Archives: Chancery Court Updates

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Chancery Describes Special Litigation Committee Requirements for Alternative Entities

The requirements for a special litigation committee, in the alternative entity context, that seeks recognition of its legitimacy from the court was recently explained in the Delaware Court of Chancery decision styled: Wenske v. Blue Bell Creameries, Inc., C.A. No. 2017-0699-JRS (Del. Ch. Aug. 28, 2019). Short Overview of Case: This case involves a derivative … Continue Reading

Chancery Finds Proper Purposes in Section 220 Demand in Absence of KFW Procedural Protections

Adding to the voluminous case law interpreting DGCL Section 220 that has been highlighted over the last 14 years on these pages, the recent Delaware Court of Chancery decision in Kosinski v. GGP Inc., C.A. No. 2018-0540-KSJM (Del. Ch. Aug. 28, 2019), is notable for its useful and thorough recitation of the basic requirements of … Continue Reading

Chancery Addresses Prerequisites for Prima Facie Duty of Loyalty Claim

A recent Delaware Court of Chancery decision addressed claims that the CEO of a closely-held company breached the duty of loyalty in connection with unauthorized personal expenses charged to the company, and other actions, while he managed the company–that were not consistent with financial management in the best interest of the company. That decision, in … Continue Reading

Director Denied Attorney/Client Communications–Firm Did Not Represent Whole Board

A recent Delaware Court of Chancery decision explained that: the general rule that a director is entitled to communications with counsel for the board has exceptions, but the threshold issue is whether the attorney involved represents the whole board–or just selected board members.  In Gilmore v. Turvo, Inc., C.A. No. 2019-0472-JRS (Del. Ch. Aug. 19, … Continue Reading

Special Litigation Committee Allows Derivative Litigation

A recent Delaware Court of Chancery decision involved the unusual situation where a Special Litigation Committee allowed derivative plaintiffs to pursue claims challenging an acquisition of the defendant company.  See In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG, Letter (Del. Ch. Aug. 15, 2019).  Another unusual case in which a Special Litigation Committee did … Continue Reading

Earn-Out Dispute: Ambiguous Terms Bar Motion to Dismiss

The recent Delaware Court of Chancery decision in Windy City Investments Holdings, LLC v. Teachers’ Insurance and Annuity Association of America, C.A. No. 2018-0519-MTZ (Del. Ch. July 26, 2019), discussed an often recurring issue in commercial litigation: a seller of a business who claims that the Earn-Out provisions in the agreement of sale were not … Continue Reading

Chancery Addresses Personal Jurisdiction Over Co-Conspirator

A recent Delaware Court of Chancery decision provides an excellent analysis of the requirements for imposing personal jurisdiction based on the Delaware Long Arm Statute, and also addresses the fiduciary duty of disclosure in a thorough manner worthy of careful reading.  In Clark v. Davenport, C.A. No. 2017-0839-JTL (Del. Ch. July 18, 2019), the court … Continue Reading

Chancery Interprets DGCL § 174

For those interested in an interpretation of § 174 of the Delaware General Corporation Law, and under what circumstances directors may be personally liable in connection with issuing dividends, as well as the statute of limitations for claims that § 174 was violated, it remains necessary to read the recent Court of Chancery decision in … Continue Reading

Advancement Granted for Post-Termination Use of Confidential Information

The recent Delaware Chancery Court opinion in Ephrat v. medCPU, Inc., C.A. No. 2018-0052-MTZ (Del. Ch. June 26, 2019), remains noteworthy for two reasons, notwithstanding the large number of advancement decisions interpreting DGCL Section 145 appearing on these pages over the last 14 years: (1)        It provides an anthology of prior Delaware decisions granting advancement … Continue Reading

Chancery Advancement Ruling Recites Basic Principles and Nuances

Adding to the multitude of Delaware decisions featured on these pages involving the right of corporate directors and officers to advancement of their fees incurred to defend claims against them, pursuant to DGCL Section 145, or by agreement, we offer highlights of Sider v. Hertz Global Holdings, C.A. No. 2019-0237-KSJM, Order (Del. Ch. June 17, 2019), a … Continue Reading

Advance Notice Bylaws Interpreted

A recent Delaware Court of Chancery decision interpreted an advance notice bylaw in a manner that disapproves of the attempt by the company to require onerous and extensive questions to be completed and returned within a five-day period before the proposed nominations to the board would be considered. The decision in Saba Capital Master v. … Continue Reading

Chancery Determines Valid LLC Managers; Rejects Bump-Out Theory of Board Replacements

A recent Delaware Court of Chancery decision is notable for featuring the resolution of a dispute regarding the valid managers of an LLC, and rejecting the “bump-out theory” of replacing LLC managers–that is, incumbent managers need to be removed before their replacements can validly “take their seats”. The ruling in Llamas v. Titus, C.A. No. 2018-0516-JTL (Del. … Continue Reading

Chancery Clarifies Section 220 Principles

A recent Delaware Court of Chancery opinion clarified a few key Section 220 prerequisites that are not otherwise explicit in the statute. The decision styled In re Facebook, Inc., Section 220 Litigation, Cons. C.A. No. 2018-0661-JRS (Del. Ch. rev. May 31, 2019), is notable for the following refinements of well-worn Section 220 requirements for a … Continue Reading

Chancery Explains the Standard of Review for Excess Director Compensation Claims

A recent Delaware Court of Chancery decision provides a helpful explanation of the standard of review for claims of excess director compensation, in Stein v. Blankfein, C.A. No. 2017-0354-SG (Del. Ch. May 31, 2019).  The decision also explains the prerequisites for stockholder ratification to be sufficient in order to shift the standard from entire fairness … Continue Reading

Expedited Proceedings Granted to Enforce Forum Selection Clause

There are many decisions highlighted on these pages ordering the enforcement of forum selection clauses. A recent transcript ruling is notable for granting expedited proceedings, without ruling on the merits, for a plaintiff who sought to enforce a forum selection clause even though the plaintiff was not a signatory to the agreement with the forum … Continue Reading

Requirements for Confidential Treatment of Chancery Court Filings

A recent Court of Chancery decision explains the prerequisites that must be satisfied to obtain court approval to prohibit the public from viewing documents filed with the court. In The Chemours Co. v. DowDuPont, Inc., C.A. No. 2019-0351-SG (Del. Ch. June 7, 2019), the court denied a motion for confidential treatment and explained why the requirements of Rule … Continue Reading

Mid-Year Review of Key Delaware Corporate and Commercial Decisions

Over the last 14 years that I have published this blog, I have compiled an annual review with a list of key Delaware corporate and commercial decisions that have widespread utility to practitioners, especially those court decisions that are not widely covered by other legal publications or the mainstream press. On a few occasions, I have prepared a mid-year … Continue Reading

Delaware A.G. Obtains Cancellation of LLC Certificate of Formation

The Delaware Attorney General announced today that she obtained a Consent Judgment to secure the cancellation of  the Certificates of Formation for several LLCs allegedly involved in criminal activities or otherwise “abusing its LLC powers and privileges” in connection with the website Backpage.com. The Consent Decree signed by the Court of Chancery was dated June … Continue Reading

Chancery Orders Mandatory Indemnification per DGCL Section 145(c)

A recent Delaware Court of Chancery decision ordered mandatory indemnification based on success in underlying litigation pursuant to DGCL § 145(c), in the matter styled:  Brown v. Rite Aid Corporation, C.A. No. 2017-0480-MTZ (Del. Ch. May 24, 2019). Issue Addressed:  Whether dismissal of the underlying litigation based on a technical argument was “success” for purposes of … Continue Reading
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