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Commentary

01/05/21 [UPDATED] MAE/MAC Clauses

NEW:  UCLA Law’s Professor Stephen Bainbridge discusses whether the effects of the coronavirus pandemic would have constituted a Material Adverse Change / Material Adverse Effect under the Tiffany / Louis Vuitton merger agreement in Pondering how the material adverse effect clause of the LVMH-Tiffany merger agreement would have played out absent the settlement.

Reuters’ Alison Frankel discusses settlements of disputes involving Material Adverse Change / Material Adverse Effect clauses asserted as grounds for terminating mergers due to the effects of the coronavirus pandemic in COVID-19 MAE cases keep ending with revised deals. That wouldn’t happen without litigation.

Seyfarth Shaw discusses recent actions in the Delaware Court of Chancery that involve failed mergers and acquisitions purportedly based on the occurrence of a Material Adverse Change / Material Adverse Effect in The MAE Clause Faces Off With COVID-19 in the Delaware Courts — What Comes Next?

Vinson & Elkins discusses current disputes involving Material Adverse Change / Material Adverse Effect clauses, force majeure clauses, and other grounds asserted for terminating or renegotiating contracts in the wake of the coronavirus pandemic in 6 Things To Know About Handling Contract Disputes In The COVID-19 Era.

Williams Mullen discusses recent lawsuits disputing acquirer’s entitlement to terminate mergers by invoking the coronavirus pandemic as having triggered material adverse effect clauses in MAEs and COVID-19: The Latest on Case Law.

Vinson & Elkins notes an anticipated increase in attempts to renegotiate or terminate transactions due to the economic effects of coronavirus, providing an overview of  Material Adverse Change / Material Adverse Effect clauses and Delaware case law interpreting such clauses, in Material Adverse Effect Clauses In An Economic Downdraft.

Case Western professors Anat Alon-Beck and Charles Korsmo discuss the coronavirus pandemic as a material adverse change / material adverse effect under Delaware law requiring that its economic effects be both sufficiently and durationally significant, in Will the Pandemic Sink Deals?

Winstead discusses Delaware and New York law interpreting Material Adverse Change / Material Adverse Effect clauses in merger agreements, and other authorities addressing lenders’ assertion of purported material adverse changes to avoid funding loans or as events of default in What a Business Should Know Before Triggering a MAC Clause Based on COVID-19.

Israeli business daily Globes discusses whether the coronavirus epidemic could be a material adverse effect that would permit a party to withdraw from a transaction under Israeli law in The Covid-19 black swan muddies the M&A lake.

Troutman Sanders discusses recently-filed lawsuits involving obligations to close transactions that implicate the effects of the coronavirus pandemic, including whether it constitutes a material adverse change or material adverse effect, in Shots Fired: Recent Claims to Terminate M&A Deals Over COVID-19 MAEs.

Fried Frank discusses the possibility that the coronavirus pandemic might constitute a material adverse change or material adverse effect under existing merger or financing agreements, noting that some parties have recently entered agreements that expressly exclude the coronavirus pandemic, and discusses Delaware case law interpreting MAE / MAC clauses in COVID-19 As A Material Adverse Change In M&A Agreements.

$$$ Law360 discusses the possibility that parties to mergers may seek termination by asserting that material adverse effect clauses were triggered by coronavirus in Why Material Adverse Effect Clauses Aren’t Escape Hatches.

Professors Matthew Jennejohn, Julian Nyarko, and Eric Talley forewent learning to paint like Bob Ross and devoted some coronavirus-avoidant downtime to updating their previous  analysis of material adverse change / material adverse event provisions from historical M&A transaction documents (incorrectly described in a prior mention on chanceryblog as an analysis of pending transaction documents) to discern trends in use of terns likely to be triggered by a viral pandemic, to also examine transaction documents for pending deals in A “Majeure” Update on COVID-19 and MAEs.

Professors Matthew Jennejohn, Julian Nyarko, and Eric Talley use machine learning techniques to analyze material adverse change / material adverse event provisions in 150 pending M&A transaction documents, and consider whether common terms are likely to be triggered by a viral pandemic in Coronavirus Is Becoming a “Majeure” Headache for Pending Corporate Deals.

Nixon Peabody discusses the results of its annual survey of the terms of Material Adverse Change clauses in merger agreements in its 2019 MAC Survey.

01/04/21 [UPDATED] Duty of Oversight

NEW:  Skadden discusses recent Delaware case law addressing the Caremark duty of oversight in Delaware Courts Examine Caremark After Marchand and Clovis.

Simpson Thatcher discusses key compliance risks a company’s business presents, and whether a particular company has implemented reasonable board-level monitoring and reporting procedures compliant with recent Delaware case law addressing the fiduciary duty of oversight under In re Caremark in Director Oversight Duty Claims.

The University of Pennsylvania Carey Law School’s Professor Elizabeth Pollman discusses the duty of oversight articulated by the Delaware Court of Chancery in In re Caremark, the two decades during which Caremark claims rarely or never proceeded past the pleading stage, and more recent decisions in which such claims have survived dismissal in The Evolution of Delaware’s Corporate Oversight Doctrine.

