Delaware Corporate Litigation in the Time of Coronavirus

Last Updated June 18, 2020
(latest updates shown in red)

“Court of Chancery practitioners hold ourselves to a high bar of professionalism and collegiality. Those traits will be more important than ever in the coming weeks, while we figure out together how to balance our clients’ needs with the new challenges we’re all facing,” Lori W. Will (of Wilson Sonsini Goodrich & Rosati) said. “If there is any court in the country that is well-equipped to manage its docket in these circumstances, it’s the Delaware Court of Chancery.”

Del. Chancery Is Uniquely Suited For Coronavirus Response

In an effort to assist Delaware corporate law practitioners with the challenges Ms. Will described, The Chancery Daily has set up this page to provide information and compile potentially instructive documents regarding alterations to standard operations and procedure that the Delaware Supreme Court and the Delaware Court of Chancery have made in response to the spread of coronavirus. Please note that the March 23, 2020 closure of Delaware State Courthouses limited The Chancery Daily’s access to information regarding pending matters. Accordingly, information presented here is limited to that of which we are aware and is not comprehensive — not all affected matters are discussed. Linked documents are provided for informational purposes only, and though official filings, should be considered merely exemplary, as circumstances in any given matter may have changed without or knowledge and we have no way of ensuring that they remain current. Nothing on this page is intended as legal advice.

For the benefit of any attorneys visiting this site who are themselves looking for work or know of others who are looking for work, we note the following: New Program Links Out-of-Work Lawyers to Legal Departments Overwhelmed by Coronavirus Impact.

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The State of Delaware has established a designated webpage — The Delaware Judiciary Response to Coronavirus Disease (COVID-19) — to publish Statements, Press Releases, and Court Orders addressing these issues, which is frequently updated and should be consulted as the official source of information. This page presents a subset of those materials primarily relevant to litigation in the Court of Chancery and on appeal to the Supreme Court.

General questions about current Court operations may be submitted to Ask a Law Librarian — but will be answered in the order received, which may take up to 72 hours. (The law librarians cannot provide legal advice).

Declarations & Orders

On March 6, the Court of Chancery issued a Standing Order Concerning COVID-19 Precautionary Measures, order (Del. Ch. Mar. 6, 2020), implementing procedural precautions, particularly the use of telephonic rather than live hearings, to help prevent coronavirus transmission.

On March 13, the Supreme Court issued an Order Declaring a Judicial Emergency, order (Del. Mar. 13, 2020), authorizing the Courts to continue hearings and instructing that telephonic proceedings be conducted to the greatest extent possible, and on March 16, the Court of Chancery issued Standing Order No. 2 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Mar. 16, 2020), ordering that all hearings be held telephonically or continued if not practicable.

On March 22, the Supreme Court issued In re COVID-19 Precautionary Measures, order (Del. Mar. 22, 2020)(“Administrative Order No. 3”), ordering closure of State Courthouses to the public, effective March 23 through April 15, and providing guidance on modification of procedural rules, including deadlines, to facilitate Court function and avoid prejudice to litigants.

On March 23, the Court of Chancery published a Statement Concerning Supreme Court Administrative Order No. 3 (Del. Ch. Mar. 23), elaborating on the Supreme Court’s March 22 order with respect to use of dropboxes for submission of paper “courtesy copies” of filings to chambers, and deadline extensions.

On March 24, the Supreme Court published COVID-19 FAQs For Delaware Supreme Court Appeals (Del. Mar. 23),explaining changes to deadlines and filing requirements for appeals filed before and after the March 23 closure of the state courthouses.

*Although not directly related to Court operations and procedure implemented in response to coronavirus, the Supreme Court’s March 24 decision in Shad C. Shaw, et al. v. American Friction, Inc., et al., No. 86, 2019, opinion (Del. Mar. 24, 2020), addresses the “good cause” standard. A dissent provides a thorough review of the “good cause” standard and its application under Delaware law. Because the Courts’ procedural orders entered in response to coronavirus impose a number of default rules that permit exceptions “for good cause shown,” we highlight the American Friction decision as potentially useful reference.

On April 6, the Court of Chancery issued Standing Order No. 3 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Apr. 6, 2020), providing that notices of hearings on default judgments (and some guardianship matters) may provide for appearances of interested parties by electronic or telephonic means, and interested parties may enter appearances by such means.  

On April 6, 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), provides rules governing notice of changes of physical meetings to meetings conducted by remote communications and adjournment of scheduled meetings, effective April 7, 2020, at 8:00 p.m., to address considerations implicated by a public health emergency not contemplated by 8 Del. C. § 222(c) and 8 Del. C. § 232.

On April 14, the Supreme Court issued In re COVID-19 Precautionary Measures, order (Del. Apr. 14, 2020)(Administrative Order No. 4), extending the closure of state courthouses, and procedural rules intended to facilitate continued court function while limiting prejudice to litigants from the closure, through May 14, 2020.

On April 15, the Court of Chancery issued Standing Order No. 4 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Apr. 15, 2020), extending Standing Order No. 2 (ordering that all hearings be held telephonically) for another 30 days.

On April 30, the Supreme Court issued In re COVID-19 Precautionary Measures (Administrative Order No. 5), order (Del. Apr. 30, 2020), ordering that, until the order is amended or vacated, court staff should wear face covering when interacting with the public and in common areas if unable to maintain a 6-foot separation from other individuals. The same provision applies to lawyers, litigants, and other visitors to any State Courthouse.

On April 30, the Supreme Court issued In re COVID-19 Precautionary Measures (Administrative Order No. 5), order (Del. Apr. 30, 2020), ordering that, until the order is amended or vacated, court staff should wear face covering when interacting with the public and in common areas if unable to maintain a 6-foot separation from other individuals. The same provision applies to lawyers, litigants, and other visitors to any State Courthouse.

On May 1, the Delaware Family Court posted two documents providing instructions for attending and participating in virtual Court hearings using Zoom on the Response to Coronavirus website: What you need to know about your Zoom hearing, and Testing Microphone and Camera (Windows). * Although posted by the Family Court, the instructions are generally applicable and may be helpful for anyone unfamiliar with the platform.

On May 14 the Supreme Court issued In re COVID-19 Precautionary Measures, order (Del. May 14, 2020)(Administrative Order No. 6), extending the closure of state courthouses, and procedural rules intended to facilitate continued court function while limiting prejudice to litigants from the closure, through June 13, 2020. Administrative Order No. 6 modified Paragraph 9 of the prior Orders, which extends certain deadlines and statutes of limitations, adding that “Notwithstanding the foregoing, each State court shall retain the discretion to require the prompt filing of public versions of documents initially filed under seal and, for good cause shown, to expedite proceedings.” An accompanying press release, Chief Justice Collins J. Seitz, Jr. extends Judicial Emergency to June 13, 2020, notes that the Judiciary has formed a Court Reopening Committee (including jurists, court employees, and an infectious disease expert) that is formulating plans for gradual and safe increase in court activity, with a possible “first phase” increase in June.

Also on May 14, the Court of Chancery issued Standing Order No. 5 Concerning COVID-19 Precautionary Measures, order (Del. Ch. May. 14, 2020), extending Standing Order No. 2 (ordering that all hearings be held telephonically) for another 30 days.

