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Case Law

Case Law

02/19/20 [UPDATED] Occidental Petroleum – Proper Purpose

The Delaware Court of Chancery, in High River Limited Partnership, et al. v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS, memo. op. (Del. Ch. Nov. 14, 2019), denied inspection of books and records, finding no credible basis to suspect non-exculpated wrongdoing and finding requested records not necessary and essential to for a proxy contest.

NEW:  Akin Gump discusses the decision in Implications for Section 220 ‘Books and Records’ Demands Following High River Limited Partnership.

Bloomberg Law discusses the decision in INSIGHT: Shareholder’s Intention to Start Proxy Fight Not Enough to Inspect Corporate Books.

Fried Frank discusses the decision in Shareholder Activism and Proxy Contests as a “Proper Purpose” for Books and Records Demands.

Quinn Emanuel discusses the decision in Hedge Fund Litigation Update: Delaware Chancery Court Denies Icahn’s “Novel” Bid For Books And Records.

Morris James discusses the decision in Chancery Declines to Establish New Rule Concerning Books and Records Inspections Related to Proxy Contests.

[$$$] Pepper Hamilton discusses the decision in Chancery Denies Shareholders’ Books-and-Records Inspection in Furtherance of Potential Proxy Contest.

Lowenstein Sandler discusses the decision in Delaware Chancery Rules Activist Investors Cannot Use 220 Demand in Aid of Potential Proxy Contest.

Shearman & Sterling discusses the decision in Delaware Court of Chancery Rejects Demand to Inspect Books and Records Under Section 220 to Aid in Proxy Contest.

Sheppard Mullin discusses the decision in Delaware Court of Chancery Holds that a Stockholder’s Disagreement with a Board’s Business Judgment and Intent to Pursue a Proxy Contest is Not a “Proper Purpose” for a Section 220 Demand.

NEW: [$$$] Morris James discusses the decision in Investor’s Desire to Criticize Proxy Contest Transactions Does Not Sustain Books and Records Request.

Deallawyers.com discusses the decision in Books & Records: Del. Chancery Says Proxy Fight Not a “Proper Purpose”.

Reuters discusses the decision in Court tosses Carl Icahn’s lawsuit seeking Occidental acquisition records.

02/19/20 Tesla – Inherent Coercion

The Delaware Court of Chancery, in In re Tesla Motors, Inc. Stockholder Litigation, C.A. No. 12711-VCS (consol.), memo. op. (Del. Ch. Feb. 4, 2020), rejected defendants’ argument that a presumption of inherent coercion cannot apply to a controlling stockholder after discovery, and that evidence of coercion is required to survive a motion to dismiss.

NEW:  Legal Newsline discusses the decision in Tesla shareholder lawsuit against Elon Musk will proceed.

NEW:  Frank Reynolds discusses the decision in Chancery: Tesla investors need only prove Musk had coercive influence ability in SolarCity deal.

DealLawyers.com discusses the decision in Controllers: The Heat is On in Delaware for Minority Shareholders.

Eric Talley, Anne Tucker, & Jamie Brumberger discuss the decision in Tesla, SolarCity, and Inherent Coercion

Alison Frankel discusses the decision in Elon Musk’s liability for Tesla’s SolarCity deal could come down to a question of his control.

$$$ Law360 discusses the decision in Chancery Puts $2.6B Tesla-SolarCity Deal Suit On Trial Track.

02/19/20 Soteria – Binding Term Sheet

The Delaware Court of Chancery, in Glenn Starkman, et al. v. Christopher O’Rourke and Soteria, LLC, C.A. No. 2018-0901-KSJM, order (Del. Ch. Jan. 14, 2020), found that Term Sheet entered in connection with mediation by a member of the Court under Ct. Ch. R. 174 contained all material terms and was binding on the parties — and that  Rule 174 precluded reliance on evidence of statements made during the mediation as parol evidence.

NEW:  Morris James discusses the decision in Chancery Denies Attempt to Use Mediation Communications to Supplement Mediation Term Sheet.

Francis Pileggi discusses the decision in Chancery Enforces Post-Mediation Term Sheet.

02/19/20 [UPDATED] Wanu Water – Board Communication with Stockholders

The Delaware Court of Chancery, in Todd O’Gara, et al. v. Sheldon Coleman, et al. [Wanu Water], C.A. No. 2018-0708-KSJM, memo. op. (Del. Ch. Feb. 14, 2020), dismissed breach of fiduciary duty claims alleging that a director acted disloyally based on correspondence between stockholders and the board that was critical of and allegedly disparaged plaintiff controller, finding the correspondence instead reflected concern for the company.