Boards Should Care More About Recent “Caremark” Claims and Cybersecurity discusses recent Delaware case law addressing the Caremark duty of oversight and their implications for potential risk of liability related to cybersecurity risk.

Potter Anderson discusses recent Delaware decisions in which claims for oversight liability survived motions to dismiss, noting dissimilarities in the analyses that do not support interpretation of multiple such decisions as constituting a trend in Three Is Not A Trend: Another Caremark Claim Survives A Motion To Dismiss, But Does Not Reflect A Change In The Law.

McDermott Will & Emery discusses criminal prosecution of the CEO of Blue Bell seeking to prove specific intent, and its implications for board oversight obligations in The Blue Bell Dairy CEO Indictment and its Implications for Executive Liability.

Sidley discusses recent Delaware decisions in which claims for oversight liability survived motions to dismiss, suggesting heightened risk associated with the coronavirus pandemic supports greater board emphasis on oversight in Board Oversight in Light of COVID-19 and Recent Delaware Decisions.

Kaplan & Walker discusses recent Delaware decisions addressing board oversight of compliance systems, noting the particular need of attention in high-risk and highly-regulated industries in Insights from the Delaware courts on board oversight of compliance programs.

Sheppard Mullin discusses recent Delaware caselaw involving the duty of oversight, noting directors’ obligations to inform themselves of fundamental business issues impacted by the coronavirus pandemic in  COVID-19 Directors’ Duties of Oversight: Reporting and Monitoring.

Akerman discusses recent Delaware case law and trends in federal regulation involving oversight of legal, ethical, and reputational risks, illustrating that boards can be held legally accountable for oversight failures.

Drinker Biddle discusses recent Delaware decisions involving claims for breach of the duty of oversight under Caremark, and suggests steps that corporate directors can take to help protect themselves from oversight liability in They Had One Job.

Foley & Lardner discusses takeaways from recent Delaware decisions addressing the duty of oversight under Caremark, presented as relevant specifically to directors and officers of health care providers, in Health Care Provider Director and Officer Liability: Important Takeaways from Clovis and Marchand.

McDermott Will & Emery’s Michael Peregrine discusses the recent release of former WorldCom CEO Ebbers from prison, noting aspects of Ebbers’ conscious marginalization of WorldCom in-house counsel as part of the conduct that led to his conviction, as relevant to duty of oversight concerns raised in recent Delaware case law in Bernie Ebbers’ and Board Oversight of the Office of Legal Affairs.

Corporate Oversight and Disobedience discusses the duty of oversight in connection with the obligation of obedience, under 8 Del. C. § 101(b), which requires that corporations serve a lawful purpose.

McDermott Will & Emery proposes a plan of action for corporate boards responsive to recent Delaware case law addressing the duty of oversight under Caremark in The Board’s Marchand/Clovis Reaction Plan.

Richards Layton & Finger discusses the nature and scope of directors’ duty of oversight under recent Delaware case law in What Is Oversight? Del. Courts Continue to Provide Clarification Post-‘Marchand’.

CorpGov.com discusses directors’ duties with respect to environmental, social, and governance risk in relation to recent Delaware Court decisions involving the duty of oversight under Caremark in ESG and Mission-Critical Issues for Director & Officer Liability.

Davis Polk discusses recent decisions of the Delaware Court of Chancery addressing the duty of oversight in Recent Delaware Cases Reinforce Director Accountability for Risk Oversight.

Wachtell summarizes emerging and recent developments involving the duty of oversight, including recent Delaware case law, the importance of engaged board oversight of corporate risk, and the record of such oversight, presented in Risk Management and the Board of Directors (WLRK November 2019), in Risk Management and the Board of Directors.

[$$$] Bloomberg Law discusses recent decisions of the Delaware Court of Chancery addressing Caremarkclaims in Corporate Boards May Face Higher Legal Hurdle in Risk Oversight.

Boston College Professor Brian JM Quinn notes that recent case law addressing Caremark claims has changed his view of the likelihood that duty of oversight claims involving Boeing’s 737 Max, asserted in Kirby Family Partnership, LP v. Dennis Muilenburg, et al. and Boeing Co., C.A. No. 2019-0907-, compl. (Del Ch. Nov. 8, 2019; red. Nov. 18, 2019), could survive a motion to dismiss.

Paul Weiss discusses recent decisions of the Delaware Court of Chancery addressing Caremark claims in Recent Delaware Decisions Signal Renewed Focus on Board Level Compliance Oversight.

12/31/20 [UPDATED] Board Diversity

NEW:  The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice examines the effects of campaigns to increase gender diversity on corporate boards that institutional investors BlackRock, State Street, and Vanguard launched in 2017, finding significant impact on increases in new female board members and proportion of female to male directors.

Vanguard’s John Galloway advises that, beginning in 2021, Vanguard funds will consider board diversity and may vote against director candidates at companies where board diversity falls behind market norms and expectations, and encourages board feedback on how they have prioritized diversity in A Continued Call for Boardroom Diversity.

Sheppard Mullin discusses a new California bill that requires increased diversity of the board of directors of publicly-traded California-based corporations in CA Bill AB 979 Seeks to Increase Board Diversity.

Wilson Sonsini discusses Nasdaq’s proposal to adopt listing rules related to board diversity in Nasdaq Proposes Listing Rules Regarding Board Diversity.