On May 29, Chief Justice Seitz hosted a videoconference with Superior Court Judge William Carpenter, chair of the Judiciary’s Court Reopening Committee, and Dr. Alfred Bacon, the Committee’s infectious disease expert, to introduce the Reopening Committee’s proposal for a gradual and safe increase in court activity, in four phases. Complete materials relevant to the reopening plan are available at The Delaware Judiciary Response to Coronavirus Disease (COVID-19). The recorded videoconference has also been uploaded to YouTube: 5-29-2020 Judicial Branch Town Hall Meeting – DE Bar. The Reopening Committee’s report was presented in a slideshow format: Courts Reopening Committee Interim Report (May 2020). A press release from the Delaware Judiciary summarizes details of the proposed phased reopening: Delaware Judiciary Unveils Public Reopening Plan (May 29, 2020).

After the May 29 videoconference, the Judiciary issued Questions & Answers from the May 29 Court Reopening Videoconference, responding to questions submitted by viewers that could not be answered during the allotted time.

On June 5, the Supreme Court issued In re COVID-19 Precautionary Measures, (Administrative Order No. 7), order (Del. June 5, 2020), extending its March 16 declaration of a judicial emergency for thirty days, effective June 8, but also ordered commencement of Phase 1 reopening in accordance with the Reopening Committee’s proposal on June 8. The Order described persons eligible to enter the Courthouses and required conduct once inside — and planned expansions of access in Phases 2-4.

Also on June 5, the Supreme Court entered a separate Order, In re COVID-19 Precautionary Measures, order (Del. June 5, 2020), reinstating the requirement under Supr. Ct. R. 10(d) (previously suspended on March 16) that paper copies of briefs and appendices be filed with the Supreme Court, effective July 1, 2020.

After the Supreme Court issued its Administrative Order No. 7 on June 5, the Court of Chancery issued Court of Chancery Courtroom Practices, effective June 8, 2020, setting rules and requirements applicable to in-person hearings and trials.

On June 12, Chief Justice Seitz issued a Statement to the Judiciary and the Delaware Bar (June 12, 2020), announcing that on Monday June 15, 2020, the Delaware Courts will commence Phase 2 of the reopening, as described in Administrative Order No. 7, further expanding judicial operations.

Judicial Comments

The Chancery Daily was privileged to have been invited by the Delaware Judiciary, in anticipation of the Delaware Supreme Court’s issuance of In re COVID-19 Precautionary Measures, order (Del. Apr. 14, 2020) (Administrative Order No. 4), extending the closure of Delaware’s State Courthouses to the public to May 14, 2020, to speak with Chief Justice Seitz and Chancellor Bouchard regarding the status of the Courts and the effects of the closure to date. TCD makes no secret of its “rah rah” enthusiasm for the quality of the Delaware Courts and their handling of Delaware corporate and commercial law disputes, and amid the chaos that the global pandemic has wrought, TCD finds further grounds supporting its enthusiasm for the Delaware Courts as well-functioning.

Among the more obvious challenges of conducting legal proceedings while Courthouses are closed is the need to turn to means of remote communication. Justice Seitz reported that Delaware’s criminal and family courts have similarly implemented video conferencing technology to conduct hearings. Consequently, much of the Courts’ work has proceeded without considerable interruption. Chancellor Bouchard reported that, with the exception of the need to continue trials (except in exigent circumstances, none of which have yet been shown), the Court of Chancery has essentially remained open for business as usual — conducting hearings by remote means, resolving pending motions, and even handling expedited new filings. (For example, in Conduent Business Services, LLC v. Skyview Capital LLC, C.A. No. 2020-0232-JTL, transcript (Del. Ch. Mar. 30, 2020), Vice Chancellor Laster considered a motion to expedite proceedings to avoid irreparable harm faced by plaintiff, who sought relief from the Court of Chancery because the New York courts’ operations, curtailed by the public health crisis, rendered the jurisdiction unavailable). 

Various correspondence with the Court, orders, and anecdotes related to TCD by counsel suggested that the Court was experimenting with various technologies. Chancellor Bouchard reported that while the use of different applications and technologies varies from judge to judge and case to case, conventional teleconferencing has typically been used when manageable; in instances where lots of attendees are involved, various members of the Court have found CourtSolutions a preferable platform; and where video elements of presentation are needed, some members of the Court have used the Zoom platform. In particular, the Chancllor noted that Vice Chancellor Zurn had used Zoom in a post-trial argument (possibly referenced in Carlos Eduardo Lorefice Lynch, et al. v. R. Angel Gonzalez Gonzalez, et al. [Grupo Belleville], C.A. No. 2019-0356-MTZ, letter (Del. Ch. Mar. 19, 2020), in which VCZ encouraging the parties to “consider creative solutions” in scheduling a telephonic post-trial argument), and Master Griffin used Zoom to conduct meditation (CB noted that Zoom was well-suited for mediation because it permits communication with separate groups in separate virtual “rooms”). With respect to publicly raised concerns concerning security of the Zoom platform, CB reassured that enhanced measures for maintaining security prescribed for the Zoom platform — namely, use of password credentials directly provided to attendees — are being used.

Regarding the Supreme Court’s announced consideration of pending appeals scheduled for argument in April and May on the briefing absent requests for argument, Chief Justice Seitz advised that, for arguments on appeal scheduled for April and May 2020, counsel had requested argument in a majority, and all but a few of those requests were granted. Scheduling of arguments for those matters remains to be determined, but notably, CJS reported that rather than conduct those arguments telephonically, the Supreme Court hopes to schedule live arguments later in the summer and proceed as usual with respect to public access via live webcast. When asked whether the Court of Chancery was also considering resolution of pending motions on the briefing, Chancellor Bouchard noted that the Court of Chancery has historically opted to forego argument on motions considered amenable to resolution without argument, but the Court has had no increased inclination to forego oral argument due to Court closure.

TCD is aware, from separate commentary within the community of interest, of purportedly increased assertions of frivolous corporate law claims following declarations of states of emergency in late March, although a review of filings of corporate law causes of action in the Court of Chancery during that timeframe, such filings appear — to TCD, at least — moderate or fewer than average. Based on contested views of filing practices, but not wanting to put the Courts in a position of ostensibly participating in a plaintiffs’ side / defendants’ side debate, TCD inquired regarding any perception by the Court of Chancery that litigants (generally) are attempting to make opportunistic use of the crisis. Chancellor Bouchard reported that, to the contrary, counsel have been extremely professional and extremely cooperative with each other — adding that he could not identify a single exception to that generalization.

Lastly, of less direct interest as a consideration to litigants in pending matters, but indispensable to the Delaware Courts’ continued ability to carry on “business as usual” during the state of emergency, Chief Justice Seitz called out essential Court personnel who continued to report to work and attend to behind-the-scenes functions as “unsung heroes,” expressing his gratitude. Also, with respect to economics of scarcity during a crisis, CJS noted that the judiciary had maintained a stockpile of personal protective equipment in anticipation (!) of a health emergency such as the coronavirus pandemic, but because closure of the Courthouses reduced the judiciary’s need of the equipment for the protection of Court employees, the supplies were redeployed to Christiana Hospital, given its more acute and more critical need.

Supreme Court

On March 13, the Supreme Court issued an Order Declaring a Judicial Emergency, order (Del. Mar. 13, 2020), authorizing the Courts to continue hearings and instructing that telephonic proceedings be conducted to the greatest extent possible.

On March 16, the Supreme Court advised Counsel in pending appeals that it had cancelled “all in person oral arguments” through May, but would contact the parties regarding “alternatives to in person oral argument.” Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, No. 405, 2019, letter (Del. Mar. 16, 2020), is exemplary of letters filed in several pending appeals.

On March 18, the Supreme Court filed identical letters to counsel in many (or all) pending appeals, explaining that it will decide all appeals scheduled for argument between March 16 and May 31 without argument, unless the parties file motions requesting oral argument no later than March 27, and if a motion is granted argument will be rescheduled to a date to be determined. Letter to Counsel (Del. Mar. 18, 2020), is exemplary.

