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 Supreme Court has affirmed the dismissal of a shareholder’s suit against Uber Technologies Inc.’s directors who approved their CEO’s “flawed” purchase of a self-driving car developer run … Continue Reading
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
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
The Delaware Court of Chancery addressed a bevy of basic corporate litigation principles in the context of claims challenging the actions of directors, and determining which standards of review apply, and which procedural prerequisites need to be satisfied. In Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018), claims for … Continue Reading
An Eckert Seamans associate prepared this overview. In the Delaware Court of Chancery decision captioned, In re Merge Healthcare Inc. S’holders Litig., C.A. No. 11388-VCG (Del. Ch. Jan. 30, 2017), Vice Chancellor Glasscock applied the business judgment rule and dismissed an action for failure to state fiduciary-related claims. This opinion is important because it highlights … Continue Reading
Pfeiffer v. Leedle, C.A. No. 7831-VCP (Del. Ch. Nov. 8, 2013). Issue Addressed: Whether the approval of stock option grants that exceeded the maximum number of stock options allowed under the stock incentive plan was the basis for a breach of fiduciary duty claim against both the board that approved it and the executive who … Continue Reading
In Re Morton’s Restaurant Group, Inc. Shareholders Litigation, C. A. No. 7122-CS (Del. Ch. July 23, 2013). This is one of two recent Chancery opinions that dismisses claims that directors did not meet their burden under Revlon to receive the best price in connection with the sale of a company. In this Morton’s Restaurant Group … Continue Reading
In Re MFW Shareholder Litigation, C.A. No. 6566-CS (Del. Ch. May 29, 2013). Issue Addressed: What standard of review should apply to a going-private merger conditioned upfront by the controlling stockholder on approval by both a properly empowered, independent committee and an informed, uncoerced majority-of-the-minority vote. Short Answer: When a controlling stockholder merger has, from the … Continue Reading
In re Wayport, Inc. Litigation, Cons., C.A. No. 4167-VCL (Del. Ch. May 1, 2013). Issues Addressed: Among the several issues addressed in this case, the most noteworthy is a fulsome discussion and restatement of the fiduciary duty of disclosure that directors and majority shareholders owe to other existing shareholders from whom they are purchasing or selling … Continue Reading
Carsanaro v. Bloodhound Technologies, Inc., C.A. No. 7301-VCP (Del. Ch. March 15, 2013). This 76-page Chancery decision addresses issues that include the following: (1) when a claim for dilution of minority shares can be pursued directly instead of, or in addition to, derivately; (2) restrictions imposed by DGCL Section 160 on the right to redeem … Continue Reading
Edgewater Growth Capital Partners LP v. HIG Capital, Inc., C.A. 3601-CS (Del. Ch., Feb. 28, 2013). This 70-page decision provides useful and extensive analysis of the duties of directors of an insolvent corporation and related claims against a private equity shareholder who enforced its foreclosure rights. The court dismissed the claims and found that the foreclosure … Continue Reading
In re Puda Coal, Inc. Stockholders Litigation, C.A. No. 6476-CS (Del. Ch. Feb. 6, 2013)(Bench ruling). Thanks to Tariq Mundiya of Willkie Farr for forwarding the transcript. This bench ruling, highlighted on The Harvard Law School Corporate Governance Blog, for which I am a contributing author, addressed a claim for a breach of the board’s duty of … Continue Reading
In re BJ’s Wholesale Club, Inc. S’holders Litig., Cons., C.A. No. 6623-VCN (Del. Ch. Jan. 31, 2013). What this Case is About This case alleged breaches of fiduciary duty in connection with the purchase of all outstanding shares by private equity firms. The Court granted a motion to dismiss in this 41-page decision. Quick Overview … Continue Reading
In Re: Mobilactive Media, LLC, Consol. C.A. No. 5725-VCP (Del. Ch., Jan. 25, 2013). What this Case is About: This decision addresses claims between two members of a joint venture based on both breach of contract and breach of fiduciary duty. Both claims were allowed to proceed and both claims prevailed as non-duplicative. The Court also … Continue Reading
Noteworthy 2012 Corporate and Commercial Decisions from Delaware’s Supreme Court and Court of Chancery. By: Francis G.X. Pileggi and Kevin F. Brady. Introduction This is the eighth year that we are providing an annual review of key Delaware corporate and commercial decisions. During 2012, we reviewed and summarized over 200 decisions from Delaware’s Supreme Court … Continue Reading
Shocking Technologies, Inc. v. Michael, C.A. No. 7164-VCN (Del. Ch. Oct. 1, 2012). Issues addressed: (1) Whether a dissident director may leak confidential data as part of his battle with the majority of directors, without breaching the duty of loyalty? (2) When a director breaches his duty of loyalty by leaking confidential data, but no … Continue Reading
The Delaware Supreme Court today, in the case of Americas Mining Corp. v. Theriault, No. 29, 2012 (Del. Aug. 27, 2012), read here, in a 110-page opinion, upheld the Court of Chancery’s 100-plus page decision awarding over $2 billion in damages based on a breach of fiduciary duty claim in connection with the sale of … Continue Reading
Seinfeld v. Slager, C.A. No. 6462-VCG (Del. Ch. June 29, 2012). Issues Presented (1) Whether board approval of a supplemental retirement bonus was a breach of fiduciary duty to the extent that it constituted waste and did not qualify for a tax deduction; and (2) Whether a stock option plan for the directors was self-interested … Continue Reading
Louisiana Municipal Police Employees’ Retirement Systems v. Pyott, C.A. 5795-VCL (Del. Ch. June 11, 2012). Issues Addressed Whether collateral estoppel, Rule 23.1 or Rule 12(b)(6) apply to require the dismissal of a Delaware derivative suit based on the dismissal in California of a related derivative suit in which a federal court granted a Rule 23.1 … Continue Reading
Paron Capital Management LLC v. Crombie, C.A. No. 6380-VCP (Del. Ch. May 22, 2012). Issue Addressed: Whether the breach of fiduciary duty owed by a hedge fund manager to his partners entitles them to lost future earnings. Short Answer: The Court found that the partners who were defrauded were entitled to lost future earnings and other costs associated … Continue Reading
The following key Delaware corporate and commercial decisions from the first four months of 2012 are a follow-up to our summary of the key decisions that we featured from 2011. We highlight on these pages all the corporate and commercial opinions from Delaware’s Supreme Court and Court of Chancery, and we have chosen the following 2012 rulings … Continue Reading
Auriga Capital Corp. v. Gatz Properties, LLC, is an iconic opinion from the Delaware Court of Chancery that was issued on Jan. 27, 2012 and highlighted on these pages here. This decision is momentous because it explains why fiduciary duties will apply by default to managers and controlling members of LLCs unless those duties are … Continue Reading
Auriga Capital Corp. v. Gatz Properties LLC, C.A. No. 4390-CS (Del. Ch., Jan. 27, 2012), read opinion here. What this Case is About and Why it is Important This case establishes a high-water mark in terms of providing the most comprehensive explanation, based on legislative history and a review of Delaware cases, to explain why … Continue Reading
In a post-trial decision, the Court of Chancery in Dweck v. Nasser, C. A. No. 1353-VCL (Jan. 18, 2012), found that Dweck, the former CEO, a director and 30% stockholder in Kids International Corporation (“Kids”), and Kevin Taxin, Kids’ President, breached their fiduciary duties of loyalty to Kids by establishing competing companies that usurped Kids’ … Continue Reading
