U.S. Court of Appeals Judge Amul Thapar recently published a book entitled, “The People’s Justice:  Clarence Thomas and the Constitutional Stories that Define Him.”  This is not a book review.  Rather, I just wanted readers to be aware of this exemplary new publication.  The book should be read by those who seek to understand one of the greatest jurists to ever sit on the U.S. Supreme Court and whose opinions have an outsized impact on the law that impacts every American.

A former U.S. Attorney General described the book as a must-read for “anyone concerned about the country’s future.”

Often the subject of unfair and relentless criticism, this book explains through the examination of landmark cases and the people behind the cases how Justice Thomas’ originalist jurisprudence delivers equal justice under the law.  Justice Thomas is quoted as saying that “finding the right answer is often the least difficult problem.”  What is needed is “the courage to assert that answer and stand firm in the face of the constant winds of protest and criticism.”

The Delaware Court of Chancery recently published an opinion that provides guidance on the latest iteration of the standard that will be applied when the court considers an application for mootness fees in the context of stockholder litigation. In Anderson v. Magellan Health Inc., C.A.No. 2021-0202-KSJM (Del. Ch. July 6, 2023), Chancellor McCormick granted a fee award of $75,000 in response to a fee request of $1.1 million in connection with a stockholder class action challenging a merger agreement between Centene Corporation and Magellan Health, Inc. After suit was filed, Magellan took certain actions that included supplemental disclosures which mooted the action and a stipulation of dismissal was filed.

Basic Background Facts

The suit claimed that confidentiality agreements that contained “don’t-ask, don’t-waive” provisions impeded the process that led to the Centene deal and, because the provisions were not fully described in the proxy, rendered stockholder provisions materially deficient. Shortly after suit was filed, Magellan issued supplemental disclosures on the don’t-ask-don’t-waive provisions and waived its rights under three of the four confidentiality agreements. On the theory that the supplemental disclosures and waivers were corporate benefits, plaintiff’s counsel petitioned the court for an award of fees and expenses.

Key Aspects of Ruling

This decision was provided as a public service to non-Delaware courts applying Delaware law who may not have “access to the this court’s bench rulings” that reflect a doctrinal shift that resulted in an “overall decline in settlements and fee awards” for strike suits challenging M&A transactions in Delaware. Slip op. at 15.

The Chancellor described this opinion as a clarification “for their sake”. Id. Specifically, the Court explained that: “Often, pre-Trulia precedent pricing corporate benefits reflect inflated valuations and warrant careful review.” Id.

The Court’s analysis emphasized that precedent prior to the seminal decision in the matter of In Re Trulia S’holder Litig.,129 A.3d 884 (Del. Ch. 2016), was “less useful”. In particular, the Court added that: “Post-Trulia decisions awarding attorneys’ fees in suits challenging don’t-ask-don’t-waive provisions reflect the decline in fees awarded for non-monetary benefits in merger litigation.’ Id.

Supplemental Disclosures

After explaining why the waivers did not deserve a fee award, the Court focused on the value of the supplemental disclosures. Although such disclosures have been recognized as a benefit, the Court observed that: “… the standard for pricing that benefit for the purpose of awarding mootness fees warrants reexamination in view of developments in deal litigation since Trulia.” Slip op. at 16.

In response to excessive deal litigation, Delaware courts responded in several ways, including a change in substantive law. In MFW and Corwin, the Supreme Court allowed deal lawyers to invoke the business judgment rule to avoid a merits-based review under the entire fairness or enhanced scrutiny standards. See Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) and Corwin v. KKR Fin. Hldngs LLC, 125 A.3d 304 (Del. 2015). In addition, C & J Energy Servs. Inc. v. City of Miami Gen. Empls. and Sanitation Empls. Ret. Trust, 107 A.3d 1039 (Del. 2014), “denounced the use of preliminary injunctions as a means of challenging third-party acquisitions and rerouted stockholders to ‘after-the-fact monetary damages.'” Slip op. at 17.

Importantly, moreover, “Delaware courts … began to clamp down on disclosure-only settlements.” Id. See footnote 49 and 51 collecting cases that document this change.