D&O Diary’s Kevin LaCroix discusses a Nasdaq proposal, introduced in a December 1, 2020 press release, to adopt listing rules related to board diversity in Nasdaq Pushes Proposed Board Diversity Listing Rules.

D&O Diary’s Kevin LaCroix discusses a stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against Pinterest in Pinterest Board Hit with Derivative Suit Based on Race and Gender Discrimination Allegations.

Goodwin Procter discusses the recent filing of stockholder challenging allegedly misleading disclosures regarding commitments to diversity by companies that have failed to achieve board diversity in Talking the Talk Versus Walking the Walk: Shareholder Suits Aim to Push Board Diversity and Punish Companies Supposedly Failing to Make Meaningful Change.

Racial Diversity and Corporate Governance: Assessing California’s New Board Diversity Mandate – discusses California’s recently-enacted law requiring boards of directors of public companies headquartered in California to have a minimum number of directors from underrepresented communities on their boards, likely legal challenges to the law under the internal affairs doctrine and equal protection, and related process and political economy concerns it raises.

Troutman Pepper discusses the recent filing of stockholder derivative actions for alleged breach of fiduciary duty and for proxy solicitation violations under Section 14(a) of the federal Securities Exchange Act based on failure to achieve board diversity and misleading disclosures regarding commitments to diversity in A New Wave of Board Diversity Derivative Litigation.

D&O Diary’s Kevin LaCroix discusses the California Partners Project’s Progress Report on Women’s Representation on California Corporate Boards, which tracks the changes in gender diversity on California boards, in Progress Report on California Public Company Board Gender Diversity Requirements.

Cooley discusses A Progress Report on Women’s Representation on California Corporate Boards, which tracks the changes in gender diversity on California boards since enactment of a state law requiring companies headquartered in California to add women to their boards of directors, citing research purportedly showing that companies with women on their boards outperform companies without them, in New report looks at board gender diversity in California.

D&O Diary’s Kevin LaCroix discusses California’s adoption of a new law requiring boards of directors of public companies headquartered in California, whether or not incorporated in California, to have a minimum number of directors from underrepresented communities on their boards, and a lawsuit — Robin Crest, et al. v. Alex Padilla, C.A. No. 20-37513, compl. (Cal. Super. Sept. 30, 2020) — challenging the constitutionality of the law in California Board of Directors Diversity Bill Signed Into Law, Challenged by Lawsuit.

Fenwick & West discusses California’s adoption of a new law requiring boards of directors of public companies headquartered in California, whether or not incorporated in California, to have a minimum number of directors from underrepresented communities on their boards in New Law Requires Racial, Ethnic or LGBT Diversity on Boards of California-Based Public Companies.

Richa Joshi at Truvalue Labs discusses California’s adoption of a new law requiring boards of directors of public companies headquartered in California, whether or not incorporated in California, to have a minimum number of directors from underrepresented communities on their boards in Board Diversity: No Longer Optional.

Deloitte discusses the results of survey data regarding company, board, and management practices related to diversity, equity, and inclusion and advancement of diversity and inclusion in their organizations in Diversity, equity, and inclusion. 

Cooley reports that parties who previously brought suit challenging the constitutionality of California’s gender diversity statute, which requires that foreign and domestic public corporations headquartered in in California appoint women to their boards of directors have filed a new lawsuit challenging the constitutionality of the state’s more recently adopted statute requiring that California headquartered companies appoint members of “underrepresented communities” to their boards in Crest v. Padilla redux – conservative activist group challenges AB 979, California’s board diversity law for “underrepresented communities”.

Jones Day discusses several recent stockholder derivative actions that challenge alleged material misstatements and omissions to investors regarding companies’ professed commitment to diversity in Shareholder Derivative Litigation Concerning Diversity in Corporate Leadership Is an Emerging Trend.

Arnold & Porter Kaye Scholer discusses California’s adoption of a new law requiring boards of directors of public companies headquartered in California, whether or not incorporated in California, to have a minimum number of directors from underrepresented communities on their boards in California Becomes First State to Require Members of Underrepresented Communities on Boards of Directors.

Wilson Sonsini discusses the passage of a new California law requiring that publicly held corporations having their principal place of business in California to have at least one director from an underrepresented community by the end of 2021, and up to three, depending on board size, by the end of 2022, in California Expands Board Diversity Mandate.

D&O Diary’s Kevin LaCroix discusses a stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against Cisco in Cisco Systems Hit With Board Diversity Lawsuit.

D&O Diary’s Kevin LaCroix discusses a stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against Monster Beverage in Monster Beverage Hit With Latest Board Diversity Lawsuit.

Olshan Frome Wolosky discusses passage of a bill by the California legislature that would require increased racial and ethnic diversity on corporate boards of directors for domestic and foreign corporations having their principal place of business in California in California State Legislature Passes Bill Requiring Each Public Company Headquartered in the State to Include a Minimum Number of Directors from Underrepresented Communities on its Board.

Reuters discusses challenges of increasing diversity on corporate boards posed by lack of disclosure and self-reporting of ethnicity in Color blind? How boardroom diversity data eludes advocates.

