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
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 business judgment rule cannot shield Clovis Oncology Inc.’s directors from shareholder charges that they breached their oversight duty by ignoring reports that their flagship cancer-fighting drug was unlikely … Continue Reading
A recent Delaware Court of Chancery decision provides an excellent analysis of the requirements for imposing personal jurisdiction based on the Delaware Long Arm Statute, and also addresses the fiduciary duty of disclosure in a thorough manner worthy of careful reading. In Clark v. Davenport, C.A. No. 2017-0839-JTL (Del. Ch. July 18, 2019), the court … Continue Reading
Over the last 14 years that I have published this blog, I have compiled an annual review with a list of key Delaware corporate and commercial decisions that have widespread utility to practitioners, especially those court decisions that are not widely covered by other legal publications or the mainstream press. On a few occasions, I have prepared a mid-year … 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
Although Delaware courts have been consistent in affirming the general principle that default fiduciary duties may be contractually modified in the context of Delaware limited partnerships by the limited partnership agreement, In re El Paso Pipeline Partners, L.P. Derivative Litigation, C.A. No. 7141-VCL (Del. Ch. April 20, 2015), serves as a reminder that transactions may … Continue Reading
In re Dell Inc. Shareholder Litigation, No. 8329, hearing transcript released (Del. Ch. June 27, 2013). In a ruling from the bench, the Court of Chancery denied a request for expedited proceedings requested by challengers of the pending deal involving Dell. The plaintiffs failed to convince the court that they had a “colorable claim” that … Continue Reading
Gerber v. Enterprise Products Holdings, LLC, Del. Supr., No. 46, 2012 (June 10, 2013). Issue Presented: This seminal Delaware Supreme Court decision addresses the important, nuanced issue of whether a contract provision that presumes good faith can preclude a claim for a breach of the implied covenant of good faith and fair dealing. Short Answer: … Continue Reading
Sutherland v. Sutherland, C.A. No. 2399-VCN (Del. Ch. May 30, 2013). Issue Addressed: Whether certain directors violated their fiduciary duties by benefiting from a system of charging for administrative expenses for personal matters that was more favorable to certain directors. Short Answer: No. Background: Many prior Delaware decisions in this long-running internecine family business dispute have … Continue Reading
Among the key corporate and commercial Delaware decisions that we have highlighted on these pages during the first five months of 2013, the following decisions either clarified existing Delaware law or announced new law on important substantive or procedural topics. This is a supplement to the annual review of cases we have provided on this … 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: Primedia, Inc., Shareholders Litigation, Cons., C.A. No. 6511-VCL (Del. Ch. May 10, 2013). Issue Addressed: Whether insider trading claim based on state law should be allowed to proceed despite motion to dismiss by special litigation committee. Short Answer: Motion to dismiss denied. Brief Background Details of this case were previously highlighted on these … Continue Reading
Bullock v. BankChampaign, N.A., No. 11-1518, 2013 U.S. LEXIS 3521 (U.S. May 13, 2013) Issue Addressed: This U.S. Supreme Court opinion considered whether a director found liable for a breach of fiduciary duty could discharge his debts related to that breach in Bankruptcy Court pursuant to 11 U.S.C. § 523(a)(4) of the Bankruptcy Code. 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
Simplexity, LLC v. Zeinfeld, C.A. No. 8171-VCG (Del. Ch. April 5, 2013) (Redacted Version) Issue Addressed: This case involves a dispute between two companies over the hiring of the former CEO of Simplexity, Andrew Zeinfeld. (The publication of this opinion was delayed while confidential data was redacted.) Short Overview Simplexity contends that Zeinfeld’s employment with … Continue Reading
Zutrau v. Jansing, C.A. No. 7457-VCP (Del. Ch. Mar. 18, 2013). Issues addressed in this Court of Chancery opinion: (1) The right to have a receiver appointed for a solvent corporation based on allegations of fraud and breach of fiduciary duty of directors; (2) direct claim for breach of fiduciary duty in connection with controllers … 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
Wagamon v. Dolan, C.A. No. 5594-VCG (Del. Ch. Mar., 15, 2013). This Court of Chancery letter ruling is worth mentioning in passing for its treatment of the fiduciary duties of co-joint venturers, and the principle that the fiduciary duty owed to each other ends with the termination of the joint venture, not unlike the end of the … 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
Forsythe v. ESC Fund Management Co. (U.S.), Inc., C.A. 1091-VCL (Del. Ch. Feb. 6, 2013). Issue addressed: Whether the court would allow objectors to the settlement of a derivative suit to guarantee the amount of the settlement and “take a chance” at pursuing a higher recovery at trial or in a later, new settlement, in … Continue Reading
Zimmerman v. Crothall, C.A. No. 6001-VCP (Del. Ch. Jan. 31, 2013) Issue Presented This 74-page opinion addresses the allegations of a minority unitholder in an LLC who asserts claims that the directors breached their fiduciary duties in connection with several financing transactions. Brief Overview Zimmerman claimed that the challenged transactions should be analyzed under the … Continue Reading
The Ravenswood Investment Company, L.P. v. Winmill & Co., Inc., C.A. No. 7048-VCN (Del. Ch., Jan. 31, 2013). Issue Addressed: Whether a fiduciary duty claim can be combined with a Section 220 claim in the same complaint. Short Answer: No. Brief Summary This case involved a complaint that sought relief under DGCL Section 220 and … Continue Reading
Gerber v. EPE Holdings LLC, C.A. No. 3543-VCN (Del. Ch. Jan. 18, 2013). Short Overview In this 37-page decision, the Court of Chancery dismissed breach of fiduciary duty claims. The Court declined to impose default fiduciary duties upon the entity’s partners based on a limited partnership agreement that waived all common law fiduciary duties in … 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