Delaware Public Policy

For the avoidance of doubt, the Court underscored that Delaware public policy does not encourage plaintiffs’ counsel to: “pursue weak disclosure claims with the expectation that defendants would rationally issue supplemental disclosures and pay a modest mootness fee as a cheaper alternative to defending the litigation.” Slip op. at 22.

Delaware courts have not had much opportunity to clarify Delaware policy and law on mootness fees based on supplemental disclosures because in the wake of Trulia, the “… deal-litigation diaspora spread mainly to federal courts, where plaintiffs’ attorneys repackaged their claims for breach of the fiduciary duty of disclosure as federal securities claims.” Id.

After careful reasoning and citation to scholarship on the topic and the case law developments, the Chancellor clarified that: ” At a minimum, mootness fees should be granted for the issuance of supplemental disclosures only where the additional information was legally required.” Slip op. at 23.

Going forward, the Court gave notice that it: “… will award mootness fees based on supplemental disclosures only when the information is material”. Slip op. at 24.

The Court engaged in a thorough analysis of the precise details and impact of the supplemental disclosures in this case, and what amounts have been awarded in relevant Delaware decisions. See, e.g., footnotes 81 to 84.

Money Quote and Takeaway

After an extensive review of the facts of this case and reasoning based on the applicable cases as well as public policy considerations, including the submissions by several professors who filed amici curiae briefs, my vote for the best concluding quote of the case, that also serves as a takeaway for future guidance, follows:

Where lawsuits are not worth much, plaintiffs’ counsel should not be paid much. In this case, the award represents less than the Movants’ lodestar, which should send a signal that these sorts of cases are not worth the attorneys’ time. Moreover, had Movants been required to meet the materiality standard, it seems unlikely that there would have been any award at all.

Slip op. at 35 (emphasis added).

This article was prepared by Frank Reynolds, who has been following Delaware corporate law and writing about it in various publications for more than 35 years.

The Delaware Chancery Court has declined to dismiss shareholder derivative charges that Walmart Corp. officers and directors chose to let the company violate criminal law by putting opioid drug profits ahead of their duty to comply with a Drug Enforcement Agency settlement.

Ontario Provincial Council of Carpenters’ Pension Trust Fund, et al. v Walton et.al. No. 2021-0827-JTL opinion issued (Del. Ch. April 26, 2023).

In his April 26 opinion of 128-pages denying part of a defense motion to dismiss for failure to plead pre-suit demand, Vice Chancellor Travis Laster ruled that the business judgment rule does not shield Walmart fiduciaries from liability for decisions that “consciously condoned illegality” by pushing its pharmacies to increase opioid sales after agreeing with regulators to reign them in.  However, he found that the majority of the directors did not face liability that would prevent them from objectively reviewing other breach-of-duty charges related to Walmart’s role as an opioid distributor.

Corporate and insurance law specialists will likely be interested in the distinction the vice chancellor made in finding that only charges involving possible criminal liability for the board’s alleged disregard of a DEA mandate and its duty as an opioid dispenser could survive the pre-suit demand test.  The court said a fiduciary cannot “make a business judgment to cause or allow the corporation to break the law” because former Chancellor Leo Strine’s Massey Energy decision found that, “Delaware law does not charter law breakers.” In re Massey Energy Co., 2011 WL 2176479, *20 (Del. Ch. May 31, 2011).


Walmart, as the distributor for a national network of more than 5,000 company pharmacies, was accused in myriad later-consolidated lawsuits of over-prescribing and diverting massive amounts of drugs in a major contribution to a plague of opioid dependence.  After a bellwether suit in a multi-district litigation determined that Walmart caused $3.1 billion of a massive total national opioid damages’ judgment, three pension fund shareholders filed a derivative suit that charged Walmart fiduciaries brought about that liability by knowingly causing Walmart to fail to comply with:

(i) its obligations under the federal Controlled Substances Act and its implementing regulations,

(ii) its obligations under the Controlled Substances Act when acting as a distributor of opioids, and

(iii) its obligations under a settlement with the U.S. Drug Enforcement Agency.

