Eric Hacker on Fiduciary Duty

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 Dismisses Claim for Breach of Fiduciary Duty Where Parties’ Commercial Relationship Was One of Ordinary Care

Nieves v. Insight Building Co., LLC, C.A. No. 2019-0464-SG (Del. Ch. Aug. 4, 2020) - The Court of Chancery used an unlikely vehicle — a dispute over stormwater drainage — to further explain the limits of common law...more

10/1/2020 / Breach of Duty , Building Permits , Construction Industry , Fiduciary Duty

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

Court Finds LLC Manager Consent Statute Authorizes Personal Jurisdiction for Tort Claims Related to the Company, Not Just Alleged...

CLP Toxicology, Inc. v. Casla Bio Holdings LLC, C.A. 2018-0783-PRW (Del. Ch. Jun. 29, 2020) & NC18C-10-332 PRW CCLD (Del. Super. Jun. 29, 2020) - In both the corporation and LLC contexts, Delaware law employs consent...more

8/5/2020 / Breach of Duty , Corporate Officers , Fiduciary Duty , Limited Liability Company (LLC) , Personal Jurisdiction

Chancery Dismisses Challenge to Top Executives’ Stock Awards in Disney-Fox Merger, Finds Plaintiff Lacks Standing to Pursue...

Brokerage Jamie Goldenberg Komen Rev TRU U/A 06/10/08 Jamie L Komen Trustee for the Benefit of Jamie Goldenberg Komen v. Breyer, C.A. No. 2018-0773-AGB (Del. Ch. June 26, 2020) - Following a merger that alters a...more

8/4/2020 / Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders , Standing

Even Though Evidence Supports Plaintiffs’ Fraudulent Inducement Claim, Chancery Denies Relief Where Plaintiff Never Gave Defendant...

HOMF II Investment Corp. v. Altenberg, C.A. No. 2017-0293-JTL (Del. Ch. May 19, 2020) - Due process requires that a plaintiff provide the defendant with fair notice of the plaintiff’s claims. As this recent post-trial...more

6/30/2020 / Breach of Contract , Breach of Duty , Fiduciary Duty , Fraudulent Inducement

Surveying the Law, Chancery Declines to Dismiss a Claim that a 35% Holder was the Controlling Stockholder of the Acquirer (as Well...

Voigt v Metcalf, C.A. No. 2018-0828-JTL (Del. Ch. Feb. 10, 2020). This decision contains an instructive review of the factors the Court of Chancery will examine to determine whether a minority stockholder may in fact be a...more

4/7/2020 / Breach of Duty , Controlling Stockholders , Fiduciary Duty , Mergers

Post-Closing Earn-Out Claims Dismissed, But Fiduciary Duty Claims Against Former Director Survive

Neurvana Medical, LLC v Balt USA, LLC, C.A. No. 2019-0034-KSJM (Del. Ch. Feb. 27, 2020). Neurvana Medical, LLC (“Neurvana”) sold a medical device to Balt USA, LLC (“Balt USA”), largely for post-closing consideration if the...more

4/7/2020 / Breach of Duty , Earn-Outs , Fiduciary Duty , Former Directors

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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