully claim repudiation of a contract. Slip op. at 10-13. The court’s reasoning for not regarding a so-called letter of termination as satisfying the requirements of repudiation includes the following key points:

  • The letter was not a unilateral demand to alter the terms of the agreement. Id.;
  • At no point in the letter was there a demand for new terms or a suggestion that the letter sought to add additional obligations to the parties’ agreement. Id.;
  • The letter did not express, in unequivocal positive, and unconditional words or conduct, that the party would not perform the agreement unless new terms and conditions were added. Id.;
  • The letter did not ask the counterparty to waive any rights, nor did it state that the party would not comply with its own duties. Id.;
  • The court explained that “a threat to exercise contractual rights in the event of breach is not repudiation, even if that contractual right is reversion. Quite the opposite—exercise of  contractual rights under an agreement requires affirming that agreement.” Slip op. at 13.

The court also emphasized that “Delaware law allows a party to retract a repudiation, ‘nullifying’ it and ‘placing the matter in its original position.’ A party may do so if the time of performance has not lapsed and the non-repudiating party ‘treats the contract as still enforced.’” Id.

Anti-SLAPP Statute Analysis

Delaware adopted on September 15, 2025, the Uniform Public Expression Protection Act (UPEPA), commonly referred to as the Anti-SLAPP statute. The purpose was to “enhance protections from strategic lawsuits against public participation (“SLAPPs”).” SLAPPs are defined as meritless lawsuits brought to “ensnare their targets in costly litigation that chills society from engaging in constitutional protected activity.” Slip op. at 14-15. (Sounds like that description could apply to a broad range of lawsuits.)

The UPEPA provides procedural relief to those opposing such a claim. Section 6003 authorizes a special motion that entitles a successful movant to costs, attorney fees, and expenses if the court grants the Rule 12(b)(6) motion. Section 6003 also provides that motions to dismiss are statutorily expedited.

Section 6007(a) establishes three elements of a so-called expedited “special motion” to dismiss provided for under Section 6003. Id. at 15. Only one of those is at issue here, and that requires the moving party to establish under Section 6002(b) or (d) of this title that this chapter applies. Id.

That first element under Section 6007(a) imposes two requirements. First, the movant must demonstrate that he engaged in a protected activity under Section 6002(b) or (d). Next, the movant must “also establish a nexus between the cause of action and the protected activity—that is that the “responding party’s suit arises from the movant’s constitutionally protected activity.” Id. at 16. See also footnote 70 (“. . . that a cause of action arguably may have been triggered by protected activity does not entail it as one arising from such.”)

The court provides a detailed analysis of the requirement of a “nexus” between the “protected activity” and the cause of action. Id. at 17 and note 71.

The court also describes what is protected speech pursuant to the statute. It must be “injury-producing conduct.” Defamation claims are the quintessential example. Id. at 18. The court distinguished between “speech that provides the basis for liability and speech that provides evidence of liability. A communication that serves merely as evidence of a complained-of wrong is not itself the injury-producing conduct.” Id. at 18.

The nexus requirement mandates that the protected activity be the cause of the injury. “How a party communicates repudiation does not render the communication the injury-producing action. Put differently, no matter how the decision to repudiate was conveyed, the injury in a claim for anticipatory breach is the act of repudiation—not the way it was communicated.” Id. at 19-20.

Finally, although the UPEPA permits a successful movant to recover fees and costs if the motion was “frivolous or filed solely with intent to delay the proceeding,” the court determined that this case was filed and argued in good faith, and therefor declined to shift fees. Id. at 20.

In a mercifully concise decision, the Court of Chancery in Shaw v. MFP Holdings, LLC, C.A. No. 2025-0575-SKR (Del. Ch. April 4, 2026), addressed a claim that a company concealed updated valuation data to depress the valuation price for the redemption of units pursuant to an LLC Agreement. The Honorable Sheldon K. Rennie of the Superior Court authored this opinion as a Vice Chancellor by designation.

