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Delaware Superior Court Distinguishes Between Affirmative and Negative Covenants in Earnout Dispute

Quarum v. Mitchell Int’l, Inc., C.A. No. N19C-03-087 AML CCLD (Del. Super. Jan. 21, 2020). Under Delaware law, parties may structure covenants in an earnout agreement as affirmative (mandating action) or negative...more

Chancery Rejects Challenge to Delaware as Proper Venue in Books and Records Action

Stanco v. Rallye Motors Holding, LLC, C.A. No. 2019-0751-SG (Del. Ch. Dec. 23, 2019). Delaware courts generally respect contractual forum selection provisions. When it comes to Delaware LLCs, however, the Delaware statute...more

Delaware Superior Court CCLD Disqualifies Counsel to Ensure Fairness of Litigation Process

Sun Life Assurance Company of Canada v. Wilmington Savings Fund Society, FSB, C.A. No. N18C-08-074 PRW CCLD (Del. Super. Dec. 19, 2019). Motions to disqualify counsel rarely succeed in the Delaware courts. This decision...more

Chancery Balances the Obligation to Defend an Arbitral Award from Collateral Attack with the Obligation to Defer to a Broad...

Gulf LNC Energy, LLC v. Eni USA Gas Marketing LLC, C.A. No. 2019-0460-AGB (Del. Ch. Dec. 30, 2019). Plaintiff (“Gulf”) invested over $1 billion to construct a facility designed to unload imported liquefied natural gas...more

Delaware Superior Court CCLD Clarifies When a Plaintiff is on Inquiry Notice to Bring a Claim for Limitations Period Purposes

Ocimum Biosolutions (India) Ltd. v. AstraZeneca UK Ltd., C.A. No. N15C-08-168 AML CCLD (Del. Super. Dec. 10, 2019). Even in circumstances where a statutory limitations period can be tolled, tolling typically will cease...more

Chancery Provides Further Clarity Regarding Material Adverse Effect Clauses in Merger Agreements

Channel Medsystems, Inc. v. Boston Scientific Corp., C.A. No. 2018-0673-AGB (Del. Ch. Dec. 18, 2019). Material adverse effect clauses provide a form of buy-side protection in merger agreements. These often are complex...more

Chancery Examines Computer Misuse Claims Against Former Employee and Awards Defamation Damages Against Former Employer

Laser Tone Business Systems LLC v. Delaware Micro-Computer LLC, C.A. No. 2017-0439-TMR (Del. Ch. Nov. 27, 2019). In one of her final opinions before joining the Delaware Supreme Court, Vice Chancellor Montgomery-Reeves...more

Chancery Declines to Establish New Rule Concerning Books and Records Inspections Related to Proxy Contests

High River Limited Partnership v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS (Del. Ch. Nov. 14, 2019). Section 220 of the DGCL grants stockholders a qualified right to inspect corporate books and records “necessary...more

Chancery Addresses Pleading Standards for Caremark Claims

In re LendingClub Corp., Consol. C.A. No. 12984-VCM (Del. Ch. Oct. 31, 2019). Delaware law sets a high bar to sufficiently plead a Caremark claim for failure of board oversight, especially when the plaintiff must satisfy...more

Superior Court Affirms Jury Verdict of Breach of Implied Covenant of Good Faith and Fair Dealing Concerning a Patent Dispute...

DRIT LP v. Glaxo Grp. Ltd., C.A. No. N16C-07-218 WCC CCLD (Del. Super. Oct. 17, 2019). This decision demonstrates the rare case where a breach of the implied covenant of good faith and fair dealing survived a legal...more

Recent Cases Emphasize the Holistic Evaluation of Director Independence in the Demand Futility Context

A derivative claim for harm befalling a corporation belongs to the corporation itself. Under the state’s board-centric model of corporate governance, Delaware law empowers the board of directors to control such claims,...more

Chancery Denies Section 220 Bid for Executive Compensation Records Involving Facebook

Southeastern Pa. Trans. Auth. v. Facebook, Inc., C.A. No. 2019-0228-JRS (Oct. 29, 2019) - Shareholders of a Delaware corporation have a qualified right to access corporate books and records for a “proper purpose.” ...more

Chancery Finds Safe Harbor Conflicts Committee Not Validly Constituted in Master Limited Partnership Dispute

Dieckman v. Regency GP LP, C.A. No. 11130-CB (Del. Ch. Oct. 29, 2019). The Dieckman v. Regency GP LP matter has been in the Delaware courts for several years. ...more

