AT & T  Corp. v. Lillis, (Del. Supr., March 9, 2009), read opinion here. In a rare split decision, the Delaware Supreme Court ruled 3-2 to affirm the original decision of the Chancery Court  that was initially reversed by the Supreme Court (also a procedural rarity). 

This case involves an attempt by former officers and directors of MediaOne Corp. (the "Option Holders") to seek compensation from AT & T for the value of their stock options.

The bottom line of this procedurally quirky case is as follows: the Supreme Court originally reversed the Chancery Court and instructed it on remand not to base its decision on certain admissions made by AT & T in its pleadings that were later amended. After remand, the Chancery Court changed its orginal decision and found in favor of AT & T. Now, however, in its second decision, the Supreme Court has reasoned that the Chancery Court was right the first time and thus Delaware’s High Court must affirm the original decision of the Chancery Court in favor of the Option Holders. ( Of course, the dissenting Justices in this opinion see it differently.)

The multiple prior decisions in this case have been highlighted here,  with the most recent Chancery Court opinion here, explaining in detail the procedurally unusual posture of this matter. Notably, the prior decision in this case decided by the Supreme Court was a unanimous en banc opinion highlighted here.

This opinion is must reading for any litigator that  needs to address any of the following issues:

  • lasting impact of admissions (if any) in a pleading that is later amended;
  • "the law of the case" doctrine
  • whether legal positions taken in a case have any impact on divining the parties’  intent in a contract at the time the parties entered into that contract
  • "course of conduct" as a contract interpretation principle
  • whether a position taken in a pleading, which is later amended, can be used as "course of conduct" to interpret the intent of the parties in an agreement
  • whether an admission in a pleading, later amended to withdraw the admission, can still be used as "evidence"–as compared to a legal admission. (see FN 17 in the majority opinion and FN 10 in the dissenting opinion)