The Delaware Court of Chancery, in Timothy Richardson v. J. Coley Clark, et al. and MoneyGram International, Inc., C.A. No. 2019-1015-SG, memo. op. (Del. Ch. Dec. 31, 2020), dismissed Caremark claims for failure to plead demand futility where, although director defendants conceivably responded ineffectively to compliance problems, plaintiff did not allege with particularity that they acted in bad faith.
NEW: Sidley Austin discusses the decision in Caremark Claims: Not Mission Impossible, but Still Risky Business for Plaintiffs.
$$$ Law360 discusses the decision in MoneyGram Dodges Suit Over Money Laundering Compliance.
The Delaware Supreme Court, in Alex Bäcker, et al. v. Palisades Growth Capital II, LP [QLess], No. 156, 2020, opinion (Del. Jan. 15, 2021), affirms invalidation of surprise resolutions by which defendant seized board control, concluding that equity may award such relief based on deception of directors with respect to regular board meetings as well as special meetings.
Frank Reynolds discusses the decision in Delaware high court agrees proof of director deception is enough to invalidate “coup”.
The Delaware Court of Chancery, in John J. Mack v. Rev Worldwide, Inc., C.A. No. 2019-0123-MTZ, memo. op. (Del. Ch. Dec. 30, 2020), dismissed claims challenging an amended contract pursuant to a forum selection clause, finding plaintiff’s agreement to be bound by amendments approved by other parties made the amended contract’s forum selection clause enforceable.
NEW: Morris James discusses the decision in Chancery Analogizes to Bylaw Provisions to Conclude that Noteholder was Bound to Forum Selection Clause in Amended Note.
Francis Pileggi discusses the decision in Conflicting Forum Selection Clauses Addressed.
The Delaware Supreme Court, in AmerisourceBergen Corp. v. Lebanon County Employees’ Retirement Fund, et al., No. 60, 2020, opinion (Del. Dec. 10, 2020), affirmed the Court of Chancery’s interlocutory rulings in Lebanon County Employees’ Retirement Fund, et al. v. AmerisourceBergen Corp., C.A. No. 2019-0527-JTL, memo. op. (Del. Ch. Jan. 13, 2020), that stockholders’ right to inspect books and records for the purpose of investigating possible wrongdoing is not limited to “actionable” wrongdoing and does not require disclosure of intended use of information obtained.
NEW: Locke Lord discusses the decision in Delaware Supreme Court Rules Stockholders Are Entitled to Books and Records Based on “Investigatory Purpose” Without Stating Objectives of Investigation.
Olshan Frome discusses the decision in Delaware Supreme Court Affirms AmerisourceBergen Ruling that Company Must Produce Documents.
Appraisal Rights Litigation Blog discusses the decision in Del. Supreme Court Weighs In and Affirms Shareholders’ Rights to Access Books and Records.
The Delaware Court of Chancery, in Jeff Lipman, et al. v. GPB Capital Holdings, LLC, et al. and GPB Holdings II, LP, et al., C.A. No. 2020-0054-SG, memo. op. (Del. Ch. Nov. 18, 2020), in a derivative action brought by limited partners on behalf of a limited partnership, found that it would have been futile to make demand on the partnership’s general partner, an LLC, because both the LLC and its individual controller faced a risk of liability for the claims asserted.
NEW: Morris James discusses the decision in Chancery Excuses Demand Where General Partner and its Controller Faced Substantial Likelihood of Liability.
$$$ Law360 discusses the decision in GPB Capital Mismanagement Suit Survives In Chancery.
The Delaware Court of Chancery, in AB Stable VIII, LLC v. MAPS Hotel and Resorts One, LLC, et al., C.A. No. 2020-0310-JTL, memo. op. (Del. Ch. Nov. 30, 2020), found that the seller of multiple hotel properties pursuant to a Sale and Purchase Agreement made extensive changes to its business, including employee layoffs and closures of facilities, in response to the coronavirus pandemic, that constituted failure to comply with a condition under the Agreement that business be “conducted in the ordinary course of business,” and allowed the buyer to terminate the Agreement.
NEW: Morris James discusses the decision in Chancery Declines to Order Specific Performance of $5.8 Billion Luxury Hotel Deal Scuttled by COVID-19 Changes to Hotel Business Operations.
Quinn Emanuel discusses the decision in Ordinary Course in Extraordinary Times.
Latham & Watkins discusses the decision in Delaware Court Nixes Deal Due to Seller’s Failure to Operate in “Ordinary Course” During COVID-19.
The Delaware Court of Chancery, in Mark Gottlieb v. Jonathan Duskin, et al. and Christopher & Banks, Corp., C.A. No. 2019-0639-MTZ, letter op. (Del. Ch. Nov. 20, 2020), dismissed derivative breach of fiduciary duty claim challenging directors’ defensive actions, allegedly taken for entrenchment purposes, for failure to plead demand futility, finding that application of enhanced scrutiny under Unocal did not, standing alone, excuse demand.