Supreme Court arguments were scheduled in the following appeals involving corporate or commercial law between March 16 and May 31:

Applications for oral argument and the Supreme Court’s rulings on the applications for appeals originally scheduled between March 16 and May 31 are now shown.

March 18, 2020
Rodolfo Enrique Jimenez, et al. v. Luisa Palacios, et al., No. 399, 2019, hearing (Del. Mar. 18, 2020)

The Court of Chancery, in Rodolfo Enrique Jiménez, et al. v. Luisa Palacios, et al. and PDV Holding, Inc., et al., C.A. No. 2019-0490-KSJM, opinion (Del. Ch. Aug 2, 2019), found that the government of Venezuela, challenged domestically but recognized by the United States, validly appointed the board of a state-owned company, applying the Political Question and Act of State doctrines.

Plaintiffs-below sought oral argument, arguing in Rodolfo Enrique Jimenez, et al. v. Luisa Palacios, et al. and PDV Holding, Inc., et al., No. 399, 2019, motion (Del. Mar. 27, 2020), that the matter was not an ordinary determination of a validly elected board under 8 Del. C. § 225, but instead focused on U.S. foreign relations law, judicial interpretation of U.S. the foreign policy, and the Act of State doctrine, which has rarely been addressed in Delaware case law. Defendants-below did not believe argument was necessary.

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in Rodolfo Enrique Jimenez, et al. v. Luisa Palacios, et al. and PDV Holding, Inc., et al., No. 399, 2019, letter (Del. Mar. 31, 2020).

James Hays v. Jose E. Almeida, et al. and Walgreens Boots Alliance, Inc., No. 371, 2019, hearing (Del. Mar. 18, 2020)

The parties did not request oral argument.

March 25, 2020
Bert Dohmen v. Albert Goodman, No. 403, 2019, hearing (Del. Mar. 25, 2020)

The parties did not request oral argument.

Jonathan Urdan, et al. v. WR Capital Partners, LLC, et al. and Energy Efficient Equity, Inc., No. 423, 2019, hearing (Del. Mar. 25, 2020)

The Court of Chancery, in Jonathan Urdan, et al. v. WR Capital Partners, et al. and Energy Efficient Equity, Inc., C.A. No. 2018-0343-JTL, memo. op. (Del. Ch. Aug. 19, 2019), ruled that plaintiffs’ sale of shares after they filed suit deprived them of standing to bring direct as well as derivative claims because the direct claims traveled with the shares.

Plaintiffs-below sought oral argument, arguing in Jonathan Urdan, et al. v. WR Capital Partners, LLC, et al. and Energy Efficient Equity, Inc., No. 423, 2019, motion (Del. Mar. 27, 2020), that conflicting authority exists on the issue of whether fiduciary duty claims are personal claims that travel with shares under In re Activision Blizzard, Inc. Shareholder Litigation, C.A. No. 8885-VCL (consol.), opinion (Del. Ch. May 20, 2015; rev. May 21, 2015), and William Schultz, et al. v. Chuck Ginsburg and Philadelphia Stock Exchange, Inc., et al., No. 341, 2008, opinion (Del. Feb. 3, 2009). Defendants-below did not believe argument was necessary.

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in Jonathan Urdan, et al. v. WR Capital Partners, LLC, et al. and Energy Efficient Equity, Inc., No. 423, 2019, letter (Del. Mar. 31, 2020).

April 1, 2020
Brigade Leveraged Capital Structures Fund, Ltd, et al. v. Stillwater Mining Co., No. 427, 2019, hearing (Del. Apr. 1, 2020)

The Court of Chancery, in In re Appraisal of Stillwater Mining Co., C.A. No. 2017-0385-JTL (consol.), memo. op. (Del. Ch. Aug. 21, 2019), found fair value of a company’s stock in a statutory appraisal proceeding equaled the deal price, acknowledging that the sale process did not adhere to best practices, but the premium to market price did not exploit stockholders.

Plaintiffs-below sought oral argument, arguing in Brigade Leveraged Capital Structures Fund, Ltd., et al. v. Stillwater Mining Co., No. 427, 2019, motion (Del. Mar. 27, 2020), that the value of the company’s primary product increased significantly between signing and closing, resulting in an increase in the value of the company that the Trial Court did not include in its fair value determination, necessitating guidance on the principle that fair value must take any material change in value between signing and closing into account. Defendant-below did not believe argument was necessary.

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in Brigade Leveraged Capital Structures Fund, Ltd., et al. v. Stillwater Mining Co., No. 427, 2019, letter (Del. Mar. 31, 2020).

Robert O. Carr v. Global Payments, Inc., et al., No. 19, 2020, hearing (Del. Apr. 1, 2020)

The Court of Chancery, in Robert O. Carr v. Global Payments, Inc., et al., C.A. No. 2018-0565-SG, memo. op. (Del. Ch. Dec. 11, 2019), permitted modification of a prior order providing for advancement, finding plaintiff was no longer entitled to advancement after defendant amended its claim to remove allegations that plaintiff used confidential information gained while serving as an officer and director.

Plaintiffs-below sought oral argument, arguing in Robert O. Carr v. Global Payments, Inc., et al., No. 19, 2020, motion (Del. Mar. 24, 2020), that plaintiffs’ former employer, which was acquired by defendant, defendant company was converted from a corporation to an LLC, and the Trial Court’s determination that his advancement right was limited by 8 Del. C. § 145 raised a question of whether plaintiff was owed advancement by his former employer as a pre-merger corporation or a post-merger LLC. Defendants-below did not believe argument was necessary. 

The Supreme Court denied the motion and affirmed the Trial Court’s ruling without oral argument in Robert O. Carr v. Global Payments, Inc., et al., No. 19, 2020, order (Del. Apr. 1, 2020).

April 22, 2020
City of Fort Meyers General Employees’ Pension Fund, et al. v. John J. Haley, et al. [Towers Watson], No. 368, 2019, hearing (Del. Apr. 22, 2020)

The parties did not request oral argument.

Borealis Power Holdings, Inc., et al. v. Hunt Strategic Utility Investment, LLC, No. 68, 2020, hearing (Del. Apr. 22, 2020)

The parties did not request oral argument.

April 29, 2020
Fir Tree Value Master Fund, LP, et al. v. Jarden Corp., No. 454, 2019, hearing (Del. Apr. 29, 2020)

The parties did not request oral argument.

John Solak v. Daniel G. Welch, et al., and Ultragenyx Pharmaceutical Inc., No. 452, 2019, hearing (Del. Apr. 29, 2020)

The parties did not request oral argument.

May 6, 2020
Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, No. 405, 2019, hearing (Del. May 6, 2020)

The Court of Chancery, in Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, C.A. No. 10803-VCMR, memo. op. (Del. Ch. Aug. 29, 2019), found the circumstances of a Delaware non-resident’s execution of disputed agreements did not reflect intent to be bound by their terms, including Delaware forum selection clauses, absent which the Court lacked personal jurisdiction.

Plaintiffs-below sought oral argument, arguing in Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, No. 405, 2019, motion (Del. Mar. 27, 2020), that appeal calls for assessment of whether the Trial Court properly applied the Supreme Court’s direction on prior remand regarding the standard for demonstrating intent to be bound by an enforceable contract, where the prior appellate rulings was divided. Defendant-below did not believe argument was necessary.

The Supreme Court denied the motion, indicating that it would decide the appeal on the briefs in Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, No. 405, 2019, letter (Del. Mar. 31, 2020).