NEW: $$$ Bloomberg Law discusses the decision in Wanu Water Founder Loses Conspiracy Claims Against Board Member.

$$$ Law360 discusses the decision in Ex-Wanu Water CEO’s Conspiracy Suit Tossed In Chancery.

02/18/20 [UPDATED] Uber – Demand Futility

The Delaware Supreme Court, in Lenza H. McElrath, III v. Travis Kalanick, et al. and Uber Technologies, Inc., No. 181, 2019, opinion (Del. Jan. 13, 2020), affirmed the Delaware Court of Chancery’s dismissal of shareholder derivative claims challenging an acquisition that exposed acquirer to liability on demand grounds, suggesting that directors “should have done more” to investigate the transaction, but finding a majority disinterested and independent.

NEW:  Morris James discusses the decision in Supreme Court Affirms Dismissal of Uber Derivative Action for Failure to Plead Demand Futility.

Fried Frank discusses the decision in Delaware Supreme Court Decision on Director Independence Suggests to Some a Change in the Court’s Recent Approach– McElrath v. Kalanick.

Wachtell discusses the decision in Core Principles of Exculpation and Director Independence.

Law.com discusses the decision in Uber Board Was Disinterested and Independent to Assess a Pre-Suit Demand for Acquisition of Google Program.

Jim Hamilton discusses the decision in Uber CEO’s ‘law breaker’ reputation not enough to show directors ignored due diligence on acquisition.

Legal Newsline discusses the decision in Delaware high court tosses Uber stockholder’s complaint over Ottomotto acquisition.

Shearman & Sterling discusses the decision in Delaware Supreme Court Affirms Dismissal Of Derivative Suit Alleging Board Approved Transaction Involving Unnecessary Litigation Exposure.

Frank Reynolds discusses the decision in Delaware Supreme Court won’t restart Uber investor suit over self-driving car company deal.

The AP’s Randall Chase discusses the decision in Delaware court refuses to revive Uber shareholder lawsuit.

02/17/2020 Shire – Contract Claims under a Merger Agreement

The Delaware Court of Chancery, in Fortis Advisors, LLC v. Shire US Holdings, Inc., C.A. No. 2018-0933-JRS, memo. op. (Del. Ch. Feb. 13, 2020), dismisses selling stockholders’ claims asserting information rights under a Merger Agreement as barred on res judicata grounds by a prior ruling seeking contingent compensation under the Agreement, finding the claims arose out of the same transaction.

$$$ Law360 discusses the decision in Fortis Loses 2nd Bid For $425M Post-Merger Drug Payout.

02/17/20 [UPDATED] Channel Medsystems – MAE / MAC Clauses

The Delaware Court of Chancery, in Channel Medsystems, Inc. v. Boston Scientific Corp., et al., C.A. No. 2018-0673-AGB, memo. op. (Del. Ch. Dec. 18, 2019), found that an acquisition target employee’s fraudulent acts did not constituted a material adverse effect.

NEW: Fried Frank discusses the decision in Delaware Supreme Court Decision on Director Independence Suggests to Some a Change in the Court’s Recent Approach– McElrath v. Kalanick.

$$$ Law360 discusses the decision in Boston Scientific Ruling Clarifies M&A Termination Rights.

Fried Frank discusses the decision in Court of Chancery Confirms that, Post-Akorn, It Will Evaluate MACs Under the Traditional Framework.

Anne Sherry discusses the decision in Court forces merger between Boston Scientific and Channel Medsystems.

Dorsey & Whitney discusses the decision in Channel Reinforces that Akorn is the Ceiling not the Floor for MAE Terminations.

Morris James discusses the decision in Chancery Provides Further Clarity Regarding Material Adverse Effect Clauses in Merger Agreements.

Cadwalader discusses the decision in The Delaware Court of Chancery Rejects Termination of Merger Agreement Based on Material Adverse Effect.

Kramer Levin discusses the decision in Delaware Confirms the High Threshold for Material Adverse Effect Claims and Interprets ‘Commercially Reasonable Efforts’.

Sherman & Sterling discusses the decision in Delaware Court Of Chancery Orders Acquiror To Consummate Merger Finding That Misrepresentations Did Not Amount To A Material Adverse Effect.

