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Chancery: Tesla investors need only prove Musk had coercive influence ability in SolarCity deal

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. The Delaware Court of Chancery recently found that a trial is needed to decide whether, despite his minority share of Tesla Motors Inc., CEO Elon Musk could exert a controller’s … Continue Reading

Chancery Denies Attorneys’ Fees for Successful Suit to Compel Annual Meeting

The Court of Chancery recently denied a request for attorneys’ fees that were sought pursuant to the corporate benefit doctrine despite a successful suit under Section 211 of the Delaware General Corporation Law (DGCL) to compel a company to hold an annual meeting. In Martin v. Harbor Diversified, Inc., C.A. No. 2018-0762-SG (Del. Ch. Feb. … Continue Reading

Court of Chancery Denies Motion to Dismiss Implied Covenant of Good Faith and Fair Dealing Claim

This post was authored by R. Montgomery (“Monty”) Donaldson, a Delaware business and commercial litigator for many years, a friend and colleague of Francis Pileggi, and a follower of this blog. The implied covenant of good faith and fair dealing has received considerable play in Delaware in recent years. In fact, over the last half-decade, … Continue Reading

Chancery Grants Defamation Damages

A recent Delaware decision is notable for two reasons. First, it provides an example of a relatively rare defamation finding in a decision by the Delaware Court of Chancery. In Laser Tone Business Systems, LLC v. Delaware Micro-Computer LLC, C.A. No. 2017-0439-TMR (Del. Ch. Jan. 17, 2020), the court granted damages in the amount of … Continue Reading

Chancery Enforces Post-Mediation Term Sheet

A recent decision of the Delaware Court of Chancery provides a useful example of why the terms of a successful mediation need to be sufficiently memorialized in writing, immediately, so that the settlement can be enforced in the event that a formal and comprehensive settlement agreement is not completed later. In Starkman v. O’Rourke, No. … Continue Reading

Vice Chancellor Does Not Follow Prior Section 220 Decisions

A recently published Delaware Court of Chancery decision must be read by anyone who seeks to understand the latest iteration of Delaware law involving Section 220 of the Delaware General Corporation Law in connection with demands by stockholders for corporate books and records. Lebanon County Employees’ Retirement Fund v. AmerisourceBergen Corporation, No. 2019-0527-JTL (Del. Ch. Jan. … Continue Reading

Investors can’t support claim they were short-changed when directors changed merger partners

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. The Court of Chancery has tossed out a shareholder class action that accused Essendant Inc.’s directors and CEO of disloyally jilting merger mate Genuine Parts Co. in favor of … Continue Reading

Moving records action to New York would not be more efficient for plaintiff, Chancery says

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. Rallye Motors Holding, LLC cannot use Delaware’s McWanedoctrine to force its ex-CEO to move his books-and-records action to New York, where a fellow member and ex-employee of that limited … Continue Reading

Chancery Analyzes Standard of “Commercially Reasonable Efforts”

A recent Delaware Court of Chancery decision discussed many issues of great interest to commercial and corporate litigators in connection with a finding that Boston Scientific Corporation could not justifiably terminate an acquisition agreement with the target company, including an analysis of the familiar contractual standard of “commercially reasonable efforts,” which has been held to be synonymous with … Continue Reading

On second look, Chancery finds buyer’s revised charge avoids ex-CEO’s advancement claim

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. A recent Court of Chancery opinion reversed an earlier advancement decision in favor of Heartland Payment System LLC ex-CEO Robert Carr after finding buyer Global Payments Inc.’s amended complaint narrowed its … Continue Reading

Chancery says Tutor Perini owes subsidiary’s former owners $8 million under holdback pact

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. The Delaware Chancery Court ordered general contractor Tutor Perini Corp. to turn over $8 million to Greenstar Services Corp.’s former owners, after finding they met the terms of a … Continue Reading

