In a short post-trial letter ruling, the Court of Chancery awarded damages for spoliation of evidence in ATG Capital Opportunity Funds LP v. Lane, C.A. No. 2026-0477-LWW (Del. Ch. Sept. 2, 2026). The record showed that a principal of plaintiff ATG failed to preserve relevant data on his mobile device. The prior post-trial decision on the merits did not rule on a motion seeking spoliation sanctions but explained that the requested adverse inference would not affect the outcome, nor would raising the burden of proof change the court’s analysis—so those requested remedies were moot. But because the spoliating party was not blameless, the court analyzed what other appropriate sanction was warranted.

Applicable Law

Court of Chancery Rule 37(e) authorizes sanctions when ESI should have been preserved in reasonable anticipation of litigation but is lost because the party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery. In such cases, “upon finding prejudice to another party from the loss of ESI, the court may order measures no greater than necessary to cure the prejudice.” Id. (citations omitted).

The court explained that the date when a duty to preserve arises is both a fact-specific and context-specific inquiry. Namely: “[a]n affirmative duty to preserve evidence attaches upon the discovery of facts and circumstances that would lead to a conclusion that litigation is imminent or should otherwise be expected,” and it attaches even before litigation has commenced “when a party should have known that the evidence may be relevant to future litigation.” Letter Ruling at 5-6 (citations omitted).

The court found that a principal of the plaintiff communicated using an ephemeral messaging app called Signal, as well as WhatsApp “with the auto-delete function enabled”—over two weeks after receiving a formal litigation-hold notice from counsel. He affirmatively turned on the WhatsApp auto-delete function while communicating with another board nominee—four days after the duty to preserve attached.

The court held that “leaving auto-delete enabled during this period was at least negligent. Failing to disable it after receiving the litigation hold was at least reckless. Affirmatively turning it on with litigation growing increasingly likely evidences an intentional disregard for [the party’s] preservation obligations.” Id. at 7 (citations omitted).

Highlights of Court’s Legal Analysis

The court reasoned that: “[t]o impose monetary sanctions, I need only find that [the party] had a duty to preserve evidence and breached that duty.” Id. (citation omitted). The court rejected the argument that substitute discovery eliminated any prejudice from the lost communications because it “ignores the financial burden it imposed, and that the discovery was an incomplete substitute for contemporaneous messages.” Id.

The court concluded that the proportionate remedy required for the court to cure the prejudice in this matter was “reasonable attorneys’ fees and expenses incurred in connection with [the opposing party’s] motion for spoliation sanctions and pursuit of supplemental discovery to compensate for the lost evidence.” Id. at 8. (citation omitted).

Takeaway

Motions for spoliation are very fact-specific and context-specific. The court will apply a measured and proportionate response depending on the prejudice that results from spoliation. There is no “one size fits all” remedy for all cases.

This overview was prepared by Rae Ra, a corporate litigation associate in the Delaware office of Lewis Brisbois.

The Court of Chancery recently emphasized again the plaintiff-friendly standard for advancement, rejecting JP Morgan’s objections to approximately $21 million in disputed fees and expenses.

In Javice v. JPMorgan Chase Bank, N.A., et al., C.A. No. 2022-1179-CDW (Transcript)(July 2, 2026)(“Transcript Ruling”) (deciding the same issue for C.A. No. 2023-0040-CDW), Magistrate Christian Douglas Wright held that, absent a showing of clear abuse, the Court will not conclude that counsel’s certifications were made in bad faith nor engage in a line-by-line analysis of whether expenses and fees are reasonable.

Rather, it remains well-established that the reasonableness of fees advanced is addressed at a later stage.

JPMorgan has appealed this Magistrate decision to ask a Vice Chancellor to pause the ruling requiring it to advance more than $20 million in disputed legal fees based in part on the argument that if it is later determined to have been improvidently paid, the bank will not be able to recoup the funds.

Factual Background

Both Javice and Amar each brought suit for advancement against JP Morgan in relation to their respective criminal proceedings, and the Court in March 2023 held that the two plaintiffs were entitled to advancement. Tr. Ruling at 5-6.

Over time, JP Morgan began to object more and more to requests for advancement. For November 2025, it refused to pay over 95 percent of the amount invoiced. Id. at 9. JP Morgan “justified its withholdings over 2025 because it asserted that the invoices included improper expense reimbursements—notably, for items such as gummy bears and a birthday cake—and that the invoices reflected impossible or implausible duplicative time entries, among a litany of similar objections.” Id.

Analysis

The Court, however, rejected those arguments, citing to the standard that the “court generally defers to a receiving party’s counsel’s good faith certification” absent an “evidentiary burden that is described as ‘clear abuse’ and ‘unmistakably unreasonable.’” id. at 13, which “approxima[ted] the most difficult burden of proof used in American law—beyond reasonable doubt.” Id. at 15.