D&O Diary’s Kevin LaCroix discusses the Board Challenge, pursuant to which corporate Pledge Partners agree to add a Black director in the next twelve months in Growing Number of Companies Pledge to Address Board Diversity Issues.

D&O Diary’s Kevin LaCroix discusses a stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against Danaher in Yet Another Board Diversity Derivative Lawsuit, This Time Against Danaher’s Board.

D&O Diary’s Kevin LaCroix discusses a stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against The Gap in The Gap Hit with Board Diversity Derivative Lawsuit.

Keith Bishop discusses passage of a bill by the California legislature that would require racial, ethnic, gender, and gender role diversity in the composition of corporate boards of directors for domestic and foreign corporations having their principal place of business in California in California Legislature Passes Corporate Board Racial/Ethnic/Gender Quota Bill.

Cooley discusses companies’ increasing concern with expanding board diversity, and considerations raised in the study Why Do Boards Have So Few Black Directors? and the Black Corporate Directors Time Capsule Project survey in Addressing the challenge of board racial diversity.

D&O Diary’s Kevin LaCroix discusses the latest stockholder action challenging alleged failures to achieve board diversity and misleading disclosures regarding commitments to diversity filed against NortonLifeLock in NortonLifeLock Hit with Board Diversity Derivative Suit.

Cleary Gottlieb discusses stockholder actions challenging alleged failure to uphold commitments to diversity at Oracle, Facebook, and Qualcomm in 3 Cases Spotlight Shareholder Interest In Public Co. Diversity.

The Origins and Real Effects of the Gender Gap: Evidence from CEOs’ Formative Years examines demographic data on the socioeconomic backgrounds of CEOs, finding CEOs raised in male-dominated families—those where the father was the only income earner and had more education than the mother—hire fewer women and allocate smaller capital budgets to female managers.

Shearman & Sterling discusses stockholder breach of fiduciary duty actions suits recently filed against directors and officers of Oracle, Facebook, and  Qualcomm based on failure to uphold commitments to diversity in Shareholder Derivative Complaints Allege Lack Of Board And Senior Executive Diversity.

Gender and Executive Job Mobility: Evidence from Mergers and Acquisitions – examines gender differences in job mobility based on senior managers displaced when their employers are acquired, finding a significant “gender penalty” for women.

Wachtell discusses increasing pressures public companies face to increase gender and racial diversity on boards in Corporate Governance Update: Raising the Stakes for Board Diversity.

D&O Diary’s Kevin LaCroix discusses ra ecent derivative breach of fiduciary duty and securities actions challenging alleged failures to achieve board diversity and misleading disclosures to stockholders regarding commitments to internal policies regarding diversity filed against Qualcomm in Qualcomm Hit with Board Racial Diversity Derivative Lawsuit.

D&O Diary’s Kevin LaCroix discusses recent derivative breach of fiduciary duty and securities actions challenging alleged failures to achieve board diversity and misleading disclosures to stockholders regarding commitments to internal policies regarding diversity filed against Oracle and Facebook in Oracle Directors Hit with Derivative Suit on Board Diversity Issues, and Facebook Board Hit with Derivative Lawsuit on Board Diversity and Other Race-Related Issues.

Barington Capital Group discusses its activist investor perspective on board diversity that companies benefit most from demographically diverse directors who also help improve cognitive diversity in the boardroom in Maximizing the Benefits of Board Diversity: Lessons Learned From Activist Investing.

Keith Bishop discusses a bill introduced in the California legislature that would require domestic and foreign publicly held corporations having their principal place of business in California to include individuals who are African-American, Hispanic, or Native American on their board of directors in Bill Would Impose Minimum Number Of “Directors From An Underrepresented Community”.

The New York City Office of the Comptroller discussed progress of its Boardroom Accountability program in obtaining commitments from companies with which it does business to engage in search processes that ensure that women and people of color are considered for executive and board positions in NYC Comptroller’s Boardroom Accountability 3.0 Results.

Shearman & Sterling reports that a recent amendment to Washington State corporation law require that public companies have a “gender-diverse board” by January 1, 2022 or provide board diversity disclosures in Washington State Becomes Next to Mandate Gender Diversity on Boards.

Jackson Lewis discusses measures that twelve states have enacted or are considering to enhance diversity on corporate boards in States are Leading the Charge to Corporate Boards: Diversify!

Cooley discusses research suggesting that, despite recent efforts to promote diversity on corporate boards, diversity in corporate executive positions remains low, in The sorry state of C-suite diversity.

Wachtell reports the dismissal of a lawsuit challenging California’s law mandating gender diversity on corporate boards for lack of standing in Creighton Meland v. Alex Padilla, C.A. No. 19-2288, compl. (E.D. Cal. Nov. 13, 2019), noting that plaintiff has already appealed the ruling, in Federal District Court Dismisses Challenge to Board Diversity Statute.

Davis Polk reports that the New York City Comptroller announced 75% of companies have approved stockholder proposals establishing diversity search policies seeking to increase board representation by women and people of color, submitted by the New York City Retirement Systems as part of the city’s Boardroom Accountability Project 3.0, which seeks to foster diversity in leadership of companies in which the Retirement System invests, in NYC Comptroller Stringer Reports Progress on Project to Boost Board/CEO Diversity.

