Ryan v. Gifford, 2007 WL 4146190 (Del. Ch., Nov. 21, 2007), read opinion here. The Chancery Court’s prior decision in the case was summarized here on this blog. The basis of the suit deals with alleged backdating of options. This most recent decision addressed issues of personal jurisdiction over certain defendant officers. The thorough discussion in the opinion could serve as a model answer to a bar exam question on civil procedure issues.
The focus of the court’s analysis was the somewhat recent amendment to the Delaware statute relating to personal jurisdiction over officers and directors of Delaware corporations. For many years, section 3114(a) of Title 10 of the Delaware Code has allowed for personal jurisdiction over a director of a Delaware corporation for acts taken by that person in his capacity as a director. In 2004, the statute was amended to allow also for personal jurisdiction over officers of Delaware corporations when the acts for which the officer is being sued were done in that person’s capacity as an officer of the corporation. 10 Del. C. Section 3114(b).
Here is the court’s overview of the procedural setting and the procedural issues:
When a defendant moves to dismiss a complaint
pursuant to Court of Chancery Rule 12(b)(2), the
plaintiff bears the burden of showing a basis for the
court’s exercise of jurisdiction over the defendant.
The court engages in a two-step analysis: the
court must first determine that service of process is
authorized by statute and then must determine that
the exercise of jurisdiction over the nonresident
defendant comports with traditional due process
notions of fair play and substantial justice. In
ruling on a Rule 12(b)(2) motion, the court may
consider the pleadings, affidavits, and any discovery
of record. If, as here, no evidentiary hearing
has been held, plaintiffs need only make a prima
facie showing of personal jurisdiction and
"the record is construed in the light most favorable to
the plaintiff." (emphasis added)(footnotes omitted).
After a comprehensive analysis, the court found, with one exception, that the allegations against the individual defendant officers involved actions that pre-dated the Jan. 1, 2004 effective date of Section 3114(b), which provides for the imposition of personal jurisdiction over officers of Delaware corporations–subject to traditional due process requirements under the U.S. Constitution. See generally, Amaysing Techs. Corp. v. CyberAir Commc’ns., Inc., 2005 WL 578972 at *3 (Del. Ch., Mar. 3, 2005).