Chancery Finds “Constellation” of Personal and Professional Relations Between Directors and Controlling Stockholder Excuses Demand

In re BGC Partners, Inc. Derivative Litig., Consol. C.A. No. 2018-0722-AGB (Del. Ch. Sept. 30, 2019). A stockholder plaintiff seeking to bring a derivative claim on behalf of a corporation must first demand authorization...more

Delaware Superior Court Finds Purchase Agreement Language Limits the Scope of Possible Claims Concerning Earn-Out Dispute

Collab9, LLC v. En Pointe Technologies Sales, LLC, C.A. No. N16C-12-032 (MMJ) (CCLD) (Del. Super. Sept. 17, 2019). Under an asset purchase agreement (“APA”), the purchaser (“PCM”) acquired substantially all of the assets...more

Chancery Construes LLC Agreement as Imposing Only the Managerial Duty to Act in Good Faith and Dismisses Claims for Failure to...

MKE Holdings v. Schwartz, C.A. No. 2018-0729-SG (Del. Ch. Sept. 26, 2019). Under Delaware law, the managers of a limited liability company owe the entity and its members the traditional common law fiduciary duties of care...more

Chancery Upholds Caremark Claim Based on Alleged Failure to Adequately Monitor Biopharmaceutical Company’s Clinical Trials

In Re Clovis Oncology, Inc. Derivative Litigation, C.A. No. 2017-0222-JRS (Del. Ch. Oct. 1, 2019). The Delaware courts have observed that a Caremark claim for failure of oversight against a board is among the most...more

Chancery Applies Entire Fairness Review to Executive Compensation Decision Benefiting Controller Despite Stockholder Approval,...

Tornetta v. Musk, C.A. No. 2018-0408-JRS (Del. Ch. Sept. 20, 2019). Under Delaware law, executive compensation decisions by a corporation’s board of directors generally are entitled to deferential judicial review, and even...more

Chancery Finds Prospective Purchaser May Pursue Breach Claims Against Target Despite Termination Fee Payment

Genuine Parts Company v. Essendant Inc., C.A. No. 2018-0730-JRS (Del. Ch. Sept. 9, 2019). Termination fee provisions are commonplace buy-side protection in M&A transactions intended to recoup a failed prospective...more

Chancery Explains When Deal Price is a Persuasive Indicator of Fair Price in an Appraisal Proceeding

In re Appraisal of Stillwater Mining Co., Consol. C.A. No. 2017-0385-JTL (Del. Ch. Aug. 21, 2019). Recent Delaware Supreme Court decisions on appraisal proceedings have stressed the pivotal importance of the deal price in...more

Chancery Finds Plaintiffs Lost Direct and Derivative Standing After Sale of Shares

Urdan v. WR Capital Partners, LLC, C.A. No. 2018-0343-JTL (Del. Ch. Aug. 19, 2019). It is well-settled Delaware law that the right to bring a derivative claim in the corporation’s name or a direct claim in the individual...more

Chancery Denies Director Access to Privileged Materials Involving Counsel to Preferred-Appointed Directors

Gilmore v. Turvo, Inc., C.A. No. 2019-0472-JRS (Del. Ch. Aug. 19, 2019). As several Delaware decisions teach, each director, as a member of the larger deliberative body that is the board, has a fundamental right to access...more

Chancery Addresses Ripeness for Indemnification Claims Concerning Tax Liabilities

Hill v. LW Buyer LLC, C. A. No. 2017-0591-MTZ (Del. Ch. July 31, 2019). As this summary judgment decision illustrates, even where parties to a securities purchase agreement agree on a buyer’s entitlement to indemnification...more

Chancery Offers Guidance on When the Limitations Periods Begin to Run For Claims Concerning Breaches of Representations and...

Kilcullen v. Spectro Scientific, Inc., C.A. No. 2018-0429-KSJM (Del. Ch. July 15, 2019). Delaware law provides for a default three-year statute of limitations period for breaches of contract, generally applicable to claims...more

Delaware Superior Court Addresses Choice of Law Issues in the D&O Insurance Context and Requires Carriers to Cover Pfizer’s...

Pfizer Inc. v. Arch Insurance Co., C.A. No. N18C-01-310 PRW CCLD (Del. Super. July 23, 2019). This case from the Delaware Superior Court discusses important D&O coverage exclusion issues that frequently arise during...more

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