The Delaware Court of Chancery recently analyzed whether the ultimate non-resident decisionmaker for a blockholder director was subject to personal jurisdiction in Delaware, based on a provision in the Delaware Long-Arm Statute that may trigger jurisdiction, not only for an action taken within Delaware, but for an “omission” that occurred in Delaware. In Zync, Inc. v. Porsche Investments Management, S.A., C.A. No. 2025-0284-JTL (Del. Ch. May 26, 2026), the court found that the omission at issue did not satisfy the necessary connection with Delaware. See generally recent Chancery decision highlighted on these pages about the duties generally of blockholder directors.

Key Background Facts

The Company involved, Zync, Inc., was a startup in the automotive industry and secured an investment from a subsidiary of Porsche AG, which resulted in Porsche gaining a right to appoint a member of the Company’s board of directors. Under a governance agreement, the Company agreed not to take specified actions without the affirmative vote of the Porsche Director. The Porsche Director could not take action without the consent of his superior within the Porsche organization by the name of Thiem.

Thiem refused to give his approval to the Porsche Director for two separate proposals for financing through venture capital and private equity sources. As a result of the refusal to give approval for the two financing deals, the company shut down.

The Company claimed that Thiem aided and abetted the Porsche Director’s breaches of fiduciary duty and interfered with the two separate financing deals. The Company invoked the conspiracy theory of jurisdiction.

Key Legal Principles

The court explained that the Delaware Long-Arm Statute authorizes the exercise of personal jurisdiction over a nonresident “who in person or through an agent . . . causes tortious injury in the State by an act or omission in the State,” citing to 10 Del. C. § 3104(c)(3). The Company argued that “but for” the refusal to approve the financing deals, which would have required a filing with the Delaware Secretary of State, such as for a Certificate of Designation for preferred stock, the filing would have constituted a Delaware act sufficient to support personal jurisdiction over someone like Thiem, who aided and abetted a breach of fiduciary duty.

The Company argued that the actions that prevented a filing with the Secretary of State resulted in an omission in Delaware sufficient to subject the person who controlled the blockholder director, Thiem, to jurisdiction in Delaware.

The court found that to support personal jurisdiction, “the omission must either be part of a cause of action or have a sufficiently close nexus to the tortious injury. The omitted filing with the Delaware Secretary of State clears neither hurdle.” Slip op. at 4.

Highlights of Court’s Reasoning

The court reviewed the familiar requirements for the exercise of personal jurisdiction under Delaware law, which is a two-step inquiry. In the first step, the court must determine whether a statute, like the Long-Arm Statute, supplies a valid method for serving and asserting jurisdiction over the non-resident defendant. If so, then the court must insure the assertion of personal jurisdiction comports with the Due Process Clause of the United States Constitution. In order to satisfy the second step, the non-resident defendant must have “sufficient minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Slip op. at 15.

The Company based its argument for jurisdiction over Thiem on the conspiracy theory of jurisdiction. The Company argued that the Long-Arm Statute provides for an “omission” to support jurisdiction if the omitted action would have had an effect in Delaware.

The Company argued that if the omission had not blocked the financing then the filing with the Secretary of State would have occurred, and due to Thiem’s blocking of the deal, the filing did not happen.

The court reviewed the familiar tests for establishing the conspiracy theory of jurisdiction which rests on “the legal principle that one conspirator’s acts are attributable to the other conspirators.” Slip op. at 16.

The Absence of any Delaware-Directed Act

The court explained that even though the acts of the blockholder director can be attributed to Thiem, the ultimate decisionmaker, for jurisdictional purposes—there still must a Delaware-Directed Act.

The court also observed that notwithstanding a choice of law provision applying Delaware law—simply because Thiem signed those agreements was not a jurisdiction-supporting act. Slip op. at 19. Although 6 Del. C. § 2708(a) provides that signing an agreement that selects Delaware law can establish a “significant material and reasonable relationship with the State,” those parties must still be “subject to the jurisdiction of the courts of, or arbitration in, Delaware and subject to the service of the legal process.” Slip op. at 19-20. But in this matter, Thiem did not sign the agreements in Delaware, he did not send them to Delaware, he did not negotiate them in Delaware, and he did not engage in any Delaware-related conduct.

The court reasoned that the act of appointing a director to the board of a Delaware corporation, or appointing a blockholder director, are not sufficient. Id.

The court noted that analogous to Section 18-109(a)(ii) of the Delaware LLC Act, in the corporate context: “the power to elect, otherwise select, or participate in the election or succession of a director of a Delaware corporation would not, by itself, establish personal jurisdiction over the power-holder.” See footnote 47.

The Concept of a Delaware-Directed Omission

The court provided the basis for its analysis to support its conclusion that the omission in this case did not satisfy the Long-Arm Statute, which requires an omission in Delaware that causes tortious injury in Delaware. The court added that: “The statute requires more than simply on omission in Delaware compared to what would have happened along an alternative timeline. The statute requires an omission that causes tortious injury.” Slip op. at 22.