Cooley reports that Creighton Meland v. Alex Padilla, C.A. No. 19-2288, compl. (E.D. Cal. Nov. 13, 2019), a lawsuit challenging the constitutionality of California’s board gender diversity statute filed by a conservative legal organization on behalf of a public company stockholder has been dismissed for lack of standing in  Federal District Court dismisses a challenge to California board gender diversity statute.

Cooley reports findings that California’s California’s SB 826 board gender diversity statute has led to significant gains in board diversity, and discusses other states that have introduced similar legislation in Will other states follow California in adopting board gender diversity mandates?

Reuters reports Goldman Sachs’ announcement that from June 30, it will only help take companies having at least one diverse member company, citing superior performance of such companies after going public, in Goldman Sachs to companies: Hire at least one woman director if you want to go public.

Spencer Stuart discusses key takeaways from the 2019 U.S. Spencer Stuart Board Index finding that boards have increasingly added new directors with diversity of gender, age, race/ethnicity and professional backgrounds, but that board turnover remains low, with new directors representing only 8% of all S&P 500 directors. 2019 U.S. Spencer Stuart Board Index.

Deloitte discusses the latest statistics on global boardroom diversity, efforts to increase gender diversity in 66 countries, and political, social, and legislative trends. Women in the Boardroom: A Global Perspective.

Keith Paul Bishop discusses a study of negative effects of California’s SB 826, imposing gender quotas on the boards of publicly traded companies headquartered in California. Business Professors Find “Large Negative Stock Market Reaction” To California’s Board Quota Law.

The New York City Comptroller calls on boards of directors to adopt a policy requiring that searches for director and officer candidates include qualified female and racially/ethnically diverse candidates, and candidates from non-traditional environments such as government, academic, or non-profit. NYC Comptroller Boardroom Accountability 3.0.

Davis Polk’s Betty Moy Huber and Paula H. Simpkins report findings from the 2019 U.S. Spencer Stuart Board Index that S&P 500 companies are accelerating the addition of women and minority directors. Spencer Stuart Shows How Boards Are Transforming.

12/30/20 [UPDATED] Standard Shifting

NEW:  Skadden discusses recent Delaware decisions addressing the “ab initio” requirement under M&F Worldwide, to shift the standard of review applicable to controlling stockholder transactions from entire fairness to business judgment in Recent MFW-Related Developments in Delaware Courts.

$$$ Richards Layton & Finger discusses Court of Chancery decisions addressing the ab initio requirement that transactional mechanisms that, under with M&F Worldwide, will shift the standard of review applicable to controlling stockholder transactions from entire fairness to business judgment be implemented before substantive economic negotiations take place, since the Supreme Court last addressed the issue in Nicholas Olenik v. Frank A. Lodzinski, et al. and Earthstone Energy, Inc., No. 392, 2019, opinion (Del. Apr. 5, 2019), in Court of Chancery’s Post-‘Olenik‘ Interpretation of the ‘Ab Initio’ Requirement.

Did Delaware Really Kill Corporate Law? Shareholder Protection in a Post-Corwin World empirical examines transactions following the Delaware Supreme Court’s decision in Robert A. Corwin, et al. v. KKR Financial Holdings, LLC, et al., No. 629, 2014, opinion (Del. Oct. 2, 2015), finding no evidence that it has led to an increase in flawed deal processes.

12/29/20 [UPDATED] New York Business Entity Law

NEW:  Farrell Fritz discusses significant New York and Delaware court decisions issued in 2020 in lawsuits among co-owners of closely held LLCs and Limited Partnerships in Top 10 Business Divorce Cases of 2020.

Farrell Fritz discusses the New York Supreme Court’s decision in Lard-PT, LLC v Seokoh, Inc., et al., C.A. No. 651726/2020, opinion (N.Y. Sup. Oct. 20, 2020), which found that an LLC member’s breaches of an operating agreement in connection with a notice of deadlock discharged another member’s buy-out obligation, and notes practical considerations of the ruling in LLC Member Pays the Price For Not Sticking to Deadlock-Breaking Script.

Farrell Fritz discusses the New York Supreme Court’s decision in Lois Weinstein v. RAS Property Management, LLC, et al., C.A. No. 653735/2019, opinion (N.Y. Sup. Oct. 23, 2020), which held, as a matter of first impression, that commencement of a proceeding seeking dissolution or appointment of a receiver for a limited partnership can result in withdrawal of its general partner and dissolution of the entity, even if the LP agreement does not provide for dissolution under such circumstances, in Limited Partnerships and the Self-Fulfilling Dissolution Petition.

Farrel Fritz discusses the New York Supreme Court’s decision in Rena Pachter v. David Winiarsky, et al., No. 502779/20, opinion (N.Y. Sup. Oct. 13, 2020), dismissing a 50% LLC member’s claim for statutory dissolution of the LLC but finding that plaintiff stated a claim for common law dissolution that had not previously been recognized by a New York Court, and suggests that the ruling may permit LLC owners to work around the challenging requirements for statutory dissolution under New York’s LLC law in First-Impression Decision Recognizes a Cause of Action for Common-Law LLC Dissolution.