May 13, 2020
Calgon Carbon Corp. v. Inter-Local Pension Fund, GCC/IBT, No. 225, 2019, hearing (Del. May 13, 2020)

The Court of Chancery, in Inter-Local Pension Fund GCC/IBT v. Calgon Carbon Corp., C.A. No. 2017-0910-MTZ, memo. op. (Del. Ch. Jan. 25, 2019), declined to dismiss a books and records action brought by a fund that contracted with counsel to monitor the fund’s investment as “lawyer-driven,” seeking inspection for counsel’s purposes rather than the fund’s purposes, even though the Court earlier in the proceedings found that counsel submitted an inaccurate affidavit that it characterized as “entirely lawyer-drafted.”

Defendant-below sought oral argument, arguing in Calgon Carbon Corp. v. Inter-Local Pension Fund GCC/IBT, No. 225, 2019, motion (Del. Mar. 27, 2020), that appeal implicates the integrity of the judicial system given evidence of plaintiff’s litigation misconduct that the Trial Court characterized at the time as having threatened the legitimacy of the proceedings. Plaintiff-below did not believe argument was necessary. 

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in Calgon Carbon Corp. v. Inter-Local Pension Fund GCC/IBT, No. 225, 2019, letter (Del. Mar. 31, 2020).

Spencer L. Murfey, III, et al. v. WHC Ventures, LLC, et al., No. 294, 2019, hearing (Del. May 13, 2020)

The parties did not request oral argument.

XL Insurance America, et al. v. Noranda Aluminum Holding Co., No. 444, 2019, hearing (Del. May 13, 2020)

The Delaware Superior Court, in Noranda Aluminum Holding Co. v. XL Insurance America, Inc., et al., C.A. No. N17C-01-152-WCC-CCLD, memo. op. (Del. Super. Oct. 7, 2019), granted in part an insurer’s motion for judgment as a matter of law in a business interruption insurance lawsuit, reducing a jury’s $20 million damages award by $7 million.

Plaintiffs-below sought oral argument, arguing in XL Insurance America, et al. v. Noranda Aluminum Holding Co., No. 444, 2019, motion (Del. Mar. 26, 2020), that appeal involves arcane forensic accounting issues, that neither party identified any case law authority directly addressing the specific issues appealed, and counsel should be able to assist the Court in understanding accounting methodologies used in business interruption claims. Defendants-below did not believe argument was necessary.

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in XL Insurance America, et al. v. Noranda Aluminum Holding Co., No. 444, 2019, letter (Del. Mar. 31, 2020).

M. Scott Harris, MD, et al. v. Innovate Biopharmaceuticals, Inc., No. 459, 2019, hearing (Del. May 13, 2019)

The parties did not request oral argument.

May 20, 2020
In re Solera Insurance Coverage Appeals, Nos. 413, 418, 2919, hearing (Del. May 20, 2020)

The Delaware Superior Court, in Solera Holdings, Inc. v. XL Specialty Insurance Co., et al., C.A. No. N18C-08-315-AML-CCLD, opinion (Del. Super. July 31, 2019), found that expenses incurred in an appraisal action came within the scope of a D&O policy’s coverage, and that insured’s failure to comply with a notice requirement did not bar coverage due to an implied requirement of prejudice.

Plaintiff-below sought oral argument, arguing in In re Solera Insurance Coverage Appeals, Nos. 413, 418, 2019, motion (Del. Mar. 27, 2020), that the appeal is of substantial significance to insurers and insured, addressing policy language commonly found in standard D&O policies, and has potential precedential implications beyond appraisal litigation. Defendants-below did not believe argument was necessary. 

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in In re Solera Insurance Coverage Appeals, Nos. 413, 418, 2019, letter (Del. Mar. 31, 2020).

Paul Morris v. Spectra Energy Partners (DE) GP, LP, No. 489, 2019, hearing (Del. May 20, 2020)

The Court of Chancery, in Paul Morris v. Spectra Energy Partners (DE) GP, LP, C.A. No. 2019-0097-SG, memo. op. (Del. Ch. Sept. 30, 2019), dismissed class claims alleging that a general partner failed to obtain value in a merger for derivative claims that survived dismissal in a prior lawsuit but were extinguished by the merger, finding the value of the claim immaterial in the context of the merger’s value.

Defendant-below sought oral argument, arguing in Paul Morris v. Spectra Energy Partners (DE) GP, LP, No. 489, 2019, motion (Del. Mar. 27, 2020), that the Supreme Court has not ruled on Court has not directly ruled on the exception to the continuous ownership rule, including the materiality and viability prerequisites to the exception, under In re Primedia, Inc. Shareholders Litigation, C.A. No. 6511-VCL (consol.), opinion (Del. Ch. May 10, 2013), and In re Massey Energy Co. Derivative and Class Action Litigation, C.A. No. 5430-VCS (consol.), memo. op. (Del. Ch. May 31, 2011). Plaintiff-below did not believe argument was necessary.

The Supreme Court granted the motion, indicating that it would schedule argument at a later date in Paul Morris v. Spectra Energy Partners (DE) GP, LP, No. 489, 2019, letter (Del. Mar. 31, 2020).

Miguel Massari v. Daniel Meyers, et al. [First Marblehead], 504, 2019, hearing (Del. May 20, 2020)

The Court of Chancery, in Miguel Massari v. Daniel Meyers, et al. [First Marblehead], C.A. No. 2019-0017-JTL, transcript (Del. Ch. Oct. 29, 2019; filed Dec. 2, 2019), dismissed an action challenging an acquisition of a company by a close personal friend of the company’s CEO and chairman, which defendants described as involving single transaction but the Court found was actually consisted of two distinct phases, finding plaintiff failed to allege that the CEO acted in a way with respect to his conflict regarding acquirer that caused the sale process to go outside the range of reasonableness in a way that the involvement of an independent committee did not cleanse.

Plaintiffs-below sought oral argument, arguing in Miguel Massari v. Daniel Meyers, et al. [First Marblehead], 504, 2019, motion (Del. Mar. 27, 2020), that the appeal addresses whether a group owning a minority of a company’s stock can exercise control and the extent to which an initial flawed, conflicted sale process can be remedied by subsequent formation of a special committee and solicitation of additional potential bidders. Defendants-below did not believe argument was necessary.

The Supreme Court denied the motion, indicating that it would decide the appeal on the briefs in Miguel Massari v. Daniel Meyers, et al. [First Marblehead], 504, 2019, letter (Del. Mar. 31, 2020).

Court of Chancery

On March 6, the Court of Chancery issued a Standing Order Concerning COVID-19 Precautionary Measures, order (Del. Ch. Mar. 6, 2020), implementing procedural precautions, particularly the use of telephonic rather than live hearings, to help prevent coronavirus transmissio

Also on March 6, the Court contacted counsel in State of Delaware, Dept. of Finance v. Univar, Inc., C.A. No. 2018-0884-JRS, via email to inform them that a live hearing scheduled for March 10 would be conducted telephonically at the scheduled time. In a subsequent email, the Court advised that the teleconference would be managed by CourtSolutions, and instructed counsel to log in to www.court-solutions.com to register. During the conference, Vice Chancellor Slights remarked that

“. . . Vice Chancellor Laster has been using this platform pretty consistently for teleconferences, and has suggested that we all experiment with the platform, given that we’re going to be conducting more and more hearings by teleconference.

It is, as has been explained to me, and it appears so far at least to be true, a superior platform for hearings such as this to a standard conference bridge. So, again, I want to thank everyone for giving this a try and, again, for just working with us.”

