Eric Hacker on Board of Directors

Chancery Finds Egregious Conduct in Books and Records Action Justifying Fee-Shifting Against Corporation

PVH Polymath Venture Holdings Ltd. v. TAG Fintech Inc., C.A. No. 2023-0502-BWD (Del. Ch. Jan. 26, 2024) - Under the “bad faith” exception to the American Rule, Delaware courts will consider shifting fees when aggressive...more

5/24/2024 / Board of Directors , Books & Records , Fee-Shifting , Section 220 Request , Shareholders

Chancery Confirms Bad Faith Pleading Standard for Officer Caremark Claims

Segway Inc. v. Hong Cai, C.A. No. 2022-1110-LWW (Del. Ch. Ct. Dec. 14, 2023) - The Caremark doctrine recognizes the duty of oversight for directors of Delaware corporations. Under In re McDonald's Corp. Stockholder...more

4/4/2024 / Board of Directors , Breach of Duty , Caremark claim , Fiduciary Duty , Shareholders

Chancery Rejects “Largely Precatory” Proposed Derivative Settlement

Knight v. Miller, C.A. No. 2021-0581-LWW (Del. Ch. June 1, 2023) - Under Court of Chancery Rule 23.1(c), the Court must approve the settlement of any derivative litigation. This case provides a rare example of the Court...more

10/24/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty

Chancery Holds Unocal Claims for Injunctive Relief are not Subject to Corwin Cleansing

In re Edgio, Inc. Stockholder Litigation, C.A. No. 2022-0624-MTZ (Del. Ch. May 1, 2023) - Under Corwin, a fully informed, uncoerced vote of the disinterested stockholders can shift the standard of judicial review for...more

9/26/2023 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Entire Fairness Standard Applied to Transaction Benefitting Controllers of Controllers

Tueza v. Lindon, C.A. No. 2022-0130-SG (Del. Ch. Apr. 27, 2023) - Because controlling stockholders of Delaware corporations owe fiduciary duties to both the corporation and to its minority stockholders, the Court of...more

8/24/2023 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Motion to Dismiss

Delaware Supreme Court Affirms Dismissal Under Zapata

Diep v. Trimaran Pollo Partners, No. 313, 2021 (Del. June 28, 2022) - After the Court of Chancery denied an initial motion to dismiss, the company formed a special litigation committee (“SLC”) to investigate the claims and...more

10/11/2022 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Curtails Discovery in Appraisal Action Instituted as a Substitute for Books and Records Demand

Wei v. Zoox, Inc, C.A. No. 2020-1036-KSJM (Del. Ch. Jan. 31, 2022) - Often, stockholders who suspect corporate wrongdoing in connection with M&A transactions demand to inspect the company’s books and records under Section...more

4/29/2022 / Board of Directors , Books & Records , Breach of Duty , Discovery , Fiduciary Duty , Section 220 Request

Chancery Rejects Argument that Omitted Information Prevents Corwin Dismissal

Galindo v. Stover, C.A. No. 2021-0031-SG (Del. Ch. Jan. 26, 2022) - If a majority of fully informed, uncoerced, disinterested stockholders vote to approve a merger not involving a conflicted controlling stockholder, then...more

4/28/2022 / Board of Directors , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Mergers , Shareholders

Chancery Rejects Challenge to Director’s Appointment and Dismisses Derivative Claims

Simons v. Brookfield Asset Mgmt., Inc., C.A. No. 2020-0841-KSJM (Del. Ch. Jan. 21, 2022) - If a derivative plaintiff does not make a pre-suit demand on the board, then under Court of Chancery Rule 23.1, the plaintiff must...more

4/22/2022 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty

Chancery Dismisses Derivative Action Based On Alleged Liability Under DGCL § 174 For Stock Repurchases and Dividends

In re The Chemours Co. Deriv. Litig., C.A. 2020-0786-SG (Del. Ch. Nov. 1, 2021) - Broadly speaking, Sections 160 and 173 of the DGCL prohibit a corporation from repurchasing stock or issuing dividends if doing so would...more

2/24/2022 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Finds Breach of Fiduciary Duty Where Defendant Resorted to Extra-Contractual Self-Help

Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Post-trial Memorandum Opinion) Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Letter...more

8/17/2021 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Shareholders

Chancery Rejects Plaintiff’s Attempt to Recharacterize Pre-Suit Demands

The Raj & Sonal Abhyanker Fam. Tr. v. Blake, C.A. No. 2020-0521-KSJM (June 17, 2021) - Court of Chancery Rule 23.1 presents a would-be derivative plaintiff with two exclusive options: make a pre-suit demand on the board to...more

7/13/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Appoints Amicus Curaie to Provide Independent Guidance Regarding Unopposed Petition to Revive Defunct Corporation for Use...

