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Case Law

09/23/20 [UPDATED] Juul Labs – Internal Affairs

The Delaware Court of Chancery, in Juul Labs, Inc. v. Daniel Grove, C.A. No. 2020-0005-JTL, opinion (Del. Ch. Aug. 13, 2020), finds inspection of a California headquartered Delaware corporation’s books and records is a matter of internal affairs controlled by Delaware law, not California law, required by a forum selection charter provision to be litigated in Delaware.

NEW:  Morris James discusses the decision in Chancery Holds Statutory Rights to Inspect Books and Records of a Delaware Corporation are Subject to the Internal Affairs Doctrine and Governed Exclusively by Delaware Law.

White and Williams discusses the decision in Move Over California, Delaware Law Applies to Internal Corporate Affairs.

Orrick discusses the decision in Delaware Chancery Court Confirms that Inspection Rights to Books and Records of Delaware Companies Are Governed by Delaware Law, Even if the Company Is Headquartered Elsewhere.

Francis Pileggi discusses the decision in ­Chancery Enforces Forum Selection Clause in Charter for Inspection Demand.

Sheppard Mullin discusses the decision in Delaware Court of Chancery Applies the Internal Affairs Doctrine to Deny Stockholder Inspection Rights Under a Foreign State’s Law.

Allen Matkins discusses the decision in Does This Ruling By V.C. Laster Decide The Constitutionality Of California’s Female Board Quota Legislation?

DLA Piper discusses the decision in Delaware Court of Chancery: “Internal affairs doctrine” bars stockholder from using California Corporations Code to inspect books and records of a Delaware corporation – four takeaways.

Troutman Pepper discusses the decision in Delaware Court of Chancery Tells California To Get Off Its Lawn.

Shearman & Sterling discuss the decision in Delaware Court of Chancery Holds Stockholder Inspection Rights for Delaware Corporations Are Governed Exclusively By Delaware Law and Are Subject to a Delaware Forum Selection Provision Addressing Internal Affairs.

Tulane Law’s Professor Ann Lipton discusses the decision in The United States of Delaware.

Wilson Sonsini discusses the decision in Delaware Court of Chancery Limits Application of California Books and Records Statute to Delaware Corporations Under the Internal Affairs Doctrine.

$$$ Law360 discusses the decision in Chancery Makes Juul Investor Seek Docs In Del., Not Calif.

$$$ Bloomberg Law discusses the decision in Juul Wins Delaware Ruling Freeing It From California Records Bid.

09/22/20 [UPDATED] Outerwall – Director Conflicts

The Delaware Court of Chancery, in Mark Rudd v. Jeffrey J. Brown, et al. [Outerwall], C.A. No. 2019-0775-MTZ, memo. op. (Del. Ch. Sept. 11, 2020), dismissed Revlon and disclosure claims challenging a completed merger, rejecting an argument that director defendants were conflicted by the prospect of losing their seats in a threatened proxy contest.

NEW:  Frank Reynolds discusses the decision in Chancery finds merger charges against directors can’t penetrate Outerwall’s exculpatory clause.

$$$ Law360 discusses the decision in Chancery Ruling Offers Takeaways On Conflicts In M&A Sales.

09/22/20 Swipe Acquisition – Anti-Reliance Clause

The Delaware Court of Chancery, in Swipe Acquisition Corp. v. Peter M. Krauss, et al., C.A. No. 2019-0509-PAF, memo. op. (Del. Ch. Aug. 25, 2020), rules that plaintiff business buyer’s fraud claim against the sellers is not improperly “bootstrapped” and duplicative of their contract claim, because plaintiff alleged knowing contractual misrepresentations and different damages, and not barred by the Purchase Agreement’s anti-reliance provision because it alleges contractual misrepresentations.

Francis Pileggi discusses the decision in Must-Read Chancery Decision for Buyers of Businesses Whose Value Depends on Retaining Customer Relationships.

09/18/20 [UPDATED] Braga – Board Observer Rights

The Delaware Court of Chancery, in Braga Investment & Advisory, LLC v. Yenni Income Opportunities Fund I, LP, C.A. No. 2017-0393-AGB, memo. op. (Del. Ch. June 8, 2020), construed investor’s entitlement to “Board packages” in connection with its board observer right to entitle investor only to materials that management determined in good faith were required by the board in connection with meetings.

NEW:  K&L Gates discusses the decision in Failed Breach of Contract Claims Underscore Chancery Court’s Focus on Contractual Plain Language Over Outside Evidence.

Morris James discusses the decision in In Post-Trial Opinion, Chancery Finds for Defendant, Rejecting Claims Alleging Breach of Purchase Agreement and Right to “Board Packages”.

09/18/20 [UPDATED] AgSpring – Material Adverse Effect

The Delaware Court of Chancery, in Agspring Holdco, LLC, et al. v. NGP X US Holdings, LP, et al., C.A. No. 2019-0567-AGB, memo. op. (Del. Ch. July 30, 2020), found contractual fraud claims brought by the buyer of a business against the seller well pled, including a claim that defendant fraudulently represented no Material Adverse Effects at closing despite knowledge of drastically reduced earnings.

NEW:  $$$ Law360 discusses the decision in Chancery Ruling Highlights Fraud Claim Risk For PE Sellers.

K&L Gates discusses the decision in Chancery Court Rules on Agribusiness Sale Fraud Suit.