State of Delaware, Dept. of Finance v. Univar, Inc., C.A. No. 2018-0884-JRS, transcript (Del. Ch. Mar. 10, 2020)

Vice Chancellor Laster had previously experimented with CourtSolutions — a visual call-management application — beginning in late 2017. See, e.g., A. Schulman, Inc., et al. v. Citadel Plastics Holdings, LLC, et al., C.A. No. 12459-VCL, letter (Del. Ch. Jan. 3, 2018).

On March 13, the Supreme Court issued an Order Declaring a Judicial Emergency, order (Del. Mar. 13, 2020), authorizing the Courts to continue hearings and instructing that telephonic proceedings be conducted to the greatest extent possible, and on March 16, the Court of Chancery issued Standing Order No. 2 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Mar. 16, 2020), ordering that all hearings be held telephonically or continued if not practicable.

It appears that VCL began moving scheduled live hearings to CourtSolutions after the Supreme Court issued its Order Declaring a Judicial Emergency, and a letter to counsel in Bandera Master Fund LP, et al. v. Boardwalk Pipeline Partners, LP, et al., C.A. No. 2018-0372-JTL, letter (Del. Ch. Mar. 19, 2020), indicating that an upcoming hearing will be conducted using CourtSolutions, is exemplary of his correspondence providing information on how to sign in and use the system.

Subsequently, we were informed by someone familiar with practices in chambers that other members of the Court of Chancery had also been experimenting with CourtSolutions, but not all members are using CourtSolutions for all hearings. In Chester County Employees’ Retirement Fund v. KCG Holdings, Inc., et al., C.A. No. 2017-0421-KSJM, letter (Del. Ch. Mar. 18, 2020), for example, counsel requested that the Court conduct a settlement hearing telephonically using CourtSolutions. On March 24, following the Supreme Court’s order closing State Courthouses, Vice Chancellor McCormick wrote to counsel advising that the hearing would be conducted telephonically, noting that proceeding telephonically was appropriate because no objections to the proposed settlement or plaintiff’s application for attorneys’ fees had been filed, and instructing plaintiff to publish dial-in information in a letter on the docket and on a public website maintained by the claims administrator. Chester County Employees’ Retirement Fund v. KCG Holdings, Inc., et al., C.A. No. 2017-0421-KSJM, letter (Del. Ch. Mar. 24, 2020). The hearing was conducted on March 31 using a conventional teleconference dial-in.

On March 19, Vice Chancellor Zurn advised counsel in Carlos Eduardo Lorefice Lynch, et al. v. R. Angel Gonzalez Gonzalez, et al. [Grupo Belleville], C.A. No. 2019-0356-MTZ, letter (Del. Ch. Mar. 19, 2020), that post-trial argument would be conducted telephonically or by other electronic means as originally scheduled, and encouraged the parties to consider creative solutions for their presentation — for example, by providing slide decks to the Court electronically and in bound form; or using screencasting options — but did not identify a conferencing platform or specify how the hearing would be conducted.

On March 30, Vice Chancellor Laster advised counsel in some matters (including In re Calamos Asset Management, Inc. Stockholder Litigation, C.A. No. 2017-0058-JTL, and CP Carco, LP v. Americas Leading Finance, LLC, C.A. No. 2020-0120-JTL) via email that he is considering using Zoom for video, in addition to audio conferencing, for at least some hearings, and solicited feedback on the application, adding that he would forward additional information as feedback is received. Of potential relevance, Zoom’s data privacy and security practices are reportedly under scrutiny by the New York attorney general. New York Attorney General Looks Into Zoom’s Privacy Practices.

Also on March 30, Vice Chancellor Laster considered plaintiff’s motion to expedite claims under an Asset Purchase Agreement, which required closing by the end of April 30, but included a New York forum selection clause in Conduent Business Services, LLC v. Skyview Capital LLC, C.A. No. 2020-0232-JTL. Plaintiff argued that although it intended to bring suit in New York as required by the forum selection clause, New York courts were closed to “non-essential” matters, including all new commercial filings, in order to avoid the spread of coronavirus, rendering the forum unavailable, and necessitating that the action be brought in another venue to obtain relief before the April 30 deadline. The Court found that, where subject matter and personal jurisdiction were proper, it could properly exercise jurisdiction over plaintiff’s claim despite the forum selection clause due to the chosen forum’s unavailability to provide relief in the necessary time frame. The Court nevertheless declined the motion to expedite because plaintiff did not request injunctive relief requiring defendant to close. Conduent Business Services, LLC v. Skyview Capital LLC, C.A. No. 2020-0232-JTL, transcript (Del. Ch. Mar. 30, 2020). The Court also emphasized the need of parties, when participating in telephonic proceedings, to avoid interrupting one another, and to identify themselves and speak slowly and distinctly to facilitate accurate transcription by the court reporter.  The hearing transcript is available for purchase from the Chancery Court Reporters. To order, call (302) 255-0523. 

On April 2, Vice Chancellor Laster advised counsel in CP Carco, LP v. Americas Leading Finance, LLC, C.A. No. 2020-0120-JTL, letter (Del. Ch. Apr. 2, 2020), that a hearing scheduled for April 20 would be conducted as a web-based video conference using Zoom, and instructing the parties to contact chambers before the hearing to obtain a meeting identification number and password — adding that the dress code is business casual.

On March 31, Chancellor Bouchard granted (apparently through a text-only entry on the docket) a request by the receiver to extend a deadline to submit a plan of rehabilitation for a life insurance company (placed in rehabilitation by Delaware’s Insurance Commissioner) due to “profound changes in interest rates and economic conditions” occasioned by the coronavirus pandemic described in In the Matter of Scottish Re (US), Inc. in Rehabilitation, C.A. No. 2019-0175-AGB, letter (Del. Ch. Mar. 23, 2020).

On April 15, following the Supreme Court’s extension of the closure of Delaware State Courthouses to the public through May 14, 2020, the Court of Chancery issued its Standing Order No. 4 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Apr. 15, 2020), extending Standing Order No. 2 (ordering that all hearings be held telephonically or continued if not practicable, but permitting applications for an in-person hearings in circumstances of exigent need) for another 30 days.

On March 24, in JJS, Ltd., et al. v. Steelpoint CP Holdings, LLC, et al., C.A. No. 2019-0072-KSJM, transcript (Del. Ch. Mar. 24, 2020; filed Apr. 14, 2020), Vice Chancellor McCormick touched upon the potential impact of coronavirus on document production, suggesting that review of paper documents in a storage unit might not be a significant priority in a climate involving avoidance of social contact and shelter-in-place orders, and suggested possible relief for delay in document production for “non-coronavirus-related” reasons (tacitly suggesting greater tolerance of coronavirus-related delay). The hearing transcript is available for purchase from the Chancery Court Reporters. To order, call (302) 255-0523.