The charges survived a motion to dismiss them as untimely.  In an April 12 ruling the court found that Walmart Corp. shareholders did not wait too long to charge that their officers and directors violated their fiduciary duties and a settlement with federal drug regulators by letting Walmart misuse its opioid dispenser role for 5,000 company pharmacies in Ontario Provincial Council of Carpenters’ Pension Trust Fund, et al. v Walton et.al. No. 2021-0827-JTL opinion issued (Del. Ch. April 12, 2023).

But two weeks later on a motion to dismiss for failure to make or excuse pre-suit demand, the court allowed only the DEA-settlement charges and the alleged violations of the Controlled Substances Act as dispenser to proceed.

Analysis of the demand ruling

The vice chancellor found significance in the absence of non-privileged communications in the record as to both compliance with the DEA settlement and the regulators’ allegations regarding Walmart’s compliance with the Controlled Substance Act as a dispenser.  He reasoned that if the board was dutifully working on those issues the record would include more than privileged communications with the directors’ attorneys (which were by nature, unavailable.)

He noted a lack of non-privileged communications about:

  • taking the steps necessary to comply with the DEA Settlement and the Controlled Substances Act,
  • responding to red flags of noncompliance, and
  • assessing the effectiveness of the compliance efforts. Although legal advice undoubtedly is an input into those discussions and decisions.

The court said “As a dispenser, Walmart must establish and maintain effective controls and procedures to guard against theft and diversion of controlled substances.  The regulations for dispensers include specific requirements that pharmacies must meet.” It found enough support for a pleading stage inference that Walmart’s board did not authorize the resources that its pharmacies needed to implement promised reforms of opioid prescribing procedures.  Instead, there was talk of support for incentives to boost prescription volume, he said.

Regarding the DEA settlement –which ran from March 2011 to March 2015—the court noted that despite Walmart’s agreement to fund reform, a report to the board ‘”conspicuously omits significant items identified in the DEA Settlement,” such as `doctor shopping, flagging requests for early refills, or checking for altered or forged prescriptions.

The vice chancellor said the pleading-stage record points to a motive for the conscious decision not to devote more resources to compliance: Walmart was driving opioid prescription traffic to its pharmacies both to generate pharmacy sales and get customers into Walmart’s stores so that they would buy other products, he said.  “Walmart was simultaneously incentivizing and pressuring its pharmacists to fill more prescriptions and do it faster. Devoting more resources to achieving compliance with the DEA Settlement would have cost money and undercut those initiatives,” he concluded.

The court ruled that was enough at the pleading stage to deny the motion to dismiss–especially since those charges could result in criminal liability.  It declined to stay the suit until that was determined in a related case.

This blog’s favorite preeminent corporate law scholar provides learned commentary on the titular topic on his eponymous blog ProfessorBainbridge.com with citations to his prior scholarship and insights by other leading corporate law professors. They do a deep dive into the implications of Coster v. UIP Cos., Inc., Del. Supr., No. 163, 2022 (June 28, 2023).

See, e.g., Prof. Ann Lipton’s commentary on the case as well as her reference on Twitter to Vice Chancellor Laster’s very recent reference to the Coster decision and its impact on the standard of review in the context of a corporate election or a stockholder vote involving corporate control.

Typically, I don’t duplicate coverage of noteworthy Delaware corporate law decisions that have already been the subject of widespread commentary such as this one that has been analyzed extensively by leading experts.

This article was prepared by Frank Reynolds, who has been following Delaware corporate law and writing about it in various publications for more than 35 years.

The Delaware Chancery Court has ruled that Walmart Corp. shareholders did not wait too long to charge that their officers and directors violated their fiduciary duties and a settlement with federal drug regulators by letting Walmart misuse its opioid distributor role for 5,000 company pharmacies in Ontario Provincial Council of Carpenters’ Pension Trust Fund,et al. v Walton et.al. No. 2021-0827-JTL opinion issued (Del. Ch. April 12, 2023).