This pithy opinion rejects an argument that the alleged concealment tolled the applicable statute of limitations and also provides a helpful analysis of when the “clock begins to tick” for purposes of determining whether or not an injury was “inherently unknowable” or if the plaintiff was “blamelessly ignorant” for purposes of determining whether or not the claimant had constructive notice.

The first issue the court addressed was whether or not the Court of Chancery had subject matter jurisdiction. The court relied on Section 18-111 of the Delaware LLC Act which gives the Court of Chancery jurisdiction to interpret, apply or enforce the provisions of a Limited Liability Company Agreement or the duties, obligations or liabilities of an LLC to members or managers, and related claims.

These highlights were prepared by Maliheh Zare, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois.

Vice Chancellor Laster’s recent opinion in In re Dynamk Fund Advisors LLC, No. 2026-0002-JTL, 2026 WL 1416650 (Del. Ch. May 20, 2026), offers several practical insights into the law governing judicial dissolution of LLCs. The decision provides guidance for both transactional lawyers drafting LLC agreements and litigators confronting dissolution disputes:

  1. LLCs are not purely contractual. Although LLCs are often described as creatures of contract, the Court reiterated that the chartering state retains ultimate authority over dissolution. See id. at *2 n.8.
  2. Contractual limits on dissolution can create untenable outcomes. The Court cautioned that provisions preventing dissolution in a deadlocked LLC can lead to dysfunctional results, comparing such an arrangement to an inescapable stalemate. Id.
  3. The Court of Chancery’s deadlock analysis focuses on the LLC’s governance structure. Before finding a deadlock, the Court examines how authority is allocated under the LLC agreement, even in a two-manager structure.
  4. Managerial authority provisions in an LLC agreement are critical. The specific allocation of decision-making power among managers can be determinative in assessing whether a true deadlock exists.
  5. Any LLC member may seek judicial dissolution where it is no longer “reasonably practicable” for the business to continue.

A recent decision from the Delaware Court of Chancery should be in the toolbox of all corporate and commercial litigators. In Guilbeau v. Footprint International Holdco, Inc., C.A. No. 2024-0968-JTL (Del. Ch. April 30, 2026), the court provided a scholarly analysis of the doctrinal and public policy issues surrounding the fiduciary duties of a director who is appointed by, for example, an institutional stockholder, a creditor, holders of a class of stock, or pursuant to contractual rights.

Additional benefits of this opinion include a deep dive into the nuances of the implied covenant of good faith and fair dealing, as well as a recitation of the elements of a claim for familiar staples of commercial litigation: promissory estoppel and tortious interference with contract.

This 59-page gem deserves careful reading but for purposes of this blog post, I highlight only a few key sections of the decision that should entice careful lawyers to read the whole thing.

Factual Context

This case involved claims by Class A preferred stockholders who challenged a cram-down financing based on allegations of breach of contract and related claims.

Highlights

  • The court begins its analysis with a restatement of the requirements to successfully sue for breach of the implied covenant of good faith and fair dealing, a duty imposed on all contracts in Delaware, for example as a “gap-filler.” Slip op. at 20.
  • In connection with its analysis of the implied covenant claims, the court regales the reader with some perspectives from English law on the nuances of this claim. See pages 30-31, 38, 42 and 51.
  • As part of its thorough discussion of the fiduciary duties owed by directors who are appointed by specific stockholders—variously referred to as blockholder directors, representative directors, designated directors, or constituency directors—the court answered the question of: to whom are their duties owed. The answer is:

the stockholders in the aggregate in their capacity as residual claimants, which means the undifferentiated equity as a collective, without regard to any special rights. Directors thus owe fiduciary duties to the entity and the entire body of stockholders generally, rather than to individual stockholders or stockholder subgroups.

Slip op. at 33 (footnotes omitted). See also Slip op. at 31-34.