Chancery Grants Access to Special Litigation Committee Documents

A recent Delaware Court of Chancery opinion involved a rare situation: A special litigation committee decided that the derivative plaintiff should be able to pursue a derivative suit that was filed against the company.  In the matter styled: In re Oracle Corporation Derivative Litigation, C.A. No. 2017-0337-SG (Del. Ch. Dec. 4, 2019), the court addressed … Continue Reading

Attorney/Client Privilege Exception for Beneficiaries of Trusts

A recent Delaware Court of Chancery decision confirmed the continued soundness of a long-standing exception to the attorney/client privilege when a beneficiary seeks communications with counsel for a trustee, based on the seminal decision of Riggs National Bank of Washington, D.C. v. Zimmer, 355 A.2d 709 (Del. Ch. 1976). The decision in J.P. Morgan Trust Company … Continue Reading

Delaware Forum Selection Clause Controls Over Foreign Exclusive Jurisdiction Statute

A recent Court of Chancery decision is noteworthy for its analysis of the interfacing between a forum selection clause requiring Delaware jurisdiction and the law of a foreign country ostensibly granting exclusive jurisdiction to the courts of that foreign country. In AlixPartners, LLP v. Mori, No. 2019-0392-KSJM (Del. Ch. Nov. 26, 2019), the court explained, … Continue Reading

Attorney/Client Privilege Applies to Email Sent on Company Server

The Delaware Court of Chancery recently ruled that the use of a company email address to send confidential information to an attorney did not negate the protection of the attorney/client privilege, based on the facts in Lynch v. Gonzalez, No. 2019-0356-MTZ, Letter Decision (Del. Ch. Nov. 18, 2019). Why Noteworthy? This decision is noteworthy because, … Continue Reading

Buyer’s Claims Fail Due to Lack of Express Representations by Seller in APA

A recent Delaware Court of Chancery decision provides an important lesson about the downside of imprecise drafting, and the need to express with precision how specific risks are to be allocated between the purchaser and seller of a business. In Julius v. Accurus Aerospace Corporation, C.A. No. 2017-0632-MTZ (Del. Ch. Oct. 31, 2019), the court … Continue Reading

Chancery orders 11th hour records for CBS Corp. investor’s probe of Viacom merger plan

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. A recent Court of Chancery decision gave a CBS Corp. shareholder access to the broadcaster’s internal documents regarding an imminent merger with former corporate sibling Viacom Inc. after finding a “credible basis” … Continue Reading

Chancery Grants a Section 220 Demand in One Case–Denies it in Two Others

This post juxtaposes two recent decisions from the Delaware Court of Chancery addressing a perennial favorite of Delaware corporate litigation: Stockholder demands for records under DGCL Section 220. Although the Section 220 demand was successful in the matter of Donnelly v. Keryx Biopharmaceuticals, Inc., C.A. No. 2018-0892-SG (Del. Ch. Oct. 24, 2019), by contrast: Section … Continue Reading

Chancery Applies Implied Covenant in Agreement that Waives Traditional Fiduciary Duties–and Affirms Shareholder Wealth Maximization Norm

A recent Chancery decision is notable for its application of the implied covenant of good faith and fair dealing in a partnership agreement that waives all conventional fiduciary duties, and replaces them with a contract-based standard of conduct. The decision in Bandera Master Funds LP v. Boardwalk Pipeline Partners, LP, C.A. No. 2018-0372-JTL (Del. Ch. … Continue Reading

Chancery: investor’s stealth demand on biopharma can’t avoid Spiegel pre-suit demand choice

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years. A shareholder who made a veiled threat to take action against a biopharmaceutical company over its directors’ allegedly excessive compensation effectively made a pre-suit demand and cannot later sue … Continue Reading

Chancery Interprets Confusing LLC Agreement

A recent Delaware Court of Chancery decision interpreted an ambiguous LLC agreement that it described–at least “at first read”–as “confusing and internally inconsistent.” The decision in MKE Holdings Ltd. v. Schwartz, C.A. No. 2018-0729-SG (Del. Ch. Sept. 26, 2019), in addition to being a helpful analysis for purposes of providing an insight into how the … Continue Reading
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