In his April 14 opinion, Vice Chancellor Travis Laster denied the defendant directors’ bid to dismiss based on laches, finding that plaintiffs were not on notice of the alleged wrongdoing until March 2020 because the Walmart board had hid its failure to reign in its alleged diversion and over-prescription of opioids that cost the company $3.1 billion in customer lawsuit liability. 

The vice chancellor’s April 14 ruling was similar to his recent decision in a related shareholder suit over the opioid liability of pharmaceutical giant AmerisourceBergen. Lebanon County Employees’ Retirement Fund, et al. v Collis, et al., C.A. No. 2021-1118-JTL (Del. Ch. Dec. 15, 2022).   In that case, as in this Walmart suit, Vice Chancellor Laster employed the separate accrual method to determine when each claim should have appeared on the derivative plaintiffs’ radar screens— and found in both cases that the claims were timely filed.

Update:  Passed timeliness test, failed pre-suit demand

However, as in the Amerisource suit, the Walmart timeliness ruling was a very short-lived victory for plaintiffs. In both cases, the plaintiff investors failed to show that the defendant directors were so conflicted by the threat of liability for causing opioid-related damage to the value of their companies that they could not objectively assess the merits of the shareholder charges.

All the AmerisourceBergen charges were dismissed one week after the timeliness ruling. Lebanon County Employees’ Retirement Fund, et al. v. Collis, et al., C.A. No. 2021-1118-JTL (Del. Ch. Dec. 22, 2022).  And the vice chancellor, in an April 26 decision, found that the Walmart shareholders’ claims failed the pre-suit demand test and must be dismissed — with the exception of charges that the officers and directors caused the company to repeatedly violate the federal Controlled Substances Act.  Ontario Provincial Council of Carpenters’ Pension Trust Fund, et al. v Walton et.al. No. 2021-0827-JTL opinion issued (Del. Ch. April 26, 2023). Those underlying charges by the U.S. Drug Enforcement Agency, are ongoing and could involve criminal penalties, he said.


Walmart, as the distributor for a national network of more than 5,000 company pharmacies, was accused in myriad later-consolidated lawsuits of over-prescribing and diverting massive amounts of drugs in a major contribution to a plague of opioid dependence.  After a bellwether suit in a multi-district litigation determined that Walmart caused $3.1 billion of a massive total national opioid damages judgment, three pension fund shareholders filed a derivative suit that charged Walmart fiduciaries brought about that liability by knowingly causing Walmart to fail to comply:

(i) with its obligations under the federal Controlled Substances Act and its implementing regulations,

(ii) with its obligations under the Controlled Substances Act when acting as a distributor of opioids, and

(iii) with its obligations under a settlement with the U.S. Drug Enforcement Agency.

The plaintiffs filed their initial complaint on September 27, 2021. On June 24, 2022, the defendants moved to dismiss the amended complaint in its entirety. The defendants argued that the claims were time-barred, that the plaintiffs had not established demand futility under Rule 23.1.

The vice chancellor ruled in the Walmart  April 12 timeliness opinion that at the pleading stage, the plaintiffs are entitled to inferences that 

(i) Walmart did not achieve compliance with its legal obligations under the DEA Settlement, 

(ii) Walmart’s directors and officers knew that Walmart was not complying) with its legal obligations, and 

(iii) Walmart’s directors and officers did not take action to cause Walmart to achieve compliance. 

The April 12 ruling

Vice Chancellor Laster concluded that, ‘The court can only apply the defense of laches at the pleading stage if it is clear from the face of the complaint that the claims are time-barred. Because of the uncertainties surrounding inquiry notice about the DEA Settlement Issues, the court cannot determine at the pleading stage those claims are time-barred. “

The April 26 ruling

However, in the demand ruling two weeks later, he found insufficient proof that a majority of the directors could not objectively consider the merits of the charges—other than the DEA controlled substances investigation.

The vice chancellor’s April 26 ruling on the Walmart demand issue cited both the approach and reasoning of his demand decision in the AmerisourceBergen case and the findings and conclusions of the MDL’s bellwether trial regarding individual liability for the harm to opioid users.  It will be summarized in detail in a future article.