  • The court explained that allowing a different result would lead to the untenable conflict of the director serving two masters. Id. at 35. The court also discusses the relevant analysis in part of the 1985 Delaware Supreme Court Van Gorkom decision, which was not overruled in relevant part on this issue by the Delaware Supreme Court decision in Gantler v. Stephens in 2009. See footnote 91.
  • The court observed that “Delaware law does not generally recognize constituency directors”. Slip op. at 32.
  • The court also provides a useful analysis of the options of fiduciaries to cause an efficient breach of a contract in order to fulfill their fiduciary duties. See footnotes 95 and 122.
  • The court conducts an extensive review of the caselaw addressing the “discretionary-exercise” version of the implied covenant. It applied the elements of that version of the implied covenant to the facts of this case to reject those claims in this matter. See Slip op. at 43-45.
  • The elements of a claim for tortious interference with contract are useful to recall. Slip op. at 54-55.
  • The court discusses the elements of a promissory estoppel claim and the doctrinal underpinning as well as subtleties that support a successful argument based on this theory. Slip op. at 56-59.

This article was prepared by Francis G.X. Pileggi and Rae Ra of the Delaware office of Lewis Brisbois

Last week, the Delaware Court of Chancery published its Guidelines on Attorney Civility (the “Guidelines”), to emphasize the “inveterate tradition of collegiality that remains a hallmark of the Delaware bar.” Delaware practitioners refer to this as the “Delaware Way.” Francis was quoted in an article by Law360 last week about the new Guidelines.

More than just platitudes, the Guidelines offer specific and practical examples of civility (and incivility) in depositions, hearings, negotiations, and more, as well as sanctions proportionate to behavior that falls short of the Court’s standards. The Guidelines also include an addendum of caselaw to support the Court’s expectations, including a case in which counsel was fined $5,000 for noticing a deposition in the middle of opposing counsel’s family vacation and refusing to negotiate an alternate date. And to be sure, these guidelines apply not only to Delaware counsel, but also to outside counsel who are admitted pro hac vice to practice in the courts of Delaware.

A definition of the “Delaware Way” does not always lend itself to mathematical precision, but the Guidelines show that zealous advocacy in Delaware encompasses respect for the Court, opposing parties, and is grounded in dignity and courtesy–which the courts take seriously.

Several existing Delaware standards form the foundation for these new guidelines.  See, e.g., Guidelines for Persons Litigating in the Court of Chancery and Principles of Professionalism for Delaware Lawyers (last revised Nov. 2003).

Below are some highlights from the Guidelines:

  • Examples of Civility/Professional Conduct:
    • “Attempting to resolve or minimize a disagreement through a phone call to opposing counsel before resorting to letters or email communications.”
    • “Responding promptly to communications from opposing counsel, even if only to acknowledge the communication and to indicate that a substantive response will be forthcoming by a date certain.”
    • Written communications that are “free of inflammatory rhetoric or disparagement.”
    • “Adopting conciliatory language in contentious legal disputes to facilitate resolution.”
  • Examples of Incivility/Unprofessional Conduct:
    • “Engaging in ‘chippy’ or antagonistic email exchanges with opposing counsel” that do not advance resolution of the issues.
    • “Making disparaging comments [during deposition] such as calling questions ‘ridiculous’ or ‘incoherent.’”
    • “Burdening the Court with disputes over immaterial noncompliance with procedural rules that does not impair the fair or efficient resolution of the case.”
    • “Failing to provide reasonable scheduling accommodations.”
  • Examples of Potential Consequences of Incivility:
    • Sanctions or fines imposed for “frivolous or abusive filings”
    • Fee shifting
    • Adverse rulings
    • Mandatory ethics training
    • Revocation of pro hac vice admission

When Delaware counsel work with non-Delaware counsel, tensions may arise when Delaware counsel refuse a request to take action that does not comply with the “Delaware Way.”  We addressed this situation in another article: Delaware Practice and Procedures for Non-Delaware Lawyers – and Working with Local Delaware Counsel

As the Editor-in-Chief of the National Law Review‘s publication called the Delaware Corporate and Commercial Law Monitor, I’m pleased to share the latest edition that has now been published. My role for this publication is in addition to my full-time practice and maintaining this blog–now in its 21st year–as well as upholding my rich family life and participation in various religious, cultural, professional and community organizations.

