Eric Hacker at Morris James LLP

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 Decision Explains Availability of Reformation as a Targeted Remedy

AECOM, et al. v. SCCI Nat’l Hldgs., Inc., C.A. No. 2022-0727-MTZ (Del. Ch. Sept. 27, 2023) - Although the Court of Chancery frequently resolves contractual disputes, it grants contractual reformation only when...more

2/7/2024 / Breach of Contract , Contract Terms , Fraud , Shareholders

Chancery Refuses to Order Specific Performance Due to Inaccurate Representations and Warranties

Restanca, LLC v. House of Lithium, Ltd., C.A. No. 2022-0690-PAF (Del. Ch. Jun. 30, 2023) - The parties seeking specific performance of an agreement must establish a clear right to performance, including that all conditions...more

11/30/2023 / Acquisitions , Breach of Contract , Contract Termination , Contract Terms , Mergers

Chancery Provides Additional Analysis of Primedia Claims in MFW Context

City of Dearborn Police and Fire Revised Retirement System (Chapter 23) et al. v. Brookfield Asset Management Inc., C.A. No. 2022-0097-KSJM (Del. Ch. June 21, 2023) - In a short letter decision, Chancellor McCormick...more

10/25/2023 / Derivative Suit , Mergers , Shareholder Litigation , 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

Chancery Court Again Applies Entire Fairness to Claims Challenging SPAC Transaction

Laidlaw v. GigAcquisitions2, LLC, C.A. No. 2021-0821-LWW (Del. Ch. Mar. 1, 2023) - In the aftermath of a SPAC merger, the plaintiff (a public stockholder) brought claims for breaches of fiduciary duty against the SPAC's...more

8/23/2023 / Breach of Duty , Fiduciary Duty , Mergers , Special Purpose Acquisition Companies (SPACs)

Chancery Resolves Dispute About Competing Forum Selection and Arbitration Provisions

Fairstead Cap. Mgmt. LLC v. Blodgett, C.A. No. 2022-0673-JTL (Del. Ch. Jan. 6, 2023) - This case highlights the difficulties that can arise when relationships are governed by contracts with competing forum selection and...more

5/4/2023 / Arbitration , Arbitration Agreements , Breach of Contract , Contract Terms , Motion to Compel

Chancery Denies Bid to Dismiss Derivative Claims Amid Alleged “Gamesmanship” Regarding Composition of LLC’s Board of Managers

Schoenmann v. Irvin, C.A. 2021-0326-SG (Del. Ch. Jun. 2, 2022) - After the plaintiff filed his direct and derivative claims in April 2021, the defendants – the company and its controller – circulated in June 2021 a written...more

10/14/2022 / Breach of Contract , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty

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

Court Rejects Franchisor’s Attempt Based on Business Effects of COVID-19 to Escape Contractual Obligation to Purchase Franchisee’s...

Level 4 Yoga, LLC v. CorePower Yoga, LLC, C.A. No. 2020-0249-JRS (Del. Ch. March 1, 2022) - In this post-trial decision, the Court of Chancery awarded specific performance to Plaintiff/franchisee who sought to enforce...more

9/9/2022 / Breach of Contract , Material Adverse Effects , Merger Agreements , Mergers

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

Language and Context Lead Chancery to Conclude That Irrevocable Proxy Does Not Bind Subsequent Transferee

Under Section 212(b) of the Delaware General Corporation Law, a stockholder may exercise voting rights through a proxy agent—that is, a person empowered to vote in the stockholder’s stead. Such an arrangement is commonly...more

4/28/2022 / Delaware General Corporation Law , Irrevocable Proxy , Limited Partnerships , Partnership Agreements

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

Delaware Supreme Court Permits Substitution of Bankruptcy Trustee as Plaintiff to Resolve “Procedural Conundrum”

Lenois v. Lawal, No. 33, 2021 (Del. Dec. 9, 2021) - A company’s bankruptcy filing during an appeal of a dismissal of a derivative action presents questions of who, if anyone, has the standing to pursue the company’s...more

3/31/2022 / Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Awards $9.5 Million Mootness Fee for Reduction of Voting Control and Other Benefits

Hollywood Firefighters Pension Fund v. Malone, C.A. 220-0880-SG (Nov. 8, 2021) - A plaintiff may be entitled to a mootness fee if it shows that its action had merit and produced a corporate benefit. This case outlines the...more

2/24/2022 / Attorney's Fees , Breach of Duty , Fee Awards , Fiduciary Duty , Mergers

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 Examines Cornerstone Standard for Establishing Non-Exculpated Fiduciary Duty Claims

In Re BGC Partners, Inc. Derivative Litigation, Consol. C.A. No. 2018-0722-LWW (Del. Ch. Sep. 20, 2021) - A director protected by an exculpatory provision is entitled to dismissal in a breach of fiduciary duty action...more

11/16/2021 / Acquisitions , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Motion for Summary Judgment

Chancery Enforces Parties’ Merger Agreement That Barred Claims Upon Termination of the Agreement

Yatra Online, Inc. v. Ebix, Inc., C.A. No. 2020-0444-JRS (Del. Ch. Aug. 30, 2021) - Agreements frequently specify how the termination of the agreement affects the parties’ rights and obligations. This case illustrates that...more

11/4/2021 / Breach of Contract , Contract Termination , Merger Agreements , Mergers

Company Did Not Breach Mandatory Redemption Provision Where Special Committee Determined Company Lacked Funds To Redeem All...

Cont’l Investors Fund LLC v. TradingScreen, Inc., C.A. No. 10164-VCL (Del. Ch. July 23, 2021) - A holder of preferred stock often possesses redemption rights that permit the stockholder to require a company to repurchase...more

9/29/2021 / Breach of Contract , Preferred Shares , Right of Redemption , Special Committees

Chancery Permits Service By Email Upon Singaporean Defendants

Skye Mineral Investors, LLC v. DXS Capital (U.S.) Ltd., C.A. No. 2018-0059-JRS (Del. Ch. Jul. 15, 2021). Delaware’s long-arm statute permits service of process on a foreign defendant by personal service, by mail with...more

9/29/2021 / Due Process , Lack of Jurisdiction , Long Arm Statute , Motion to Dismiss , Personal Jurisdiction

Chancery Explains Pleading Standard and Sustains Unjust Enrichment Claim Related to Plaintiff’s Forfeiture of LLC Acquisition...

Angel v. Warrior Met Coal, Inc., C.A. No. 2019-0235-SG (Del. Ch. Jun. 30, 2021) - Under Delaware’s notice pleading standard, a plaintiff’s claim will survive a motion to dismiss if it is “reasonably conceivable” that the...more

8/20/2021 / Breach of Contract , Breach of Duty , Fiduciary Duty , Limited Liability Company (LLC) , Pleading Standards , Unjust Enrichment

Eric Hacker

Morris James LLP

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