Archives: Delaware Supreme Court Updates

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Supreme Court Clarifies Contract Formation and Forum Selection Clause Principles

The Delaware Supreme Court recently clarified for the first time the test to be used in Delaware to determine whether a contract’s terms are sufficiently definite to create an enforceable contract. In Eagle Force Holdings, LLC v. Campbell, No. 399, 2017 (Del. Supr., May 24, 2018), the court addressed whether various documents signed by the … Continue Reading

Collection of Cases on Earn Out Disputes

A recent article on The Harvard Law School Corporate Governance Blog collected decisions, mostly based on Delaware law, that address Earn Out disputes, which generally involve agreements for the sale of a company that allow for post-closing payments subject to various milestones or revenue targets being satisfied. Commonly, the buyer of the company is required to use a … Continue Reading

Supreme Court Bars Wal-Mart Claims Based on Issue Preclusion

The Delaware Supreme Court recently issued an epic opinion, ending the lengthy saga of litigation involving efforts by some stockholders of Wal-Mart to pursue claims in connection with alleged improprieties relating to the Mexican subsidiary of Wal-Mart, in California State Teachers’ Retirement System v. Alvarez , Del. Super., No. 295, 2016 (Jan. 25, 2018).  Multiple prior decisions in this … Continue Reading

13th Annual List of Key Delaware Corporate and Commercial Decisions for 2017

This is the 13th year that I have created an annual list of the key corporate and commercial decisions of the Delaware Supreme Court and the Delaware Court of Chancery. I chose the following rulings from among the more than 100 corporate and commercial decisions that have been highlighted on this blog over the past … Continue Reading

Supreme Court Rejects Earn-Out Claim

The recent Delaware Supreme Court decision in Exelon Generation Acquisitions, LLC v. Deere & Company, No. 28,2017 (Del. Supr., Dec. 18, 2017), reversed the trial court ruling and rejected an earn-out claim based on the application of well-settled contract interpretation principles. The specific contract terms that were interpreted are fairly sui generis and not widely … Continue Reading

Supreme Court Allows Challenge to Director Compensation Claims; Rejects Ratification Defense

In its first explicit clarification of Delaware law on stockholder ratification in many years, the Delaware Supreme Court provided a virtual restatement of the prerequisites for valid stockholder ratification of director actions. In doing so, Delaware’s High Court allowed a claim to proceed which challenged allegedly excessive director compensation.  In the case styled: In re Investors … Continue Reading

Delaware Supreme Court Declines to Adopt Deal-Price Presumption in Appraisal Action

This post was prepared by Brian E. O’Neill, Esq. of Eckert Seamans. The Delaware Supreme Court recently declined to adopt a presumption in appraisal actions of deal price as fair value in a robust, market-driven sales process. In DFC Global Corporation v. Muirfield Value Partners, L.P., (Del. Aug. 1, 2017), the Delaware Supreme Court reversed … Continue Reading

Fiduciary Duties in Limited Partnerships

For my latest column in Directorship, the publication of the National Association of Corporate Directors, I discuss a recent Delaware Supreme Court decision that addresses fiduciary duties as modified in the context of a limited partnership agreement. The case of Brinckerhoff v. Enbridge Energy Company was previously highlighted on these pages, but the opinion remains … Continue Reading

Supreme Court Dismisses Post-Closing Adjustment Claim

A recent Delaware Supreme Court decision dismissed a claim for post-closing adjustments to the purchase price for the sale of a company. Anecdotally, almost every merger or acquisition agreement that includes a purchase price that provides for an adjustment after closing for such things as net working capital or an earnout will generate a dispute.  The … Continue Reading

Delaware Supreme Court Addresses Contractual Fiduciary Standard

Last week the Delaware Supreme Court reversed its prior decision interpreting a master limited partnership agreement that provided what Delaware’s high court described as a contractual fiduciary standard.  The Court’s opinion is necessary reading for anyone who drafts or litigates alternative entity agreements that waive fiduciary duties but provide other contractual replacement standards.  In Brinckerhoff … Continue Reading