The court referred to cases that require an omission giving rise to jurisdiction in the state generally involving a party present in the state who failed to act when under a duty to act, thereby causing tortious injury. For example, other courts have treated omissions as sufficient when part of a claim for fraud by omission, a tortious failure to warn, or conversion resulting from the failure to determine whether checks were forged. Slip op. at 22-23. Although the Long-Arm Statute does not appear to require that the omission be part of the cause of action, it requires a causal link between the omission and the tortious injury. The statute states that the claim must “arise from” and not merely be “related to” the omission. Slip op. at 23-34.

A sufficient nexus can exist if the Delaware-Directed Act of omission “set in motion a series of events which formed the basis for the cause of action before the court.” But the omission in this case of a filing with the Delaware Secretary of State was a collateral effect of the alleged breach of duty. The omitted filing did not form the basis of the company’s claim nor does it bear any causal connection to the Company’s injury. Slip op. at 24.

The court observed that it is easier to establish personal jurisdiction when a plaintiff bases its claims on a transaction that took place, rather than one that was prevented from taking place. Notwithstanding this asymmetry, based on action versus conscious non-action, that is the current status of the law.

Public Policy Observation

The court noted that with the proliferation of investor-level blocking rights, securing jurisdiction over a party who exercises those rights may become an obstacle but “Delaware lacks a statutory method of serving process and establishing personal jurisdiction that overcome it.” Footnote 59.

This post was written by Chauna Abner, a corporate and commercial litigation partner at Lewis Brisbois.

The Delaware Court of Chancery recently dismissed a lawsuit by a Delaware corporation against its founder, former CEO, and former director that sought to invalidate the applicable employment agreement after the court found that the agreement’s forum selection clause required the action to be brought in California. See Masimo Corp. v. Kiani, C.A. No. 2024-1086-NAC (Del. Ch. Apr. 21, 2026); Cf. Mawson Infrastructure Grp., Inc. v. Mewawalla, C.A. No. 2025-0789-JTL, Transcript (Del. Ch. Feb. 13, 2026)(granting a motion to dismiss breach of fiduciary duty claims brought in Delaware against a former director and employee based on a Washington forum selection clause in an employment agreement between the parties, although the plaintiff’s claims were not asserted based on that agreement).

Key Facts

Masimo, a Delaware corporation, sued Joe Kiani in Delaware seeking to invalidate its employment agreement with Kiani based on alleged breaches of fiduciary duties by Kiani. The agreement provided that upon a “Qualifying Termination,” Kiani would receive a certain severance payment, any unvested stock options, and a certain “Special Payment” of restricted share units plus $35 million. The agreement defined “Qualifying Termination” as termination for “Good Reason.” In addition, the employment agreement contained a forum selection clause requiring any suit “arising out of or relating to” the agreement to be brought in California Superior Court, Orange County.

 After Masimo’s stockholders voted to remove Kiani from the Board of Directors, Kiani resigned as CEO stating that he did so for “Good Reason.” Kiana subsequently filed suit against Masimo in California seeking declarations that he resigned for Good Reason and is entitled to severance and the Special Payment.  

Masimo subsequently filed the instant action in Delaware seeking declarations invalidating the agreement’s provisions, invalidating the Special Payment, declaring waste, and alleging fiduciary breaches. Kiani moved to dismiss under Rule 12(b)(3), arguing that the agreement’s forum selection clause required that the litigation proceed in California.

Holding & Reasoning

          The Court of Chancery agreed and granted Kiani’s motion to dismiss, enforcing the agreement’s California forum selection clause. The Court held that Masimo’s claims “arise out of or relate to” the agreement and, therefore, must be litigated in California.

The Court reasoned that DGCL § 122(18) authorizes stockholder agreements to select non‑Delaware fora for internal affairs claims, notwithstanding § 141(a) and  excluding § 115, and that Section 122(18), effective August 1, 2024, abrogated the prior Independent‑Source Principle for stockholder agreements, such that fiduciary claims can be routed by contract. The Court found that the agreement qualified at least in part as a § 122(18) stockholder governance agreement, and was not solely an employment contract under DGCL § 122(5), since the agreement included matters of governance. Specifically, the agreement materially allocated governance power, including change‑in‑control triggers, supermajority for‑cause removal, and Chairman/lead‑director provisions.

          The Court further explained that under both California and Delaware law, “arising out of or relating to” is construed broadly, and found that Masimo conceded its claims would not exist absent the agreement. Accordingly, the Court concluded that the agreement’s forum selection clause compelled litigating Masimo’s claims against Kiani in California.

Practical Takeaways

  • Pursuant to DGCL § 122(18),  corporations can validly route internal affairs disputes to non‑Delaware fora, including through employment‑style agreements with controllers.
  • Agreements with governance features tied to board composition or control may be treated as DGCL§ 122(18) governance agreements even if styled as employment contracts.
  • Broad “arising out of or relating to” forum clauses will capture fiduciary duty and waste claims closely related to the agreement.

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.

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