On May 8, the Delaware Superior Court, in Conduent State Healthcare, LLC v. AIG Specialty Insurance Co., et al., C.A. No. N18C-12-074-MMJ-CCLD, order (Del. Super. May 8, 2020), granted a motion to compel remote video depositions., ruling that preparation for and conduct of depositions using remote means of communication are not unfair or unduly prejudicial over objection that participation by counsel for multiple parties make remote depositions unfeasible. * Although a ruling of the Delaware Superior Court, this is the only ruling of a Delaware Court that we have seen addressing remote depositions, and given the seeming likelihood that remote depositions will continue to be requested, we suspect that the ruling may will be considered useful and persuasive. The parties’ briefs are linked below for additional reference:

Conduent State Healthcare, LLC v. AIG Specialty Insurance Co., et al., C.A. No. N18C-12-074 MMJ-CCLD, motion (Del. Super. Apr. 28, 2020)

Conduent State Healthcare, LLC v. AIG Specialty Insurance Co., et al., C.A. No. N18C-12-074-MMJ-CCLD, opposition & cross-motion (Del. Super. Apr. 29, 2020)

Conduent State Healthcare, LLC v. AIG Specialty Insurance Co., et al., C.A. No. N18C-12-074-MMJ-CCLD, reply & opposition (Del. Super. May 6, 2020)

Prior to May 14, defendants in certain pending actions before the Court of Chancery — including at least In re Police & Fire Retirement System of the City of Detroit v. Bernardo Hees, et al. and The Kraft Heinz Co., C.A. No. 2020-0069-AGB (Del. Ch.), and Tom Birdsey, et al. v. EYP Group Holdings, Inc., et al., C.A. No. 2020-0335-KSJM (Del. Ch.) — had taken the position, in response to objections to confidential treatment of Court filings under Ct. Ch. R. 5.1, that 3- and 5-day deadlines for filings public versions of documents initially filed under seal under Rule 5.1 were extended until June 1, 2020 by operation of the Supreme Court’s Administrative Order No. 3 and Administrative Order No. 4, both of which broadly extended “deadlines in court rules” (Paragraph 9).

On May 14 the Supreme Court issued In re COVID-19 Precautionary Measures, order (Del. May 14, 2020)(Administrative Order No. 6), extending the closure of state courthouses, and procedural rules intended to facilitate continued court function while limiting prejudice to litigants from the closure, through June 13, 2020. While Paragraph 9 further extended “deadlines in court rules” through July 1, 2020, Administrative Order No. 6 modified the Paragraph as it appeared in the Supreme Court’s prior Administrative Orders, adding that “Notwithstanding the foregoing, each State court shall retain the discretion to require the prompt filing of public versions of documents initially filed under seal and, for good cause shown, to expedite proceedings.”

Also on May 14, Vice Chancellor McCormick granted a motion seeking compliance with Ct. Ch. R. 5.1 in Tom Birdsey, et al. v. EYP Group Holdings, Inc., et al., C.A. No. 2020-0335-KSJM, letter op. (Del. Ch. May 14, 2020), requiring that defendants advise plaintiffs of material that defendants believed was subject to confidential treatment for redaction from public versions of documents originally filed under seal, citing Paragraph 9 of the Supreme Court’s Administrative Order No. 6 permitting the Court discretion “to require the prompt filing of public versions of documents initially filed under seal.”

Also on May 14, the Court of Chancery issued its Standing Order No. 4 Concerning COVID-19 Precautionary Measures, order (Del. Ch. Apr. 15, 2020), extending Standing Order No. 2 (ordering that all hearings be held telephonically or continued if not practicable, but permitting applications for an in-person hearings in circumstances of exigent need) for another 30 days.

On May 22, Vice Chancellor McCormick stressed that the impact of coronavirus is taken seriously in the conduct of discovery in Sanjiv Mehra, et al. v. Jonathan Teller, et al. [EOS], C.A. No. 2019-0812-KSJM, order (Del. Ch. May 22, 2020): “In conducting discovery in compliance with this Order, the parties shall confer and work together in good faith to identify and address any challenges arising from the novel COVID-19 virus and resulting pandemic . . . . The health and safety of persons involved in this litigation are of paramount importance.”

COVID-19 Litigation

While coronavirus as a trigger for Material Adverse Change / Material Adverse Effect clauses has been a topic of some discussion within the corporate law community of interest, and litigation over the issue has been predicted, a review of complaints filed to date illustrates that contractual provisions other than MAC / MAE have been relied upon by parties seeking to avoid closing obligations. In the Level 4 Yoga action, for example, buyer purportedly has taken the position that seller failed to comply with an obligation to continue operations in the normal course of business due compliance with government-mandated shutdowns, and in the Oberman, Tivoli & Pickert matter, buyer purportedly has taken the position that seller failed to comply with an obligation to provide financial information and projections that reflect the impact of coronavirus on seller’s financial condition (which seller alleges is currently unknowable). Various scenarios involving contractual obligations other than closing on mergers and acquisitions are represented, including continuation of a joint venture, an obligation to provide working capital to an operating business, and an obligation to make an earn-out payment. The following list compiles all complaints that The Chancery Daily has been able to identify (i.e., it may not reflect everything but it’s the best we’ve been able, with concerted effort, to do) — in Delaware and in other jurisdictions — that challenge actions or positions taken that involve the coronavirus pandemic.  This list does not include securities class action lawsuits related to coronavirus, but we note that The D&O Diary’s Kevin LaCroix has been compiling such complaints — the most recent (as of June 18, 2020) being COVID-19 and D&O Insurance: The Latest Update:

Jan Kieleczawa v. Tony Zhen Li, et al. and Wyzer Biosciences, Inc., C.A. No. 2020-0239-, compl. (Del. Ch. Mar. 30, 2020) 

The chairman and CEO brought suit seeking a determination of the proper composition of nominal defendant company’s board of directors and asserting breach of fiduciary duties by investor defendants who allegedly assumed positions as the company’s CEO and CFO by ambush — during the escalation of the coronavirus in the U.S. — at a stockholder meeting, without proper notice, and in violation of a standstill agreement, where they purported to remove CEO, in order to sell the company.

Bed Bath & Beyond, Inc. v. 1-800-Flowers.com, Inc., et al., C.A. No. 2020-0245-, compl. (Del. Ch. Apr. 1, 2020)

Seller seeks specific performance of an obligation under an Equity Purchase Agreement to close on the sale of a business, after buyer allegedly refused to comply with the scheduled closing and requested a month-long delay due to uncertainty involving coronavirus. The complaint does not allege that buyer invoked the Agreement’s Material Adverse Effect clause, but that buyer indicated it needs additional time to assess whether a MAE occurred.

Level 4 Yoga, LLC v. CorePower Yoga, LLC, et al., C.A. No. 2020-0249-, compl. (Del. Ch. Apr. 2, 2020)

Seller asserts that buyer breached an Asset Purchase Agreement, seeking a declaration that seller complied with its obligations and specific performance of buyer’s obligation to close, alleging that buyer improperly asserts that seller’s compliance with temporary government-ordered cessation of the businesses to be acquired — to prevent the spread of coronavirus — repudiated seller’s obligations to operate the businesses in the ordinary course and consistent with past practice.

Omar Khan, SCGC, Inc., et al. v. Cinemex USA Real Estate Holdings, Inc., et al., No. 20-1178, compl. (S.D. Tex. Apr. 2, 2020)

Sellers allege that buyer breached an Equity Purchase Agreement by claiming that the coronavirus pandemic relieved seller of its obligation to close, noting that the Agreement’s Material Adverse Effect clause expressly excludes “epidemics, pandemics, [and] outbreaks.”

WiLine Networks, Inc. v. Inconnu, LLC, et al., C.A. No. 20-556-, compl. (D. Or. Apr. 3, 2020)

The acquirer of a wireless internet and phone service from seller seeks a declaration that payment of an earn-out due seller under the Asset Purchase Agreement is impracticable due to a decline in monthly income due to non-payment by customers who are out of work, and acquirer cannot compel payment by discontinuing service because the FCC has requested it to continue providing service to all customers whether or not it is promptly paid.

Buckeye Partners, LP, et al. v. GT USA Wilmington, LLC, C.A. No. 2020-0255-, compl. (Del. Ch. Apr. 6, 2020)

Plaintiff, which maintains gasoline storage tanks adjacent to defendant’s property (over which plaintiff has an easement), alleges that defendant has blocked plaintiff’s customers from transporting gasoline from the storage tanks to gas stations in order to coerce plaintiff to make payments defendant claimed it was owed many months ago — capitalizing on the heightened importance of access to fuel occasioned by the coronavirus emergency.