Supreme Court Defines “Commercially Reasonable Efforts”

The Delaware Supreme Court recently analyzed, for the first time, a common contractual standard in business agreements.  The legal meaning of the phrase “commercially reasonable efforts” does not enjoy clarity in the law. Lawyers and jurists alike should be excused if they view the law on this topic as not entirely self-evident.  The split decision … Continue Reading

Supreme Court Affirms Chancery Penalties for Litigation Misconduct

The Supreme Court’s recent affirmance of penalties imposed by the Delaware Court of Chancery for litigation misconduct is a useful tool for litigators of all stripes to brandish as an incentive for both their clients and opposing parties to comply with the rules of the road in connection with obligations to preserve evidence during discovery–and to … Continue Reading

Delaware Supreme Court Finds that Implied Covenant of Good Faith and Fair Dealing Requires Reversal

This Delaware Supreme Court decision must be read by anyone who hopes to understand the nuances of the rarely successful claim for breach of the implied covenant of good faith and fair dealing, especially in the context of a limited partnership agreement which waives all fiduciary duties. In Dieckman v. Regency GP LP, No. 208, 2016 (Del. … Continue Reading

Supreme Court Hears Argument on Impact of Decisions in Other Fora

The Delaware Supreme Court recently heard the appeal in a case involving the Lululemon company which addressed the impact of a decision in another forum on the ability of stockholder in a Delaware derivative suit to make the same or similar claims. Laborers’ District Council Construction Industry Pension Fund et al. v. Bensoussan et al., … Continue Reading

Supreme Court Clarifies Attorney Charging Liens

Readers of these pages who make their living by practicing law in private law firms will be interested in the recent Delaware Supreme Court opinion captioned Katten Muchin Rosenman LLP v. Sutherland, No. 151, 2015 (Del. Jan. 6, 2017). Others–not so much. Why would private lawyers care about this decision? Because, generally speaking, it will make it easier to collect … Continue Reading

Supreme Court Underscores Delaware Policy on Advancement for Directors and Managers

The Delaware Supreme Court explains in this short opinion the public policy supporting the expedited nature of advancement proceedings for officers and directors of corporations, and managers of LLCs. Trascent Mgmt. Consulting, LLC v. Bouri, No. 126, 2016, 2016 WL 6947014 (Del. Nov. 28, 2016). Although the principles discussed in this opinion are not new, the result … Continue Reading

Delaware Supreme Court Addresses Recoupment and Setoff

The Delaware Supreme Court addressed the related but distinct defenses of recoupment and setoff, and the statutes of limitations that applied to them, in the context of an appeal from a Court of Chancery decision which decided claims and counterclaims based on overlapping agreements related to multiple entities. In Finger Lakes Capital Partners, LLC v. Honeyoye … Continue Reading

Supreme Court Upholds Chancery’s Advancement Ruling

The Delaware Supreme Court in Andrikopoulos v. Silicon Valley Innovation Co., LLC, No. 490, 2015 (Order) (Del. June 8, 2016), affirmed the Chancery decision which was highlighted here, and which determined that the decision of a receiver to deny advancement rights was not in error, and that claims for advancement were appropriately treated as other … Continue Reading

More Directors and Officers Subject to Lawsuits in Delaware

We previously highlighted on these pages a Delaware Supreme Court decision in Hazout v. Tsang, that expanded the orthodox interpretation of a Delaware statute with the net result of making it easier to sue in Delaware an officer or director who has agreed to serve in that capacity for a Delaware entity. Now, readers have the benefit … Continue Reading

Delaware Supreme Court Addresses Direct v. Derivative Claims

The difference between a direct claim by a stockholder against a corporation as compared to a derivative claim, is a subtlety that even the most astute corporate litigator cannot always easily discern. Many Delaware court opinions have addressed the nuances that distinguish between such claims–and to make it more interesting for everyone the Delaware Supreme Court has … Continue Reading
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