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Case Law

Case Law

11/26/20 GPB – Entity Controller Liability

The Delaware Court of Chancery, in Jeff Lipman, et al. v. GPB Capital Holdings, LLC, et al. and GPB Holdings II, LP, et al., C.A. No. 2020-0054-SG, memo. op. (Del. Ch. Nov. 18, 2020), in a derivative action brought by limited partners on behalf of a limited partnership, found that it would have been futile to make demand on the partnership’s general partner, an LLC, because both the LLC and its individual controller faced a risk of liability for the claims asserted.

$$$ Law360 discusses the decision in GPB Capital Mismanagement Suit Survives In Chancery.

11/26/20 Gilead – Books & Records Defense

The Delaware Court of Chancery, in Deborah Pettry, et al. v. Gilead Sciences, Inc., C.A. No. 2020-0132-KSJM, memo. op. (Del. Ch. Nov. 24, 2020), in a books and records action under 8 Del. C. § 220, entered judgment in stockholder plaintiffs’ favor, finding defendant company’s defenses, described as “over-aggressive,” as baseless, and invited plaintiffs to move for an award of attorneys’ fees and expenses incurred in seeking inspection.

$$$ Law360 discusses the decision in Chancery Slams Gilead Stonewalling Over Records Demands.

11/25/20 [UPDATED] Coty – De Facto Control

The Delaware Court of Chancery, in In re Coty, Inc. Stockholder Litigation, C.A. No. 2019-0336-AGB (consol.), memo. op. (Del. Ch. Aug. 17, 2020), declined to dismiss stockholder breach of fiduciary duty claims challenging a tender off through which a 40% stockholder increased its ownership to 60%, rejecting the argument that plaintiff’s assertion that defendant was a de facto controller before it increased its stake precluded harm to minority holders when defendant obtained a majority of the company’s stock.

NEW:  Duane Morris’ Stephen Honig discusses the decision in Corporate transactions: planning insights from Delaware Chancery.

K&L Gates discusses the decision in Delaware Court of Chancery Denies Motions to Dismiss Claims Alleging Breaches of Fiduciary Duty in Alleged Controlling Stockholder Tender Offer.

$$$ Law360 discusses the decision in Key Issues To Watch As Coty Investor Suit Proceeds.

Fried Frank discusses the decision in Acquisition of Majority Ownership May Constitute a “Benefit”.

Morris James discusses the decision in Chancery Upholds Class Claims Alleging Breaches of Fiduciary Duty in Alleged Controlling Stockholder’s Tender Offer.

Shearman & Sterling discusses the decision in Delaware Court of Chancery Denies Motion to Dismiss Claims Regarding Alleged Controller’s Tender Offer as the “Abstention Principle” is “Not Absolute” and a De Facto Controller May Obtain Additional Benefits From Mathematical Control.

$$$ Law360 discusses the decision in Coty, JAB Can’t Ditch Del. Investor Suit Over $1.7B Deal.

11/24/20 [UPDATED] Baker Hughes – Disclosure Duties

The Delaware Court of Chancery, in In re Baker Hughes, Inc. Merger Litigation, C.A. No. 2019-0638-AGB (consol.), memo. op. (Del. Ch. Oct. 27, 2020), dismissed claims defendant officers who stood to receive change-in-control payments through a merger breached their fiduciary duties by approving the transaction but allowed disclosure claims against one defendant to stand.

NEW:  DealLawyers discusses the decision in Disclosure: Del. Chancery Leaves CEO Holding the Bag for Alleged Proxy Deficiencies.

Frank Reynolds discusses the decision in Chancery says only Baker Hughes CEO is still on the hook for disclosures in merger with GE Oil & Gas.

Reuters discusses the decision in Delaware court axes Baker Hughes shareholder claims over GE merger.

11/23/20 Pilot Air – Contractual Limitations Period

The Delaware Court of Chancery, in Pilot Air Freight, LLC v. Manna Freight Systems, Inc., et al., C.A. No. 2019-0992-JRS, memo. op. (Del. Ch. Sept. 18, 2020), found an Asset Purchase Agreement’s survival clause created a contractual limitations period applicable to representation and warranty claims, but did not bar fraud claims filed after the limitations period.

Morris James discusses the decision in Chancery Applies Contractual Shortening of Limitations Period for Breaches of Representations, Finds it Inapt to Fraud Claims and Enforces Clear Anti-Reliance Clause.

11/18/20 [UPDATED] Altaba – Interim Distribution During Dissolution

The Delaware Court of Chancery, in In re Altaba, Inc., C.A. No. 2020-0413-JTL, opinion (Del. Ch. Oct. 19, 2020), rules that a dissolved corporation may obtain Court approval for an interim distribution of assets to stockholders on a showing, analogous to that required for summary judgment, of sufficient reserves to satisfy creditor claims.

NEW:  K&L Gates discusses the decision in Court of Chancery Allows For Interim Distribution to Stockholders of Altaba, Inc., With Some Conditions.

$$$ Richards Layton & Finger discusses the decision in Court of Chancery Permits $4.3 Billion Interim Distribution in Altaba Dissolution.