In re Forum Mobile, Inc., C.A. 2020-0346-JTL (Del. Ch. Mar. 18, 2021) - The Court of Chancery has the inherent authority to appoint an amicus curaie if the Court believes it would benefit from a more fulsome presentation...more

4/15/2021 / Board of Directors , Custodians , Delaware General Corporation Law , Securities and Exchange Commission (SEC)

Chancery Dismisses Stockholder’s Claim that Directors Provided Materially-Deficient Notice of their Intent to Use Equity Bonus...

Pascal v. Czerwinski, C.A. No. 2020-0320-SG (Del. Ch. Dec. 16, 2020) - This decision concerned a motion to dismiss a stockholder’s direct claim that Director-Defendants breached their duties by providing a...more

2/9/2021 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Invokes Internal Affairs Doctrine to Dismiss Dispute Over Former Delaware Corporation Brought Over Two Years After Its...

Sylebra Capital Partners Master Fund, LTD v. Perelman, et. al., C.A. No. 2019-0843-JRS (Del. Ch. Oct. 9, 2020) - Defendant Scientific Games Corporation (the “Company”) is a gaming and lottery company that reincorporated in...more

12/2/2020 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Internal Affairs Doctrine , Motion to Dismiss

Chancery Rejects Bid to Jettison USACafes and its Holding That, Absent Agreement to the Contrary, the Controllers of a Corporate...

Fannin v. UMTH Land Development, L.P. (In re: United Development Funding III, L.P.), C.A. No. 12541-VCF (Del. Ch. Jul. 31, 2020). The Court of Chancery has concluded that in certain situations, equity will, by default,...more

9/8/2020 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Limited Partnerships

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

12/6/2019 / Board of Directors , Breach of Duty , Caremark claim , Demand Futility , Fiduciary Duty , Pleading Standards

Chancery Enforces Preferred Stock Consent Rights, and Reasons that Designee of a Corporate Stockholder Is an “Affiliate” of that...

PWP Xerion Holdings III LLC v. Red Leaf Resources Inc., C.A. No. 2017-0235-JTL (Del. Ch. Oct. 23, 2019). Preferred stockholders frequently obtain the right to veto specific types of transactions....more

10/25/2019 / Board of Directors , Fiduciary Duty , Preferred Shares , Shareholders

Chancery Dismisses Merger Challenge Concerning Board’s Delegation of Merger Negotiations and Management’s Undisclosed Compensation...

In re Towers Watson & Co. Stockholder Litigation, C.A. No. 2018-0132-KSJM (Del. Ch. July 25, 2019). The ultimate responsibility for considering a merger falls on the board to carry out consistent with each directors’...more

8/6/2019 / Board of Directors , Breach of Duty , Business Judgment Rule , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Officer and Director Entitled to Mandatory Indemnification Regardless of Circuitous Path to Victory

Brown v. Rite Aid Corporation, C.A. No. 2017-0480-MTZ (Del. Ch. May 24, 2019). Even when an indemnitee takes a circuitous path to victory, the indemnitee is entitled to indemnification under 8 Del. C. § 145(c) for...more

7/3/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Indemnification , Motion for Summary Judgment , Motion to Dismiss

Delaware Supreme Court Revives Fiduciary Duty Claims in Derivative Lawsuit Concerning Blue Bell’s Listeria Outbreak

Marchand v. Barnhill, No. 533, 2018 (Del. June 19, 2019). As this decision illustrates, while Delaware law imposes a high bar for pleading demand futility and fiduciary oversight claims under what is known as a Caremark...more

7/3/2019 / Blue Bell Creameries , Board of Directors , Breach of Duty , Caremark claim , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Eric Hacker

Morris James LLP

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