The Court further commented:

In short, the words we use for the system we now have in place for advancement requires good faith in the preparation and submission of advancement demands. It doesn’t require perfection. It tolerates mistakes. It tolerates negligence. It even tolerates gross negligence, as long as counsel’s certification is made in good faith.

Id. at 16.

And based on this standard, the Court held, for the instant case: “JPMorgan hasn’t put forward sufficient evidence to persuade me that the fees and expenses . . . are so unmistakably unreasonable that they can only be the product of dishonest purpose, moral obliquity, furtive design, or ill will” such that the Court “must conclude that counsel’s certifications were made in bad faith.” Id. at 19.

For litigators, this decision offers practical and specific tips for asserting (or objecting to) advancement rights:

  • When opposing advancement, it’s a good idea to submit one’s own counsel’s invoices for comparison. The Court pointed out JPMorgan’s own invoices “would have been a helpful reference in a record grasping for comparisons,” id. at 22, before delving into, by way of example, the more than 2,500 hours billed by JPMorgan’s counsel in the Spirit Airlines bankruptcy case. Id. at 23. The Court noted that “JPMorgan’s refusal to provide its invoices was self-defeating and leads me to infer the invoices wouldn’t have favored JPMorgan here . . . The next time I ask for invoices, please hand them over.” Id. at 25.
  • Trying to argue for reasonableness of “total” spending won’t move the needle. “There isn’t some hypothetical outer limit on what any particular case should cost.” Id. at 27. “Delaware law doesn’t impose bright-line limits for total spend or, for that matter, spending within any particular category of work that is typically done in litigation.” Id. at 46.
  • The Court will not conduct a “granular level of review” over staffing decisions, number of timekeepers, minor billing errors, clerical work, specialist work, rate increases, Tide pens, gummy bears, and the like, at the advancement stage. Id. at 34-44, 47-58.
  • The reasonableness of fees and expenses can be hammered out at the indemnification stage, not at the advancement stage. See id. at 13, 38, 42.
  • Make sure to follow deadlines. The Court will not be “persuaded ‘we were really busy’ constitutes inadvertence” for missing deadlines for seeking advancement. Id. at 40.

In sum, advancement is warranted absent a showing of clear abuse and unreasonableness that would defeat a counsel’s good faith certification. This decision serves as a reminder of the high threshold that must be met before fees, in this context and at this procedural posture, may be challenged.  

I was delighted this week to receive a courtesy copy of the newest contribution, in hardback, to corporate law scholarship by Stephen Radin as an update to his iconic four-volume treatise on the Business Judgment Rule. It features a Foreword by former Delaware Chief Justice E. Norman Veasey.

What a challenge to do a short overview on a blog of a 1,500-page deep dive into a complex bedrock tenet of corporate law, with its discussion of countless seminal decisions and more recent court opinions that address the many facets of this keystone of corporate governance. I encourage anyone interested in this area of law to include this important tool in their toolbox.

In this short blog post I only attempt to whet the appetite of those interested in this topic.  

Highlights

  • The book begins with the basics, including the role of Delaware in corporate governance and the importance of the internal affairs doctrine.
  • The book provides a primer on the business judgment rule and examines the fiduciary duties of care and loyalty, as well as the Section 102(b)(7) exculpation.
  • The treatise includes a discussion of the amendment in 2025 to Section 144 and its new and heightened business judgment rule presumption.
  • Copious citations support an analysis of the effect of the presumption, when the presumption is not rebutted, when it is irrebuttable—supplemented by examples of how to rebut the presumption.
  • True to its title, the court discusses the role of the BJR in derivative litigation, including the demand requirement: demand excused and demand refused,
  • Although cases in other states are addressed, the focus is on Delaware law and the seminal Delaware cases, as well as more recent cases that discuss the multi-faceted aspects of demand futility and the challenge to proceed with derivative litigation when demand is refused.
  • The final chapter deals with special litigation committees and restoration of board control if a stockholder satisfies the demand requirement.

In the chapter that provides a primer on the Business Judgment Rule, the author begins with the introductory statement that:

Corporate law ‘starts with the bedrock principle’—codified in Section 141(a) of the General Corporations Law—that ‘the business and affairs of any corporation . . . should be managed by or under the direction of a board of directors.’ ‘Directors, rather than shareholders, manage the business and affairs of the corporation.’ . . . This ‘bedrock statutory principle of director primacy’ is ‘the centerpiece of Delaware law’ and the ‘cornerstone of Delaware’s board-centric regime.’ (citations omitted.)

Consistent with this bedrock principle, ‘for its entire history, our corporate law has tried to insulate the good faith decisions of disinterested corporate directors from judicial second-guessing.’ ‘The Business Judgment Rule embodies that policy judgment,’ is ‘at the foundation’ and ‘at the core of Delaware corporate law’ . . . (citations omitted.)

Treatise at 25-26.