Morris James discusses the decision in Chancery Denies Sellers’ Request for Dismissal, Finding That Fraud Claims Were Timely Filed and Properly Pled.

Fried Frank discusses the decision in PE Seller May Have Liability for Portfolio Company’s Alleged Fraud in Concealing Steep Earnings Decline Post-Signing.

Kansas City Business Journal discusses the decision in Agspring founders lose effort to dismiss Delaware fraud case.

$$$ Law360 discusses the decision in Chancery Mostly Keeps Agribusiness Sale Fraud Suit Intact.

09/18/20 [UPDATED] Anthem-Cigna – Efforts Clause

The Delaware Court of Chancery, in In re Anthem-Cigna Merger Litigation, C.A. No. 2017-0114-JTL (consol.), memo. op. (Del. Ch. Aug. 31, 2020), found, in a post-trial ruling, that neither party to a failed merger established entitlement to damages for breaches of “efforts” obligations under the merger agreement, or entitlement to a termination fee.

NEW:  Cahill Gordon discusses the decision in Cigna : Delaware Court Of Chancery Denies Damages After Collapse Of Proposed $54 Billion Merger.

Shearman & Sterling discusses the decision in Delaware Court of Chancery Denies Billion-Dollar Damages in Cigna-Anthem Row.

Fried Frank discusses the decision in Lessons from Anthem-Cigna, Including Avoiding the Result of No Damages for Clear Breaches of a Merger Agreement.

Richards, Layton, & Finger discusses the decision in Delaware Court of Chancery Finds Neither Cigna nor Anthem Entitled to Damages in Connection with Their Terminated Merger Agreement

Anne Sherry discusses the decision in Neither side gets damages in failed Anthem/Cigna merger.

$$$ Law360 discusses the decision in Anthem Accused Of Bogus Defense Of $99M Escrow Holdback.

$$$ Law360 discusses the decision in  3 Lessons From The Failed $54B Cigna-Anthem Merger.

DealLawyers.com discusses the decision in Anthem-Cigna: Chancery (Eventually) Says -“You’ll Get Nothing & Like It!”

ThinkAdvisor discusses the decision in Judge Rules Anthem, Cigna Can’t Recover Damages Over Failed Merger.

Inside Indiana Business discusses the decision in Judge Rules No Damages in Anthem-Cigna Suit.

09/18/20 [UPDATED] USG – Disclosure Claim

The Delaware Court of Chancery, in In re USG Corp. Stockholder Litigation, C.A. No. 2018-0602-SG (consol.), memo. op. (Del. Ch. Aug. 31, 2020), found that an acquisition target’s directors’ failure to disclose their view of the target’s intrinsic value resulted in an uninformed stockholder vote, precluding a Corwin ratification defense, but the same disclosure violation did not state an unexculpated breach of fiduciary duty claim.

NEW:  Morris James discusses the decision in Chancery Rules Failure to Disclose “Intrinsic Value” Precludes Corwin Defense – But Does Not Necessarily Suggest a Breach of the Duty of Loyalty.

Cleary Gottlieb discusses the decision in Stockholder Claims Dismissed Even After Corwin Defense Fails.

Shearman & Sterling discusses the decision in Even After Finding Corwin Inapplicable Because of Alleged Misstatements, Delaware Court of Chancery Dismisses Post-Merger Damages Claims For Failure to Please Bad Faith.

09/17/20 [UPDATED] Applied Energetics – Defective Corporate Acts

The Delaware Court of Chancery, in Applied Energetics, Inc. v. George Farley, et al., C.A. No. 2018-0489-JTL, opinion (Del. Ch. Aug. 3, 2020), finds that director action by unanimous consent without a quorum is invalid, but constitutes a failure of authorization rather than a lack of corporate power, and may therefore be validated under 8 Del. C. §§ 204 and 205.

NEW:  K&L Gates discusses the decision in Chancery Court Holds Under-Manned Board’s Acts Were Invalid But Potentially Susceptible to Validation Under §205.

Cooley discusses the decision in Do We Have a Quorum?

Francis Pileggi discusses the decision in Chancery Court ruling addresses Section 205’s application to ex-officer’s alleged defective corporate acts.

$$$ New York Law Journal discusses the decision in Validating Defective Corporate Acts Under DGCL Sections 204 and 205.

09/17/20 [UPDATED] Otto Candies – Vicarious Liability

The Delaware Court of Chancery, in Otto Candies, LLC, et al. v. KPMG, LLP, et al., C.A. No. 2018-0435-MTZ, memo. op. (Del. Ch. Aug. 21, 2020, found that an auditor was not vicariously liable for negligence of its foreign affiliate through an agency relationship or as part of a joint venture.

NEW:  Foley & Lardner discusses the decision in Delaware Affirms Limitation of Vicarious Liability Within Global Networks.

$$$ Law360 discusses the decision in KPMG Once Again Ducks $1B Negligence Claims In Chancery.

09/16/20 Metlife – Red Flags

The Delaware Court of Chancery, in In re Metlife, Inc. Derivative Litigation, C.A. No. 2019-0452-SG (consol.), memo. op. (Del. Ch. Aug. 17, 2020), dismisses Caremark claims, finding no substantial likelihood of director liability for bad-faith breach of the fiduciary oversight duty based on an alleged failure to adopt modern practices in one business segment following regulatory action affecting an analogous segment.

Morris James discusses the decision in Chancery Dismisses Caremark Claims Against Metlife Board.