Farrel Fritz discusses the New York Appellate Division’s decision in Daniel Shatz v. Douglas Chertok, et al., No. 10972, opinion (N.Y. App. Feb. 27, 2020), finding that a manager-managed LLC Agreement providing the manager “sole and absolute discretion” in decision-making did not defeat a non-managing member’s breach of fiduciary duty claim alleging that a managing member exercised discretion in bad faith in When an LLC Manager’s “Sole and Absolute Discretion” is Neither Sole Nor Absolute.

Farrell Fritz discusses New York case law governing the enforceability of oral agreements concerning the rights of owners different types of business entities in Enforceability of Oral Operating, Shareholder, and Partnership Agreements.

Farrel Fritz discusses validity and effect of transfers of LLC membership interests under New York law, noting that transfer rights can be subject to restrictions that are strengthened, weakened, or eliminated by the terms of an LLC Agreement, but statutory default rules leave involuntarily withdrawn members with economic interest rather than membership interests in Turmoil Follows Involuntary Transfers of LLC Membership Interests.

Farrel Fritz discusses the New York Appellate Division’s decision in Julius Behrend v. New Windsor Group, LLC, et al., No. 17-01392, opinion (N.Y. App. Jan. 29, 2020), affirming a ruling that the purported transfer of an interest in an LLC without unanimous consent of the other LLC members, required under the LLC agreement, did not make the transferee an LLC member, and resulted only in transfer of entitlement to receive distributions and profit and loss allocation, in Always Check Provenance Before Taking an Assignment of LLC Interest.

Farrel Fritz discusses the New York Court of Appeals’ decision in Luciano Bonanni, et al. v. Horizons Investors Corp., et al., No. 2017-06803, opinion (N.Y. App. Jan. 29, 2020), affirming a Trail Court’s finding that an asset sale between an LLC and a PLLC was a de facto merger based on cessation of business by the predecessor and continuity of business operations, management, assets, and personnel by the successor, and that the successor retained the predecessor’s liabilities, in  Bending the Rules of Standing: The De Facto Merger Doctrine.

Farrel Fritz discusses the New York Supreme Court’s decision in Culligan Soft Water Co., et al. v Clayton Dubilier & Rice, LLC, et al., No. 651863/12, opinion (N.Y. Sup. Mar. 19, 2020), which found, in a derivative action, that futility of a litigation demand for claims asserted in an amended complaint must be considered as to liquidators appointed after plaintiff filed its original complaint but before plaintiff filed its amended complaint, rather than corporate directors, in The Pre-Suit Demand Requirement for a Corporation in Liquidation or Receivership.

Farrell Fritz discusses the New York Superior Court’s decision in Amit Doshi v. Michael Besen, No. 651696/19, opinion (N.Y. Sup. Ct. Dec. 30, 2019), judicially dissolving a deadlocked company, finding that resignation of one of the company’s two 50% stockholders as a director did not resolve deadlock, in Resignation: Antidote for Internal Dissention and Deadlock?

Farrell Fritz’s Peter Mahler discusses case law interpreting purpose and audit provisions of a New York LLC Agreement in Court Takes Ambiguity Off the Menu of Restaurant’s LLC Agreement.

Farrell Fritz discusses the New York Supreme Court’s decision in Lois Weinstein v. RAS Property Management, LLC, et al., No. 653735/19, opinion (N.Y. Sup. Feb. 5, 2020), finding that a successor in interest to a deceased limited partner succeeds to the decedent’s economic rights but not partner status for purposes of derivative standing in Death of Limited Partner Disarms Derivative Action.

Farrell Fritz’s Peter Mahler discusses New York case law addressing the ability of a minority LLC member to force dissolution in LLC Member’s Petition to Dissolve Boxing Club Dealt First Round KO.

Farrell Fritz discusses the New York Supreme Court’s decision in Robert Shapiro v. Gabriel Ettenson, et al., No. 654641/17, memo. op. (N.Y. Sup. Ct. Dec. 23, 2019), finding that an LLC member’s claim for wrongful expulsion in breach of the LLC Agreement was direct rather than derivative, where defendants allegedly failed to follow the Agreement’s dissociation procedures, in The Curious Case of the Expelled LLC Member Bound by Operating Agreement He Never Signed.

Lowenstein Sandler discusses the New York Appellate Division’s ruling in Mark A. Galasso v. Cobleskill Stone Products, Inc., et al., No. 527237, memo. op. (N.Y. App. Div. Feb. 28, 2019), an appraisal action, holding that a valuation was not protected by attorney-client privilege because it was created for an estate tax filing before the appraisal action commenced, in Are Communications With Third Parties Still Attorney-Client Privileged in Appraisal?

Bryan Cave discusses the New York Appellate Division’s ruling in Kevin Askari, et al. v. McDermott, Will & Emery, LLP, et al., No. 606862/15, opinion (N.Y. App. Div. Nov. 27, 2019), finding that New York law governed privilege applicable to seller’s pre-transaction communications notwithstanding a contractual Delaware choice of law clause, and differences between New York and Delaware law addressing privilege applicable to pre-transaction communications in post-transaction disputes in Buyer’s Purchase or Seller’s Privilege? Attorney-Client Communications in the Post-Sale Context.

