Archives: Chancery Court Updates

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Chancery Rejects Challenge to State Contract Bid Award

A recent Delaware Court of Chancery decision rejected a challenge by an unsuccessful bidder to an award by the state of a professional services contract. This decision provides a helpful example of how difficult it remains to challenge such bid awards. Many thanks to Deputy Attorney General Larry Lewis for bringing this opinion to our attention. We … Continue Reading

Chancery Denies Rule 5.1 Motion to Maintain Confidentiality of Pleadings

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Court of Chancery recently denied a motion to maintain the confidentiality of redactions in the public version of the complaint and briefs related to the defendants’ motion to dismiss. In Oklahoma Firefighters Pension Retirement System v. Corbat, C.A. No. 12151-VCG (Del. Ch. … Continue Reading

Court Rejects Pre-Trial Restrictions on Expert Testimony

A recent short letter ruling by the Delaware Court of Chancery provides a useful tool for the toolbox of commercial and corporate litigators regarding pre-trial arguments to exclude the testimony of an expert who has prepared a report, even though in the Court of Chancery motions in limine to obtain pre-trial rulings on such evidentiary issues are … Continue Reading

Chancery Rejects Jurisdiction Over Merits of Dispute Involving Selection of Successor Arbitrator

The Court of Chancery opinion in the case styled In Re: Good Technology Corporation Stockholder Litigation, C.A. No. 11580-VCL (Del. Ch. Oct. 27, 2017), provides a pithy, persuasive analysis of a binding arbitration agreement that specifically appoints a named arbitrator–but that arbitrator later recused himself. Overview: This decision provides reasoning supported by ample citations to authority to … Continue Reading

Release Bars Claim for Excessive Pay

A recent Chancery decision dismissed a claim for excessive compensation based on a prior release that covered such claims. The ruling in Feuer v. Dauman, C.A. No. 12579-CB (Del. Ch. Oct. 25, 2017), may be useful in those instances where an analysis is necessary to determine whether a settlement encompasses subsequent claims based on events that pre-dated … Continue Reading

Chancery Finds Expert Valuations Are Inadmissible as Hearsay Evidence

In our latest column for the Delaware Business Court Insider, we provide an overview of a recent opinion from the Delaware Court of Chancery, in Zohar II 2005-1 Ltd. v. FSAR Holdings, which examined the nuances regarding hearsay and expert valuation reports.  The Court provided a helpful overview for those who may be years removed from studying the … Continue Reading

Chancery Finds Breach of Obligation to Use “Diligent Efforts”

A recent Delaware Court of Chancery opinion is useful for commercial litigators who encounter the frequent situation where one party is required to use some variation on the standard of “best efforts” to either sell a product or reach certain revenue milestones, for example, in connection with a joint venture or a post-closing earn-out. In … Continue Reading

Chancery Orders Incorporation Provision in Books and Records Request

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Court of Chancery recently granted a defendant’s request to impose an incorporation provision upon a decision to grant a books and records request. That provision would deem all documents produced as incorporated by reference in any Complaint subsequently filed for purposes … Continue Reading

Chancery Finds Pre-Suit Demand Not Excused and Rejects “Regular Folks” Argument of Director Interestedness

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Court of Chancery recently dismissed a complaint for failure to adequately allege demand futility despite allegations that non-wealthy, “regular folks” directors were not disinterested based on their substantial directors’ fees. In Chester County Employees’ Retirement Fund v. New Residential Investment Corp., … Continue Reading

Chancery Excuses Pre-Suit Demand Requirement Due to Board’s Knowing Violation of Federal Regulation

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Court of Chancery denied a motion to dismiss two claims in a derivative action, finding pre-suit demand futility was established because the allegations of knowing violation of a federal regulation by the defendant directors sufficiently alleged bad faith conduct. In Kandell … Continue Reading

Chancery Refuses to Seal Courtroom for Allegedly Confidential Trial Exhibits

The Court of Chancery recently rejected a request by a non-party to seal certain trial exhibits so that they would not become part of the public trial record.  The court also rejected a request to close the courtroom to the public during trial for any testimony or argument regarding those exhibits.  ADT Holdings, Inc. v. Harris, … Continue Reading

Chancery Reviews Fiduciary Duties of Independent Board of Directors

A recent Delaware Court of Chancery decision addressed how the court will review claims against an independent and disinterested board for breach of the duty of loyalty in connection with a merger transaction. The opinion styled Kahn v. Stern, C.A. No. 12498-VCG (Del. Ch. Aug. 28, 2017), involved allegations made unsuccessfully, that the board of directors breached their duties … Continue Reading

Court Rejects Post-Closing Adjustment Claims

The Delaware Court of Chancery recently addressed a common type of claim in commercial litigation: Post-closing adjustments to the purchase price. Sparton Corporation v. O’Neil, C.A. No. 12403-VCMR (Del. Ch. Aug. 9, 2017). Basic Facts: The claims in this case involved an assertion that the defendant directors changed the selling company’s accounts receivable after an amount was … Continue Reading

Court Rejects Claims for Post-Closing Milestone Payments

A recent decision of the Delaware Court of Chancery deals with a recurring source of litigation: Claims for post-closing contingent payments based on allegations that the requisite milestone was triggered.  The merger in Fortis Advisors LLC v. Shire US Holdings, Inc., C.A. No. 12147-VCS (Del. Ch. Aug. 9, 2017), involved novel pharmaceutical products that were … Continue Reading

Claims Allowed to Proceed Based on Entire Fairness Standard

The recent Chancery decision in Buttonwood Tree Value Partners, L.P. v. R.L. Polk & Co., Inc., C.A. No. 9250-VCG (Del. Ch. July 24, 2017), is noteworthy for its application of the entire fairness standard to a controlling stockholder transaction, and the observation that exculpatory provisions barring director liability for violations of the duty of care … Continue Reading

Chancery Awards Advancement Fees for Defense of Similar Claims Pending Against Non-Covered Parties

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Court of Chancery recently awarded an applicant, Eric Pulier, all of his requested fees and expenses for advancement even though some of the expenses incurred related to the defense of claims asserted against SRS, a defendant not seeking advancement. In Pulier v. … Continue Reading

Fiduciary Duty Claims of Start-up Co-Founder Denied

A recent Delaware Court of Chancery opinion analyzed claims that are not uncommon: one of two founders of a start-up, that failed to launch, claimed that the other co-founder breached fiduciary duties by launching another start-up venture with a third-party who then pursued the business plan of the original start-up, but without the original co-founder.  In McKenna v. … Continue Reading