NEW: Morris James discusses the decision in Chancery Dismisses Derivative Action for Failure to Plead Demand Futility Despite Unocal Enhanced Scrutiny.
Shearman & Sterling discusses the decision in Delaware Court of Chancery Dismisses Derivative Claims for Failure to Plead Demand Futility Notwithstanding Unocal Enhanced Scrutiny.
The Delaware Court of Chancery, in International Rail Partners, LLC, et al. v. American Rail Partners, LLC, C.A. No. 2020-0177-PAF, memo. op. (Del. Ch. Nov. 24, 2020), found LLC managers entitled to advancement, recognizing that standard indemnification provisions in commercial contracts are generally presumed to apply to third-party claims, not claims between contracting parties, but declines to apply that proposition to an LLC Agreement.
NEW: Morris James discusses the decision in Chancery Finds Company Responsible for Advancing Costs of Defense to Its CEO in a Claim Brought by the Company.
$$$ Law360 discusses the decision in Railroad Operator’s Fees Must Be Covered, Chancery Says.
Frank Reynolds discusses the decision in Chancery rules Delaware’s LLC Act requires advancement for firm’s suit against member, CEO.
The Delaware Court of Chancery, in Legent Group, LLC, et al. v. Axos Financial, Inc., et al., C.A. No. 2020-0405-KSJM, order (Del. Ch. Jan. 8, 2021), rejected defendants’ contention of plaintiffs’ claim of indemnification under the merger agreement to exercise jurisdiction because the claim was “purely legal” rather than equitable.
Shearman & Sterling discusses the decision in Delaware Court of Chancery Exercises Subject Matter Jurisdiction Appropriate Over Merger Agreement Dispute “Legal” Claim.
The Delaware Court of Chancery, in Deborah Pettry, et al. v. Gilead Sciences, Inc., C.A. No. 2020-0132-KSJM, memo. op. (Del. Ch. Nov. 24, 2020), in a books and records action under 8 Del. C. § 220, entered judgment in stockholder plaintiffs’ favor, finding defendant company’s defenses, described as “over-aggressive,” as baseless, and invited plaintiffs to move for an award of attorneys’ fees and expenses incurred in seeking inspection.
NEW: Morris James discusses the decision in Chancery Grants Leave to Move for Fees for Overly Aggressive Books and Records Defenses.
Keith Bishop discusses the decision in Fee Shifting May Be New To Delaware, But It’s Old Hat In California.
Goodwin discusses the decision in Delaware Court of Chancery Rules Against Gilead in Books and Records Action.
The Delaware Court of Chancery, in In re WeWork Litigation, C.A. No. 2020-0258-AGB (consol.), opinion (Del. Ch. Aug. 21, 2020), finds that company management could not withhold company privileged information from directors who served on a special committee of a company’s board based on management’s unilateral determination that the committee members’ interests were adverse to the company’s interests.
NEW: K&L Gates discusses the decision in Management Cannot Unilaterally Preclude Directors From Obtaining Privileged Communications.
Morris James discusses the decision in Chancery Holds That Management Does Not Have Unilateral Authority to Preclude a Director From Obtaining the Company’s Privileged Information.
Sheppard Mullin discusses the decision in Delaware Court of Chancery Clarifies that Management Cannot Unilaterally Curtail a Director’s Access to Corporation’s Privileged Information.
The Delaware Supreme Court, in Gulf LNG Energy, LLC, et al. v. ENI USA Gas Marketing, LLC, No. 22, 2020, opinion (Del. Nov. 17, 2020), found claims asserted in a second arbitration constituted an impermissible collateral attack on an award in a first arbitration that, under the Federal Arbitration Act, could only be asserted in a court proceeding to review, vacate, or modify the first arbitration award.
Morris James discusses the decision in Delaware Supreme Court Finds that Court of Chancery Had Jurisdiction To Enjoin a Collateral Attack on a Prior Arbitration Award Under the Federal Arbitration Act.
The Delaware Court of Chancery, in Great Hill Equity Partners IV, LP, et al. v. SIG Growth Equity Fund I, LLLP, et al., C.A. No. 7906-VCG, memo. op. (Del. Ch. Dec. 31, 2020), declined to award attorneys’ fees in litigation between parties to a merger agreement under a “prevailing party” fee shifting clause, where neither party prevailed, or an indemnification clause that did not clearly call for fee shifting for first party claims.
Francis Pileggi discusses the decision in Chancery Addresses Contractual Fee-Shifting Where Prevailing Party Is Unclear.
The Delaware Court of Chancery, in Lorenzo Roccia, et al. v. Martin Mugica, et al. and Skyline Renewables, LLC, C.A. No. 2020-0641-MTZ, order (Del. Ch. Dec. 29, 2020), found that the CEO of an LLC, granted “general powers of management” typical of a chief executive, and control of the company’s “business and operations,” lacked authority to remove a board member of an entity the LLC partially owned.
Francis Pileggi discusses the decision in Delaware Chancery Court rules CEO director removal authority is not ‘usual and ordinary’ core business.