11/17/20 [UPDATED] Facebook – Director Independence

The Delaware Court of Chancery, in United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund v. Mark Zuckerberg, et al. and Facebook, Inc., C.A. No. 2018-0671-JTL, opinion (Del. Ch. Oct. 26, 2020), dismisses derivative claims challenging director defendants’ agreement to support a stock reclassification that would provide nominal defendant’s founder with permanent voting control — a transaction that was abandoned after being challenged in a prior lawsuit — for failure to make demand, finding that directors could believe in good faith that the founder’s permanent control was in the company’s best interests, and rejecting plaintiffs’ argument that directors’ affiliation with venture capital firms overcame Delaware law’s presumption of director independence based on venture firms’ reliance on “deal flow” from the founder.

NEW:  Paul Weiss discusses the decision in Delaware Court Of Chancery Provides New Guidance On The Standard For Analyzing Demand Futility.

$$$ Law360 discusses the decision in Facebook Ruling Highlights Risks Of Flawed Board Processes.

$$$ Fried Frank discusses the decision in Facebook Decision Highlights Risks of Back-Channel Communications with a Controller.

Tulane Law’s Ann Lipton discusses the decision in Not All Heroes Wear Capes.

UCLA Law Professor Stephen Bainbridge discusses the decision in A brief essay on Delaware Vice Chancellor Laster’s Argument for Replacing Aronson with Rales.

$$$ Law360 discusses the decision in Chancery Tosses Suit Over Facebook Stock-Shuffle Plan.

Wachtell discusses the decision in Delaware Reaffirms Director Independence Principle in Founder-Led Company.

$$$ Delaware Business Court Insider discusses the decision in Facebook Shareholders Can’t Bypass Board to Pursue $90M Case.

11/16/20 [UPDATED] Mindbody – Fraud on the Board

The Delaware Court of Chancery, in In re Mindbody, Inc. Stockholders Litigation, C.A. No. 2019-0442-KSJM (consol.), memo. op. (Del. Ch. Oct. 2, 2020), found stockholder plaintiffs successfully pled breach of fiduciary duty claims alleging that a merger target’s Chairman and CEO orchestrated an underpriced merger in order to achieve liquidity for himself, rejecting the proposition that such a theory is viable only under circumstances involving a “fire sale.”

NEW:  Fried Frank discusses the decision in Decision Highlights the Limits of Corwin (and the Benefits of a Good Process) in the Sale of a Company to a PE Buyer — Mindbody.

NEW: Locke Lord discusses the decision in Delaware Court of Chancery Applies Revlon, Not Business Judgment Rule, Despite ‎Stockholder Approval in In re Mindbody, Inc. ‎

Goodwin discusses the decision in Delaware Court of Chancery Denies Motion to Dismiss in Shareholder Class Action Lawsuit Related to MindBody Inc.’s Billion Dollar Merger with Vista Equity Partners.

Shearman & Sterling discusses the decision in Delaware Court of Chancery Declines to Dismiss Claims That Officers Tilted Take-Private Sale Process to Favored Buyer.

Troutman Pepper discusses the decision in Fraud on the Board II: Conflicted CEO Tilts Company Sale in PE Firm’s Favor.

$$$ Law360 discusses the decision in Investors’ Suit Over $1.9B Mindbody Deal Moves Forward.

11/13/20 [UPDATED] Solera – D&O Insurance

The Delaware Supreme Court, in In re Solera Insurance Coverage Appeals, Nos. 413, 418, 2019, opinion (Del. Oct. 23, 2020), ruled that that a statutory appraisal proceeding was not covered by a D&O insurance policy under terms that limited coverage to alleged “violations” of law.

NEW:  Goodwin Procter discusses the decision in Delaware Supreme Court Holds D&O Insurance Policy Does Not Cover Costs in Appraisal Proceeding.

Goodwin Procter discusses the decision in Delaware Supreme Court Holds Appraisal Action Is Not “Securities Claim” Covered By D&O Insurance Policy.

Mark S. Nelson discusses the decision in Justices explain nature of appraisal proceedings.

Rolnick Kramer Sadighi discusses the decision in Appraisal Action Leads to Insurance Action: D&O Doesn’t Cover Appraisal.

D&O Diary’s Kevin LaCroix discusses the decision in Delaware Supreme Court: Appraisal Action Not a “Securities Claim” and Therefore Not Covered by D&O Insurance.

11/13/20 [UPDATED] Stillwater Mining – Flawed Sale Process

The Delaware Supreme Court, in Brigade Leveraged Capital Structures Fund, Ltd., et al. v. Stillwater Mining Co., No. 427, 2019, opinion (Del. Oct. 12, 2020), affirmed the Court of Chancery’s determination in a statutory appraisal proceeding that the best evidence of a company’s fair value was the deal price, finding no abuse of discretion in the trial court’s identification of sufficient indicia that the process, though flawed, was reliable.

NEW:  Cadwalader discusses the decision in Delaware Supreme Court Reaffirms Primacy of Market Evidence in Determining Fair Value in Appraisal Proceedings.

$$$ Bloomberg Law discusses the decision in Sibanye’s $2.2 Billion Stillwater Deal Ruled Fair in Delaware.