McGuireWoods discusses the New York Appellate Division’s ruling in Kevin Askari, et al. v. McDermott, Will & Emery, LLP, et al., No. 606862/15, opinion (N.Y. App. Div. Nov. 27, 2019), finding that New York law governed privilege applicable to seller’s pre-transaction communications despite a purchase agreement’s Delaware choice of law clause due to New Yok’s greater interest in the litigation in NY Appellate Division Affirms Seller Retains Privilege for Certain Pre-acquisition Communications.

Shearman & Sterling discusses the U.S. Court of Appeals for the Second Circuit’s decision in Chufen Chen, et al. v. Dunkin’ Brands, Inc., No. 18-3087, opinion (2d Cir. Mar. 31, 2020), finding that registration to do business in New York does no subject a company to general personal jurisdiction in The Second Circuit Holds that New York Business Registration Does Not Constitute Consent to General Personal Jurisdiction.

Sheppard Mullin discusses the U.S. Court of Appeals for the Second Circuit’s decision in Chufen Chen, et al. v. Dunkin’ Brands, Inc., No. 18-3087, opinion (2d Cir. Mar. 31, 2020), finding that registration to do business in New York does no subject a company to general personal jurisdiction in Second Circuit Holds that Registering to do Business in New York Under Section 1301 of the Business Corporation Law Does Not Constitute Consent to General Personal Jurisdiction in New York Courts.

12/28/2020 [UPDATED] M&A Litigation

NEW:  Fasken discusses the Ontario Superior Court of Justice’s decision in Fairstone Financial Holdings, Inc., et al. v. Duo Bank of Canada, No. 20-641857-00CL, opinion (Ont. Sup. Ct. J. Dec. 2, 2020), finding that the effects of the coronavirus pandemic did not constitute a Material Adverse Event / Effect under a merger agreement allowing an acquirer to avoid closing a merger in No, you MAE not: Ontario Court Rules that Duo Bank Cannot Rely on Material Adverse Event Clause to Avoid Closing Fairstone Deal.

Davies discusses the Ontario Superior Court of Justice’s decision in Fairstone Financial Holdings, Inc., et al. v. Duo Bank of Canada, No. 20-641857-00CL, opinion (Ont. Sup. Ct. J. Dec. 2, 2020), finding that the effects of the coronavirus pandemic did not constitute a Material Adverse Event / Effect under a merger agreement, that the target’s response to the pandemic did not breach its obligations to conduct business in the ordinary course, and ordering specific performance requiring the buyer to close on the merger in Buyer Beware: In Canada’s First COVID-19 “Busted Deal” Decision, Court Finds That Duo Bank Cannot Terminate Its Acquisition of Fairstone Financial.

Quinn Emanuel discusses legal and practical aspects of lawsuits involving termination of mergers based on the alleged existence of a Material Adverse Change / Material Adverse Event or failure of a target company to operate in the ordinary course of business as a result of the coronavirus pandemic, based on its experience as litigation counsel in several such actions — settled and pending — in the Delaware Court of Chancery in Report from the Front Lines: COVID-19 M&A Litigation in Delaware.

Deallawyers.com discusses recent decisions by the Delaware Court of Chancery finding plaintiffs effectively pled fraudulent inducement in business acquisitions, notwithstanding anti-reliance clauses, based on representations and warranties within the acquisition agreements in M&A Litigation: Contractual Fraud Claims Are The New Black.

Cooley discusses issues that the Delaware Court of Chancery has preliminarily addressed in merger termination lawsuits where the transactions require debt financing in Pandemic-Related Deal Litigation Highlights Buyer Leverage in Transactions Requiring Debt Financing.

Cooley discusses recent Delaware case law emphasizing the obligation of corporate directors and officers to keep a company board or special committee informed of material developments throughout a sale process, including after signing, in Renegotiating Deal Terms? Delaware Reminds Fiduciaries of Unremitting Duties.

Gibson Dunn provides a chart showing common M&A fact patterns and the standard of review likely to apply in such situations under Delaware law in Determining the Likely Standard of Review Applicable to Board Decisions in Delaware M&A Transactions.

White & Williams – M&A Litigation Rising Amidst COVID-19 Uncertainty: Considerations for Litigators and Deal-Makers.

Paul Weiss discusses recent decisions of the Delaware Court of Chancery addressing claims regarding M&As in Delaware M&A Quarterly.

12/28/20 [UPDATED] Corporate Officers

NEW: Skadden discusses recent Delaware court decisions declining to dismiss unexculpated breach of fiduciary duty claims against corporate officers in Recent Trends in Officer Liability.

Can Socially Responsible CEOs Find Better Jobs? investigates the relationship between firm social performance and CEOs’ job market opportunities, finding CEOs leaving firms with strong Corporate Social Responsibility performance more likely to be hired by another firm, which is more likely a public firm, larger in size, with higher compensation, and with a shorter gap in employment than CEOs leaving firms with weak social performance.

12/24/20 [UPDATED] Books & Records

NEW: $$$ The Delaware Business Court Insider reviews 2020 Delaware court decisions addressing inspection of books and records in Section 220 in 2020: Delaware Courts Clarify Shareholder Rights Law as Case Focus Expands.

Wachtell discusses recent Delaware case law developments involving inspection of corporate books and records under 8 Del. C. § 220 in Section 220 as Pre-Complaint Discovery – Recent Developments.