Wilson Sonsini discusses the decision in Delaware Court of Chancery Declines to Find a Material Adverse Effect and Orders Specific Performance of a Merger.

The Boston Business Journal discusses the decision in Court orders Boston Scientific to complete $275M acquisition.

Francis Pileggi discusses the decision in Chancery Analyzes Standard of “Commercially Reasonable Efforts”.

Weil Gotshal discusses the decision in Just Because a Really Bad Thing Happens Does Not Mean a Material Adverse Effect has Occurred: Assessing the Latest Delaware MAE Decision.

Fenwick & West discusses the decision in Delaware Reaffirms High Bar for Establishing a Material Adverse Effect.

Medical technology industry reporter MedTech Dive discusses the decision in Delaware court deals blow to Boston Scientific in Channel Medsystems lawsuit.

02/17/20 NCI Building Systems – Stockholder Control

The Delaware Court of Chancery, in Gary D. Voigt v. James S. Metcalf, et al. and NCI Building Systems, Inc., C.A. No. 2018-0828-JTL, memo. op. (Del. Ch. Feb. 10, 2020), finds it reasonably conceivable that a 35% stockholder exercised effective control through a combination of stock ownership, board appointee rights, blocking rights under a Stockholders Agreement, and other means of influence over the board and management.

NEW:  Tulane Law’s Professor Ann Lipton discusses the decision in Who’s a Controlling Stockholder: Delaware Strikes Again.

Anne Sherry discusses the decision in Minority stockholder may yet have wielded control.

$$$ Law360 discusses the decision in Chancery Keeps Alive Suit Over $553M CD&R Deal Windfall.

$$$ Bloomberg Law discusses the decision in NCI Building Systems Directors Stuck With Suit Over 2018 Merger.

02/14/20 [UPDATED] Saba – Advance Notice Bylaw

The Delaware Supreme Court, in BlackRock Credit Allocation Income Trust, et al. v. Saba Capital Master Fund, Ltd., No. 297, 2019, opinion (Del. Jan. 13, 2020), found that a company board submitted voluminous requests for additional information from director candidates nominated to oppose incumbents that exceeded the scope of supplemental information requests authorized by advance notice bylaw, but nominees were not excused from submitting their responses by the deadline imposed by the bylaw.

NEW:  Morris James discusses the decision in Delaware Supreme Court Finds That Stockholder Failed to Satisfy Unambiguous Requirements of Advance Notice Bylaw.

Goodmans discusses the decision and its implications under Canadian law in Advance Notice By-Laws — A Canadian Shield.

Bass, Berry, & Sims discusses the decision in Advance Notice Bylaw Provisions Upheld by Delaware Supreme Court.

Shearman & Sterling discusses the decision in Delaware Supreme Court Finds Dissident Board Nominees Ineligible Because Of Noncompliance With Bylaws Deadline To Respond To Supplemental Information Request.

Wilson Sonsini discusses the decision in Delaware Supreme Court Reverses the Court of Chancery and Upholds the Enforceability of Clear and Unambiguous Advance Notice Bylaw Deadline.

Paul Weiss discusses the decision in Delaware Supreme Court Requires Stockholders to Comply or Object to Supplemental Information Requests by Deadline.

Hunton Andrews Kurth discusses the decision in Delaware Supreme Court Upholds Advance Notice Bylaw.

$$$ Law360 discusses the decision in Del. Justices Ax Late Votes In BlackRock Board Battle.

02/14/20 AmerisourceBergen – Investigation of Wrongdoing Certified

The Delaware Court of Chancery, in Lebanon County Employees’ Retirement Fund v. AmerisourceBergen Corp., C.A. No. 2019-0527-JTL, memo. op. (Del. Ch. Jan. 13, 2020), found stockholders entitled to inspection of corporate books and records, relating to defendant pharmaceutical distributor’s monitoring of opioid shipments, for purposes of investigating possible wrongdoing, irrespective of whether the possible wrongdoing would support claims that were actionable or subject to indemnification. The Court certified interlocutory appeal of the prior decision in Lebanon County Employees’ Retirement Fund, et al. v. AmerisourceBergen Corp., C.A. No. 2019-0527-JTL, order (Del. Ch. Feb. 12, 2020).

NEW:  Reuters discusses the certification decision in Dela. judge okays Supreme Court review of controversial books-and-records decision.