Oberman, Tivoli & Pickert, Inc. v. Cast & Crew Indie Services, LLC and Camera Holdings, LP, et al., C.A. No. 2020-0257-PAF, compl. (Del. Ch. Apr. 6, 2020; red. Apr. 9, 2020)

Seller alleges acquirer breached an Asset Purchase Agreement by refusing to close on a merger because financial information seller provided buyer did not take into account the effects of coronavirus, and that buyer asserts seller breached its obligations under the Agreement to provide information. Seller maintains that there has been no material adverse effect on its business, and even if coronavirus caused an adverse effect, it would come within an exception to the definition of Material Adverse Effect in the Agreement. 

The We Company v. Softbank Group Corp., et al., C.A. No. 2020-0258-, compl. (Del. Ch. Apr. 6, 2020)

Plaintiff company alleges investor defendant breached an obligation to close on a tender offer for up to $3 billion worth of the company’s stock, improperly citing government actions related to COVID-19, but that the Master Transaction Agreement at issue contains no Material Adverse Effect or other provision that would excuse the investor’s performance.

Energy Earth, LLC v. Just Energy (US) Corp., C.A. No. 2020-22395, compl. (Tex. Dist. Apr. 8, 2020)

Plaintiff alleges that defendant improperly asserts coronavirus as a basis to unilaterally terminate a joint venture.

Highgate Hotels, LP v. +42 W 35th Property, LLC, C.A. No. 2020-0279-, compl. (Del. Ch. Apr. 13, 2020)

A hotel manager alleges that a hotel owner breached its obligation under a Hotel Management Agreement to make sufficient working capital available to operate the hotel by “refusing to remit funds to cover payroll and benefits, and instead [left] . . . Hotel employees without paychecks at a time when COVID-19 is wreaking havoc on the economy . . . before being furloughed as a result of Owner’s decision to close the Hotel during the pandemic.”

Snow Phipps Group, LLC v. KCAKE Acquisition, Inc., et al., C.A. No. 2020-0282-, compl. (Del. Ch. Apr. 14, 2020; red. Apr. 17, 2020)

Seller alleges that buyer — a special purpose vehicle for private equity funds — breached a Stock Purchase Agreement, and its affiliate funds breached funding obligations, by refusing to close on the purchase of the target; that defendants agreed there would be no financing contingency to closing (due to committed lending and the funds’ commitment to equity financing) in order to induce seller to enter an agreement with defendants rather than other bidders; that defendants later demanded — and received — a significant purchase price reduction and due to economic risk from the coronavirus pandemic; and defendants nevertheless refuse to close, arguing that the effects of coronavirus have excused their performance. In opposing seller’s motion to expedite, defendants expressly argue that the target’s “severe, disproportionate, and durationally significant financial collapse is a Material Adverse Effect.”

Highgate Hotels, LP v. MP Bedford Property, LLC, C.A. No. 2020-0286-, compl. (Del. Ch. Apr. 15, 2020)

A hotel manager alleges that a hotel owner breached its obligation under a Hotel Management Agreement to make sufficient working capital available to operate the hotel, including making benefit contributions to hotel employees, but did not provide funds to make those contributions, even though funds were deducted from employees’ paychecks, leading up to the owner’s decision to close the hotel during the coronavirus pandemic. 

[voluntarily dismissed 05/04/20] SP VS Buyer, LP v. L Brands, Inc. [Victoria’s Secret], C.A. No. 2020-0297-, compl. (Del. Ch. Apr. 22, 2020)

Buyer seeks a declaration that it validly terminated a Transaction Agreement under which it would acquire a majority interest in seller’s retail business because seller breached covenants, representations, and warranties by closing nearly all of its retail stores furloughing most employees, reducing senior employees’ compensation, reduced new merchandise while failing to dispose of old merchandise, and failing to pay rent; and that its breaches were not excused by the coronavirus pandemic.

[voluntarily dismissed 05/04/20] L Brands, Inc. v. SP VS Buyer, LP, et al. [Victoria’s Secret], C.A. No. 2020-0304-, compl. (Del. Ch. Apr. 23, 2020) 

Seller seeks specific performance of buyer’s obligation to close on the purchase of a majority interest in businesses under a Transaction Agreement, and specific performance of an Equity Commitment Letter with investors who agreed to fund the purchase, where buyer has taken the position that seller breached obligations to operate in the normal course of business by temporary closing retail operations and taking other actions as a result of the coronavirus pandemic.

[voluntarily dismissed 05/04/20] Sycamore Partners III, LP, et al. v. L Brands, Inc. [Victoria’s Secret], C.A. No. 2020-0306-, compl. (Del. Ch. Apr. 24, 2020)

Investors seek a declaration that all rights and obligations under Equity Commitment Letter with a buyer (under a Transaction Agreement that buyer purported to terminate due to seller’s breach of covenants, representations and warranties by closing nearly all of its retail operations and taking other actions as a result of the coronavirus pandemic), including rights of the seller as a third-party beneficiary, have expired.

AB Stable VIII, LLC v. MAPS Hotel and Resorts One, LLC, et al., C.A. No. 2020-0310-, compl. (Del. Ch. Apr. 27, 2020; pub. Aug. 30, 2020) 

Seller seeks declaratory judgments that buyer breached a Sale & Purchase Agreement by refusing to close on the sale of hotels following changed economic conditions caused by the coronavirus pandemic (even though Sale & Purchase Agreement did not include a financing contingency, protections against changes in the value of the hotels, or a Material Adverse Event provision that includes pandemics), and that Equity Commitment Letters between buyer and investors, to which seller is a third-party beneficiary, are valid and enforceable; and seeks specific performance of the Agreement and the Letters.

Realogy Holdings Corp. v. SIRVA Worldwide, Inc, et al., C.A. No. 2020-0311-, compl. (Del. Ch. Apr. 27, 2020; red. Apr. 30, 2020)

Seller alleges that buyer breached a Purchase Agreement by refusing to close on the purchase of a business even though all conditions precedent have been satisfied, taking the position that the coronavirus pandemic has caused a Material Adverse Effect. Seller also alleges that investment funds managed by the private equity firm that owns buyer breached a Limited Guaranty by failing to pay the purchase price required by the Purchase Agreement, and seeks specific performance or payment of a termination fee.

Adam Neumann, et al. v. Softbank Group Corp., et al., C.A. No. 2020-0329-, compl. (Del. Ch. May 4, 2020)

Plaintiff, former CEO and Chairman, follows special committee plaintiff’s allegations in The We Company v. Softbank Group Corp., et al., C.A. No. 2020-0258-, compl. (Del. Ch. Apr. 6, 2020), that investor defendant breached an obligation to close on a tender offer, maintaining that investors’ press release announcing termination of the Tender Offer claimed government action related to COVID-19 created unfulfilled closing conditions, but the Tender Offer conditions do not include a force majeure or Material Adverse Effect clause that would excuse performance.

Juweel Investors, Ltd. v. Carlyle Roundtrip, LP, et al., C.A. No. 2020-0338-, complaint (Del. Ch. May 6, 2020; red. May 11, 2020) 

A representative of sellers of a 20% stake in a travel management company pursuant to a Share Purchase Agreement seeks to compel buyers to close after buyers asserted that decline in the company’s financial condition due to decreased demand for travel during the coronavirus pandemic constituted a Material Adverse Effect, the company failed operate in the ordinary course of business, and failed to satisfy other conditions precedent to closing.