I want to thank my partner, Sean Brennecke, for his valuable contribution to this post.

The titular holding was rendered in the context of whether substantial compliance was established as a defense to a breach of contract claim in a recent decision of the Delaware Court of Chancery in the matter styled LPPAS Representative, LLC v. ATH Holding Company, LLC, et al., C.A. No. 2022-0241-KSJM (Del. Ch., May 2, 2023).

This useful decision deserves a spot in the toolbox of all commercial litigators. It addresses several noteworthy issues beyond substantial compliance, including whether the right to participate by the indemnitee as part of a right to indemnification was honored–but for purposes of this short post I will limit my highlights to only a few aspects of the decision.

The court’s discussion begins with its holding that the defendant breached the terms of the contract it entered into with plaintiff by, among other things, not including the plaintiff in discussions with a government agency, not allowing plaintiff to review and comment on filings and submissions the defendant made to a court or government agency, and otherwise failed to allow plaintiff to participate in the defense of claims for which the defendants were providing indemnification. 

In so holding, the court rejected the defendants’ arguments, including that they substantially complied with the contract’s requirements. The court discusses the substantial compliance issue primarily from pages 34 to 39 of the slip opinion.  Initially, the court observed that the parties disagreed on whether Delaware law required a party to strictly comply with the terms of a contract or whether substantial compliance was sufficient. In footnote 163 the court reviewed the cases cited by the parties on this issue although the court did not view the parties as having “meaningfully” briefed the question and noted that the limited authority cited by the parties did not fully support their respective positions.

In order to “streamline this decision,” the court assumed that the applicable standard is substantial compliance as that is the lower standard. 

Applying that assumption, the court considered whether the defendants’ failure was “material.”  The court instructed that Delaware followed the Restatement (Second) of Contracts for determining materiality in the substantial compliance context and identified five circumstances which are particularly significant, including “the extent to which the injured party will be deprived of the benefit which he reasonably expected, and the extent to which the injured party can be adequately compensated for the part of the benefit of which he will be deprived….”  See Slip Op. at 35-36.  The court added that the materiality standard is “necessarily imprecise and flexible” and must be “applied in the light of the facts of each case in such a way as to further the purpose for securing for each party his expectations of an exchange of performance.”

The court reasoned that the plaintiff was deprived of the benefit which it reasonably expected, which in this case was the ability to participate in the defense in connection with its right to indemnification and that because that benefit was intangible, “it is hard to imagine how to adequately compensate” for the breach.  Under the circumstances of this case, the court found those factors to weigh in favor of a finding of materiality.

The defendant raised, and the court rejected, five arguments in support of their claim that their breach was immaterial.  One such argument was that their obligations to include plaintiff in critical discussions was not triggered because the plaintiff did not approach the defendant and request that they enter into joint defense agreement.  In rejecting this argument, the court held that the language of the indemnification provision did not impose an affirmative duty to contact the other party to put a joint defense agreement in place. 

The court further observed that the lack of such language in the agreement suggested that “neither party alone bears the burden of first contact.”  Slip Op. at 39.

Therefore, the court concluded that the failure to propose a joint defense agreement proactively did not necessarily absolve the defendants of their own obligation to work with the plaintiff to get one in place or honor their other contractual obligations. 

A recent decision of the Delaware Superior Court cited an article that I co-authored with Chauna Abner that provides a step-by-step guide to transferring cases from the Delaware Court of Chancery to Delaware’s trial court of general jurisdiction, the Superior Court. See RiseDelaware Inc. v. DeMatteis, C.A. No. N22C-09-526-CLS (Del. Super. May 22, 2023). 

The article is cited at footnote 8 of the opinion and was previously posted on this blog.  Footnote 8 notes that the procedure for transferring a case from the Court of Chancery to the Superior Court is similar to transferring a case from the Superior Court to the Court of Chancery. 