The Delaware Corporate and Commercial Law Monitor curates articles from many commentators around the country on the titular topic.

By: Chauna A. Abner*

This article first appeared in a recent issue of the Delaware Business Court Insider, and is reproduced here with their kind permission.

The Delaware Court of Chancery recently confirmed that when an LLC’s operating agreement provides that a managing board will manage the company, absent language to the contrary, all decisions must be made by the managing board—even  when the decision is whether to remove two of the three members of the board.

In Ropko v. Burdi, C.A. No. 2024-1193-PAF (Del. Ch. Mar. 16, 2026), two of the three members of McNeil Investment Group, LLC (“MIG”)’s managing board (the “Managers”)  filed suit against the third manager, who was also the Executive Chairman and founder of the company (“Executive Chairman”) after the Executive Charman purported to remove the Managers from the 3-manager board.

As part of a restructuring of MIG, the parties executed a letter agreement (“Voting Agreement”) providing that so long as the Executive Chairman is a member of the Board, actions of the Board will require his consent and the Managers “will vote in the same manner” as him. Two days later, MIG adopted the operative operating agreement which vested management of the company in the Managing Board and provided that the Managing Board consisted of the Managers and the Executive Chairman. Just over a year later, the Executive Chairman issued a written consent purporting to remove the Managers from the Board. The Written consent was signed by the Executive Chairman individually and on behalf of the Managers “pursuant to that certain [Voting] Agreement.”

The Managers filed suit seeking declaratory relief that their removal was improper and attorneys’ fees pursuant to MIG’s operating agreement. After a two-day trial and post-trial briefing, the Court found in favor of the Managers on both issues. The Executive Chairman argued that the Voting Agreement authorized him to vote on the Managers’ behalf in their capacities as members of the Board of Managers. The Court rejected this argument explaining that although the LLC Act allows managers to vote by proxy, an agreement to vote by proxy must include language of “clear agency appointment.” The Court concluded that there was no language in either the operating agreement or the Voting Agreement that authorized the Executive Chairman to act on behalf of the Managers.

The Executive Chairman also argued that, Voting Agreement aside, the formalities associated with the removal should be excused because “a contractual party need not perform a futile act.” The Court rejected this argument too. The Court analyzed the  limited body of case law in Delaware addressing futility in the context of contract compliance and explained that this body of case law has been limited to notice-and-cure provisions that do not apply here. In declining to apply the futility doctrine, the Court reinforced the well-established principle that “[w]hen an alternative entity agreement prescribes how its governing body must act, the governing body may not ignore it. Nor will this court refuse to enforce it merely because on party deems it to be inconvenient.”

After finding that the Executive Chairman violated the operating agreement by purporting to remove the Managers, the Court went on to hold that the Managers were entitled to their reasonable attorneys’ fees and expenses in the litigation pursuant to the fee-shifting provision of the operating agreement.

The Court’s decision provides helpful reminders to practitioners:

  • Proxy instruments must expressly evidence an agency relationship between the principal and proxy holder to be valid;
  • If the intent is for a board of managers to be able to remove board members without requiring the approval of those members, then the operating agreement should clearly state so; and
  • The Court has yet to permit the doctrine of futility to be employed to excuse board governance formalities.

*Chauna is a business and commercial litigation Partner at Lewis Brisbois where she represents clients to resolve a wide range of business disputes in state and federal court and in arbitration. Chauna’s practice focuses on high-stakes disputes of corporations and other forms of entities, stockholders, members of boards of directors, and members and managers of LLCs. She has extensive experience in matters involving demands for books and records, fiduciary duties, and corporate governance.

