The Ravenswood Investment Company L.P. v. Winmill, C.A. No. 3730-VCN (Del. Ch. Nov. 30, 2011), read letter ruling here. A prior decision by the Delaware Court of Chancery in this case was highlighted on these pages here.
The Court addressed a motion for reargument under Rule 59(f), as well as Court of Chancery Rule 59(e), to alter or amend the Court’s prior memorandum opinion of May 31, 2011.
The three arguments made regarding the Court’s prior opinion were as follows: (i) The prior decision contained a material mathematical error; (ii) The allegations in the complaint should form a basis to give the plaintiff an opportunity to amend its complaint in order to expand on the original allegations; and (iii) Ravenswood argues that the complaint did contain sufficiently particularized allegations that established demand futility.
The Court addressed the standard to be applied under Rule 59(e) for a motion to alter or amend a judgment based on three prerequisites: (i) an intervening change in controlling law; (ii) the availability of new evidence not previously available; (iii) a need to correct a clear error of law or prevent manifest injustice.
By contrast, under Rule 59(f) a motion for reargument may be granted if the moving party demonstrates that the Court’s decision was predicated upon a “misunderstanding of a material fact or a misapplication of the law.”
Although the Court made a mathematical error in footnote 50, it was not a material error. The Court explained that any stock options involved would have a dilutive effect on shareholders’ equity and this effect alone does not render an options plan unfair. See footnotes 19 and 20. Thus, the Court refused to revisit its dismissal of the claim that the defendants breached their fiduciary duties by adopting a stock option plan. The Court also refused to reconsider the argument that demand should have been excused with regard to the claim regarding a stock buyback plan allegedly harming Winmill.