UCLA Law’s Professor Stephen Bainbridge discusses Delaware law on inspection of corporate books and records in A Mini-Treatise on DGCL Section 220 Books and Records Inspections Inspired by Woods v. Sahara Enterprises, Inc.

12/23/20 [UPDATED] Stockholder Meetings

NEW:  Cooley discusses guidance provided by different stockholder constituency groups regarding the conduct of virtual stockholder meetings in 2020 Working Group identifies best practices for virtual shareholder meetings.

Back to the Future? Reclaiming Shareholder Democracy Through Virtual Annual Meetings examines stockholder voting turnout and voting outcomes at annual meetings between March and June 2020 in comparison with prior years, noting differences in turnout and approval rates depending on use of hybrid, in-person, telephonic, or interactive video, market capitalization; and proposal topics.

Mayer Brown discusses implications of the coronavirus pandemic, including the likelihood that companies may wish to use virtual stockholder meetings in 2021, proxy disclosures regarding the effects of the pandemic, and other likely proxy disclosure issues for which companies may wish to begin preparation in 2021 Proxy and Annual Report Season: Time to Prepare.

Skadden suggests, given uncertainty to the ongoing consequences of the coronavirus pandemic in 2021, that companies begin to consider and plan for effective use of virtual stockholder meetings in the 2021 in Planning Ahead: Virtual Shareholder Meetings in the 2021 Proxy Season.

How Shifting from In-Person to Virtual Shareholder Meetings Affects Shareholders’ Voice evaluates the conduct of virtual stockholder meetings following shifts from in-person meetings in response to the coronavirus pandemic, finding decreases in meeting length and discussion of various topics that suggest virtual meetings increase potential stockholder participation by reducing costs, but that in practice, less time has been spent addressing stockholder concerns.

Stockholder and sustainable investment organizations write to the SEC to raise concerns based on recent experience with widespread use of remote virtual platforms to conduct stockholder meetings in Letter to Clayton and Hinman on Virtual and Hybrid Meetings.

Soundboard Governance discusses use of remote, virtual platforms to conduct stockholder meetings following recent increases in use in Key Takeaways and Best Practices from Virtual Shareholders Meetings in 2020.

Vorys discusses the use of virtual board meetings, their management, and how mitigate  additional risks they pose in Virtual board meetings and risk mitigation during Covid-19.

Broadridge provides statistics on virtual stockholder meetings it hosted between January 1 and May 22, 2020, representing a more than 6X increase over the same period in 2019, at Broadridge Virtual Shareholder Meetings (“VSMs”): Preliminary Statistics.

Wachtell discusses increases in the use of virtual annual meetings during the coronavirus meeting, and the first virtual meeting used in a proxy contest in Lessons From the Future – The First Contested Virtual Annual Meeting.

Cleary Gottlieb reports that New York’s Governor Cuomo has issued Executive Order 202.18, Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency (New York, Apr. 16, 2020), extending his previous Executive Order 202.8, Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency (New York, Mar. 23, 2020), which suspended New York’s Business Corporation Law Sections 602(a) — requiring physical stockholder meetings — and 605(a) and (b) — requiring prior notice of annual meetings and adjournments — “to the extent they require meetings of shareholders to be noticed and held at a physical location.” Cuomo Executive Order Gives New York Corporations Relief on Physical Annual Meetings.

Olshan discusses Delaware Governor Carney’s a Tenth Modification of the Declaration of a State of Emergency for the State of Delaware Due to a Public Health Threat (Apr. 6, 2020), which authorized Delaware corporations to switch noticed in-person stockholder meetings to remote virtual meetings of adjourn them in favor of a later remote meeting, which it commended as preferable to a proposed emergency amendment to 8 Del. C. § 110, which would give broads discretion to postpone annual meetings irrespective of whether an emergency prevented a quorum from being convened in Delaware Emergency Order: Remote Shareholder Communication Meetings.

Sheppard Mullin discusses considerations regarding the use of virtual stockholder meetings, including hybrid meetings that can be attend either in-person or remotely, in Virtual and Hybrid Shareholder Meetings in the Era of COVID-19: What Public Companies Need to Know.

UCLA Law Professor Stephen Bainbridge discusses recent sources of authority for conducting virtual stockholder meetings, and suggests a platform offered by Broadridge for conducting virtual meetings in Conducting the Annual Shareholder Meeting during the COVID19 Pandemic.

ISS discusses SEC guidance regarding the conduct of virtual stockholder meetings in Annual General Meetings & COVID-19.

Delaware Governor John Carney, in a Tenth Modification of the Declaration of a State of Emergency for the State of Delaware Due to a Public Health Threat (Apr. 6, 2020), noting that the Delaware General Corporation Law does not address certain aspects of stockholder meetings implicated by a public health emergency, provides rules governing notice of changes of physical meetings to meetings conducted by remote communications, and adjournment of scheduled meetings.

Cleary Gottlieb discusses adjournment of scheduled stockholder meetings and conversion of scheduled stockholder meetings to virtual meetings, and related notice and procedural requirements under Delaware and New York law in Coronavirus & Postponing/Adjourning Annual Meetings and Coronavirus & Virtual Annual Meetings.