A recent Delaware Court of Chancery decision determined that the forum clause in the Tesla bylaws, after its redomestication in Texas, requiring derivative suits to be brought in Texas, would be upheld even though the lawsuits at issue were filed shortly before the Tesla shareholders approved the change and despite the suits being filed when the applicable Delaware bylaws required the forum to be Delaware.

In the matter styled In re Tesla, Inc. Derivative Litigation, Cons., C.A. No. 2024-0631-BWD (Del. Ch. April 13, 2026), the court discussed the established authority permitting forum clauses to be enforced even when adopted for a period of time after the lawsuits at issue were filed.

Brief Background

The derivative litigation at issue was filed at a time when the bylaws of Tesla designated Delaware as the exclusive forum for derivative litigation. After its redomestication, the new Tesla bylaws designated Texas as the exclusive forum for derivative litigation. The lawsuits involved were filed before Tesla’s new bylaws with a Texas forum clause, as approved by their stockholders, became effective.

Highlights of Court’s Analysis

The court recognized that there is precedent for courts to look to later points in time when determining venue, such as when a defendant appears or a time when a movant seeks transfer.

The court refused to second-guess Tesla stockholders’ chosen forum by purporting to weigh the advantages and disadvantages of Texas law and procedure relative to Delaware. The court emphasized that the owners of the corporation voted to require the derivative litigation be filed in a Texas forum and that, based on the present facts, it was not inequitable to enforce their decision.

Key Principles

  • The court recognized that the proper procedural rubric for addressing a motion to dismiss based on a forum selection clause is found in the improper venue provision of Rule 12(b)(3).
  • Forum selection provisions, including corporate bylaws, are presumptively valid and should be specifically enforced unless the resisting party “clearly shows that enforcement would be unreasonable and unjust or that the clause is invalid for such reasons as fraud and overreaching.” Slip op.at 9.
  • The court recited relevant authority recognizing that courts sometimes look to later points in time when determining venue. Slip op. at 13. The court also referred to other jurisdictions applying Delaware law to enforce forum selection clauses adopted after the derivative litigation was filed. Id.
  • The court relied on settled Delaware law that a forum selection bylaw may apply retroactively to cover claims arising from conduct that occurred prior to the adoption of the bylaws. Slip op. at 14.
  • The court explained that:

“a stockholder does not have a vested right to litigate in a particular forum, even for claims arising from past conduct, because the contractual relationship among the directors, officers, and stockholders formed within the statutory framework of the DGCL is, by design, flexible and subject to change in the manner that the DGCL spells out, and investors know about when they purchased stock in a Delaware corporation.”

Slip op. at 14.

  • The court further observed that: “a stockholder should hold the reasonable expectation that the board could adopt such a bylaw at any time, subject to an as-applied challenge.” Id.
  • The court rejected arguments that Section 266(a) of the DGCL was violated, in part because plaintiffs never had any vested rights or an obligation to litigate in a particular forum because as the court instructed: “Our corporate law has long rejected the so-called ‘vested rights’ doctrine, the notion that a corporation’s governing documents cannot be amended in a manner that diminishes or divests pre-existing stockholder rights.” Slip op. at 19.
  • The court also rejected a claim that DGCL Section 115 was violated. Section 115 deals with a prohibition against bylaws prohibiting the filing of internal corporate claims in Delaware, but the court reasoned that Section 115 does not apply in in this matter because the statute governs Delaware corporations and Tesla was not incorporated in Delaware when it adopted the Texas forum bylaw. Slip op. at 21.
  • Finally, the court also rejected the argument, based on the facts of this case, that the Texas bylaw was unreasonable or unjust based on a comparison of Texas and Delaware law because:

Courts are ill-equipped to quantify the cost and benefits of one state’s corporate governance regime over another’s, and attempting to do so risks intruding on the value judgments of state legislatures and directors, as well as stockholders.”

Slip op. at 24 (quoting Maffei v. Palkon, 339 A.3d 705, 743-44 (Del. 2025)). Some citations and quotes omitted.