Carlyle Roundtrip v. Juweel Investors, Ltd., et al., C.A. No. 2020-0351-, complaint (Del. Ch. May 8, 2020; red. May 13, 2020)

A member of a group of buyers of a 20% stake in a travel management company pursuant to a Share Purchase Agreement seeks declarations that it has no obligations to close the transaction because the coronavirus pandemic constitutes a Material Adverse Effect, the company has not operated in the ordinary course of business, and other conditions to closing have not been satisfied. 

Pure Magenta Investment, Pte. Ltd. v. Juweel Investors, Ltd., C.A. No. 2020-0354-, complaint (Del. Ch. May 8, 2020; red. May 13, 2020)

A member of a group of buyers of a 20% stake in a travel management company pursuant to a Share Purchase Agreement seeks declarations that it has no obligations to close the transaction because ten provisions of the Agreement, including the absence of a Material Adverse Effect (buyer alleges that the coronavirus pandemic constitutes a Material Adverse Effect), have not been satisfied.

May 11, 2020 – two complaints filed in the UK against WEX, Inc. 

As reported in WEX, Inc. 5/11/20 Form 10-Q: On May 11, 2020, the shareholders of eNett and the shareholders of Optal each initiated separate legal proceedings against [WEX, Inc.] by filing claims in the High Court of Justice of England and Wales in the United Kingdom. The claims deny that there has been a Material Adverse Effect (as defined in the purchase agreement between WEX, eNett and Optal, among others) and allege that the Company has threatened to breach its obligations under the terms of the purchase agreement. The claimants seek a declaration that no Material Adverse Effect has occurred within the meaning of the purchase agreement and orders for specific performance of WEX’s obligations under the purchase agreement. 

Local 464A United Food & Commercial Workers Union Pension Fund v. Darcy Antonellis, et al. [Xperi], C.A. No. 2020-0376-, compl. (Del. Ch. May 15, 2020)

A stockholder alleges that director defendants breached continuing fiduciary duties in connection with a “merger of equals” in which stockholders would own a minority of the combined entity, entered in December 2019, before the coronavirus pandemic. Plaintiff alleges that the board failed to consider whether the coronavirus pandemic caused a Material Adverse Effect that would entitle the company to terminate the merger, or constitutes an Intervening Event that would permit the board to change its recommendation of the merger; that the board failed to consider an intervening cash offer that valued the company more favorably than the merger; and that the board’s proxy disclosures regarding the effects of the pandemic are misleading and incomplete.

Forescout Technologies, Inc. v. Ferrari Group Holdings, LP, et al., C.A. No. 2020-0385-, compl. (Del. Ch. May 19, 2020)

An acquisition target seeks specific performance of defendant acquirer’s obligation under a Merger Agreement to close on its acquisition of target. The target alleges that “[t]his busted deal is unlike most others,” in that the Agreement, executed after coronavirus was declared a public health emergency, contains a Material Adverse Effect clause that “specifically allocated the risk of any impact from a pandemic to [acquirer]” — and because the acquirer allegedly admitted that its refusal to close was “100% COVID related.”

XHR Santa Barbara, LLC, et al. v. SBG US Holdings Pte, Ltd., et al. and First American Title Insurance Co., C.A. No. 2020-0395, compl. (Del. Ch. May 22, 2020) 

Sellers under an Asset Purchase Agreement allege that buyers had difficulty securing financing due to the economic effects of the coronavirus pandemic, sought to renegotiate the transaction, and four days before the scheduled closing date, purported to terminate the transaction because sellers were not operating the hotels in the ordinary course of business. Sellers took the position that buyers defaulted, terminated the Agreement, and instructed nominal defendant escrow agent to release funds that buyers placed in escrow as a deposit. The escrow agent refused to release the escrow until the parties resolve their dispute over buyers’ purported default, and sellers brought suit seeking a declaration that they are entitled to the deposit and an order compelling the escrow agent to release the funds.

St. Paul Electrical Construction Pension Plan, et al. v. Ernest Garcia, III, et al. and Carvana Co., C.A. No. 2020-0415-, compl. (Del. Ch. May 28, 2020)

Stockholders of nominal defendant company challenge a private offering of stock to the company’s controllers and certain other selected investors, claiming that the private offering was timed to coincide with the company’s stock price reaching an artificial low before release of 1Q20 results — which revealed that the company’s performance during the coronavirus pandemic has been strong (and is allegedly expected to continue to be strong because the company’s e-commerce platform for auto sales permits remote car purchases) — and before a second offering to the public at a much higher price. 

Simon Property Group, LP v. The Gap, Inc., et al., C.A. No. N20C-06-034-CCLD-EMD, compl. (Del. Super. June 2, 2020)

A landlord brought suit in Delaware Superior Court against retail lessees seeking to recover unpaid rent for the months of April, May, and June, 2020. The complaint does not mention coronavirus or that lessees were unable to operate the leased properties due to mandated closures of non-essential businesses due to the coronavirus pandemic, which has elsewhere been reported as the reason for lessees’ nonpayment. 

Jay Fuhr v. CrowdFood, Inc., C.A. No. 2020-0432-, compl. (Del. Ch. June 4, 2020)

An investor in a company that organizes food truck vendor attendance at public events seeks inspection of books and records under 8 Del. C. § 220 to determine whether the company remains solvent following elimination of all public events due to coronavirus.

John Giarratano v. L Brands, Inc. [Victoria’s Secret], C.A. No. 2020-0437-, compl. (Del. Ch. June 4, 2020) [involves coronavirus only incidentally — included for the sake of completeness]

A stockholder seeks inspection of a company’s books and records under 8 Del. C. § 220 for the purpose of investigating wrongdoing following public reports of its allegedly abusive work environment, noting that the company has failed to respond to his inspection demand even after its headquarters reopened after closure due to coronavirus.

 City of St. Clair Shores Police & Fire Retirement System v. The Williams Companies, Inc., C.A. No. 2020-0439-, compl. (Del. Ch. June 4, 2020)

A stockholder seeks inspection of a company’s books and records under 8 Del. C. § 220 for the purpose of investigating possible wrongdoing in connection with the board of directors’ adoption of a poison pill, purportedly in response to “conditions stemming from the impact of COVID-19” that “resulted in significant declines in the Company’s stock price,” and having a low ownership trigger.

Yatra Online, Inc. v. Ebix, Inc., et al., C.A. No. 2020-0444-, compl. (Del. Ch. June 5, 2020; red. June 17, 2020)

Seller under a Merger Agreement under which its stockholders would receive shares of buyer’s convertible preferred stock, brought suit against buyer, alleging that buyer announced after spread of the coronavirus pandemic but in advance of the Agreement’s outside closing date that it would not close the transaction and demanded that seller renegotiate the deal terms, while buyer had itself breached the Merger Agreement’s “Accuracy Provisions” and “Accounting Provisions,” and its obligation to use reasonable best efforts to close the transaction “as promptly as practicable,” delaying closing until it eventually needed to renegotiate its credit facility due to the effects of the pandemic. Seller seeks equitable and monetary relief for buyer’s breaches.

Simon Property Group, Inc., et al. v. Taubman Centers, Inc., et al., C.A. No. 2020-181675-CB, compl. (Mich. Cir. June 10, 2020)

Buyer of a majority of a target company brought suit in Michigan State Court against the target, seeking a declaration that the target suffered a Material Adverse Effect, alleging target breached contractual obligations to use commercially reasonable efforts to conduct its business in the ordinary course, and breached representations that it had not suffered a Material Adverse Effect.

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