This recent decision provides a hard-to-find, practical explanation of the procedure, which is somewhat esoteric to the extent that it is not a well-traveled path and explanations about the nuanced procedures described for transfer between trial courts are not easy to find. That point makes this opinion required reading for any Delaware practitioner that needs to know the procedural requirements for this type of case transfer. 

The opinion’s judicial guidance is especially important in light of a recent trend in Delaware Court of Chancery decisions that employ more scrutiny, often sua sponte, in the service of jealously guarding (understandably) the famously limited subject matter jurisdiction of the Court of Chancery–which, many will be surprised to know, does not always always include requests for a permanent injunction.  See, e.g. In re Covid-Related Restrictions on Religious Services, Consol. C.A. No. 2021-1036-JTL (Del. Ch. Nov. 22, 2022), highlighted on these pages.

Some readers who have followed these pages over the last 18 years may be weary of reading about DGCL Section 220 court decisions regarding the nuanced right, subject to various prerequisites, of a stockholder to demand certain books and records. But bear with me for this short post.

Discovery in a Section 220 case is limited, consistent with its narrow focus and due to a Section 220 case being a “summary proceeding”. Discovery is especially restricted as it relates to requests for information directed to the company.

A recent order granting a motion for a protective order provides a helpful overview of the applicable standards, with citations to authority, of the restrictions on deposing a company representative and others. See Job v. jaris, Inc., C.A. No. 2022-0944-LWW, Order at 3 (Del. Ch. Feb. 13, 2023)(the lower case in the defendant company’s name is not a typo. The last page of the foregoing hyperlinked pdf has the court’s explanation attached to the last page of the form submitted by the movant.)

The Delaware Court of Chancery recently addressed the titular topic and reasoned after a thorough analysis that, in opposing the appointment of a receiver, counsel’s “purported representation of a defunct limited liability company is not only puzzling, but impossible.” In Re Reinz Wisconsin Gasket, LLC, C.A. No. 2022-0859-MTZ, Slip op. at 2 (Del. Ch. May 8, 2023).

The Court had previously decided in a post-trial decision that a receiver should be appointed for a cancelled LLC under 6 Del. C. section 18-805, in connection with a request that the cancellation of the LLC should be nullified. In this heavily-footnoted 12-page letter ruling, the Court explained that because the LLC was cancelled and lacks a decisionmaker, the LLC “cannot participate in the process of appointing its own receiver or retain counsel to do so.” Slip op. at 11.

I recently posted my latest ethics column for The Bencher which provided a short overview of the standards for judicial recusal or disqualification applicable to federal judges. The standards for state judges are similar but based on slightly different rules.

Fortunately, there are not many decisions by the Delaware Court of Chancery on the standards applicable to judicial recusal or disqualification.

A recent Chancery decision applied the same standards to a Special Master as would apply to a judge in the matter styled: In re AMC Entertainment Holdings, Inc. Stockholder Litigation, Consol. Civil Action No. 2023-0215-MTZ (Del. Ch. May 10, 2023). The Court applied Rule 2.11 and Rule 2.11(A) of the Code of Judicial Conduct for Delaware Judges. Rule 2.11 provides in relevant part that:

(A) A judge should disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances where:
(1) The judge has a personal bias or prejudice concerning a party[;]
(2) The judge, . . . or a person within the third degree of relationship,
calculated according to the civil law system,
. . .
(c) is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding[.]6

Regarding Rule 2.11(A), the Court explained that:

Our Supreme Court has set forth the standard where one seeks disqualification of a judicial officer under Rule 2.11(A)(1):

‘[T]he judge must engage in a two-part analysis to determine if recusal is warranted. First, the judge must determine whether she is subjectively satisfied that she can hear the case free of bias or prejudice concerning the party seeking recusal. Second, “even if the judge believes that he or she is free of bias or prejudice, the judge must objectively examine whether the circumstances require recusal because ‘there is an appearance of bias sufficient to cause doubt as to the judge’s impartiality.’

For those interested in this topic, I encourage a close review of this excellent application of the standards to the facts in this case

Postscript: This topic was also recently addressed in a recent article about a motion to disqualify the judge hearing the pending case involving the Disney Company and the Florida Governor.