The publisher is Wolters Kluwer 1-800-638-8437.

This post is by Aimee M. Czachorowski, a partner in the Delaware office of Lewis Brisbois Bisgaard & Smith LLP.

In Altigen Communications, Inc. v. Day, C.A. No. 2025-1298-JTL (Del. Ch., August 21, 2026), the Court of Chancery provided an in-depth explanation of the basis for imposing personal jurisdiction pursuant to the Delaware Corporate Officer-Consent Statute, 10 Del C.  § 3114(b), compared to the LLC Act under 6 Del. C. § 18-109. In noting the difference between the two statutes, the Court, sua sponte, directed the parties to address the precedent concerning de facto officer status under Section 3114(b) as discussed in Harris v. Harris, 289 A.3d 310 (Del. Ch. 2023).

Ultimately, the Court determined that the plaintiff failed to establish personal jurisdiction over the corporate officer under the Delaware Officer Consent Statute, 10 Del. C.  § 3114(b), because the title of “Chief Strategy Officer” was neither listed as a type of officer over which personal jurisdiction is conferred under §3114(b), nor was there any evidence that the activities performed by the Chief Strategy Officer made him a de facto officer.

The scholarly analysis includes the history and reasoning behind the expansion of Section 3114, compared to the LLC context, and every Chancery practitioner should be familiar with this decision.

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 been published. (It was published earlier in the month but paying client work has delayed this post.) The newsletter includes articles from authors around the country on the titular topic. 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

In the latest episode of my Delaware Corporate Litigation Insights podcast, I am joined by K&L Gates litigation partner Steven Caponi to examine a recent Delaware Court of Chancery decision involving fabricated quotations generated through the use of AI in a court filing.

The Delaware Court of Chancery’s recent published decision where the issue arose was also highlighted on these pages.

Voluminous commentary exists regarding the substantive comparisons between Delaware corporate law and competing states such as Texas, but an article that my partner and I published for Bloomberg Law compares the more practical aspect of expedited services that the Delaware Division of Corporations offers, such as same day service for corporate filings. Delaware still provides superior logistical advantages.

We explain why the expedited services that Delaware offers still surpass the Lone Star State despite recent improvements made by Texas.

A recent Delaware Court of Chancery decision identified more than 21 reasons why an LLC is not purely a creature of contract. Hassanein v. NTO Fund I, LLC, C.A. No. 2025-0299-DH (JTL) (Del. Ch. August 4, 2026), is noteworthy for several reasons.

It should be included in the pantheon of iconic and consequential Delaware Chancery opinions because it provides an illustrative, but not exclusive, list of reasons, with copious citations to authority, why an LLC Agreement might be primarily a creature of contract—but is not purely, or only, a contractual creature. Slip op. at 9-17. This decision

The court also observes that equitable remedies are also among the potentially available factors to consider. See footnote 50. A recent decision, by the same Vice Chancellor, that we highlighted on these pages, also addressed the issue. There is much else to commend this decision, but I only adumbrate it on these pages for purposes of whetting the appetite of serious followers of the law.

Other Highlights

  • The court provided a thorough examination of the difference between the status of an investment as a loan or equity in both the LLC and corporate contexts, as well as the consequences of that classification. Slip op. at 20-30.
  • The court recites basic contract interpretation principles that are always useful. Slip op. at 18-19.
  • The court engages in a thorough examination of the difference between a direct claim as compared to a derivative claim in both the LLC and corporate context. Slip op. at 43-55.
  • The court explains the rights of a creditor pursuant to § 18-502(b) of the LLC Act. Slip op. at 54-63.
  • See generally footnote 24 which notes that the General Assembly a few years ago abrogated the concept of incurable contract voidness.

A recent Delaware Court of Chancery decision is noteworthy for allowing an unusual procedural vehicle as a reply to counterclaims, as well as featuring an unusual initial retort to the counter-counterclaims, in the context of an intricate series of claims between and among parties involved in a dispute about the ouster an initial investor of a company. Namdar v. Immutable Holdings, Inc., C.A. No. 2024-0535-CDW (Del. Ch., July 17, 2026) (Wright, M.)

Highlights

  • After the original defendant filed counterclaims, the original plaintiff filed “counter-counter claims”, and in response to that move, a motion for more definite statement was filed and granted. After amended counter-counterclaims were filed, another motion to dismiss those amended counter-counterclaims was denied in this decision. Slip op. at 7.
  • The court concluded, with citations to supporting authority, that the Court of Chancery Rules allow counter-counterclaims, and referred to two other names by which they are also known: “counterclaims in reply” or “reply counterclaims.” Slip op. at 10 and footnote 52.
  • The court conducts an extensive analysis with copious citations to federal cases and other sources to buttress its reasoning why counter-counterclaims are allowed in Chancery, and why the defenses presented in this case were unsuccessful. Slip op. at 12-29.