Amirsaleh v. Board of Trade of the City of New York, No. 2822-CC (Del. Ch., January 19, 2010), read opinion here. Read summaries on this blog of the several prior opinions of the Court of Chancery in this case here. In this latest opinion, the Court presumed the reader’s familiarity with the background facts recited in the Court’s November 2009 opinion.


This 24-page Court of Chancery decision provides a descriptive post-trial analysis of the application of the implied covenant of good faith and fair dealing that Delaware imposes on all contracts–without exception. The claim for breach of the covenant was ultimately rejected in the context of allegations that a deadline was “selectively extended” to assist “connected” people.


This dispute arose out of the merger, on January 12, 2007, of the New York Board of Trade (“NYBOT”) with and into CFC Acquisition Company, a wholly owned subsidiary of IntercontinentalExchange, Inc. (“ICE”).  In connection with the merger, NYBOT owners (known as members) were effectively given the option of being cashed out or receiving a combination of ICE common stock and cash in exchange for their membership interests. NYBOT members expressed their merger consideration preference by completing and timely submitting an election form to a third-party. The combination of ICE common stock and cash was worth more than the option of only straight cash, so most members naturally did not prefer to be cashed out.

The initial deadline for the election was January 5, 2007. Many members missed the deadline. Thus, the deadline was extended until January 18, 2007. However, some members still missed the extended deadline.

Plaintiff submitted his form late and it was rejected as untimely, thus he was cashed out instead of receiving the combination of common stock. He then sued claiming a breach of the implied covenant of good faith and fair dealing.

The Court’s November 2009 opinion, cited as 2009 WL 3756700 (Del. Ch. Nov. 9, 2009), explained in great detail the contours of  the good faith and fair dealing covenant. The current opinion decided whether the evidence presented at trial satisfied the prerequisites for breach of that obligation. It did not.


Although the demarcations of the applicable law were set forth in the November 2009 decision, the latest opinion is helpful for its highlighting of the factual situations that are illustrative of “what one should do” when there are financial repercussions for failing to meet deadlines and under what circumstances allowing only “selective” extensions of that deadline may be considered bad faith and a violation of the covenant of good faith and fair dealing.

Prerequisites to Finding Bad Faith Based on Facts of This Case

The Plaintiff failed to present at trial sufficient evidence to satisfy his burden of proof that the acceptance of less than all of the late elections amounted to bad faith. In order to establish bad faith the Court determined that the Plaintiff was required to show (but did not),  the following:

(i) that the decision to allow a limited extension of the deadline was motivated by bad faith; and (ii) that it was the result of a culpable mental state. See. 2009 WL 3756700 at *5-6.

The Court explained that the Plaintiff could have demonstrated the foregoing by showing that the decision to open a late acceptance window was: (i) solely based on the fact that certain “connected members” failed to get their forms in on time; or (ii) that certain “connected members” received special treatment in submitting late elections, including holding open the window until all  “connected members” had submitted their elections.

Four Examples Not Demonstrating Bad Faith

The Court explained that bad faith (the absence of good faith) would not be found if it appeared that the decision to accept late submissions fell within the following categories: (i) it was driven by considerations of customer satisfaction balanced against leaving enough time to calculate and distribute the merger distribution by the January 29, 2007 distribution deadline required by the merger agreement; or (ii) if it appeared that defendants made reasonable efforts to give all members making late elections the same or substantially similar assistance turning in their late forms. See n. 11. Nor would bad faith be found if: (iii) defendants had failed to accept any late election form; or (iv) if defendants accommodated all late filers (as this would have exceeded the implied covenant’s requirements.) See n. 18

Court’s Reasoning and Holding

The Court found that opening a late election acceptance window was not motivated by a desire to help “connected members” but rather was intended to accommodate all members who missed the deadline. Moreover, the people whom the Plaintiff claimed were “connected’ and the object of the defendants’ alleged favoritism, were not “connected” at all, as the Court explained after careful analysis of the relationships involved, spanning many pages of this opinion.