Tyler O'Connell on Board of Directors

Chancery Addresses When Third Parties Are Within the Scope of the Privilege

Police and Fire Ret. Sys. of the City of Detroit v. Musk, C.A. No. 2020-0477-KSJM (Del. Ch. January 31, 2023) - A communication is privileged under Delaware Rule of Evidence 502(b) if it is confidential and "made for the...more

5/4/2023 / Attorney-Client Privilege , Board of Directors , Confidential Communications , Derivative Suit , Shareholders

Chancery Finds Delaware’s Officer Consent Statute Extends Beyond “Formal Officers” to De Facto or Acting Officers

Harris v Harris, C.A. No. 2019-0736-JTL (Del. Ch. January 19, 2023) - Delaware's Officer Consent Statute provides for service of process on anyone who "accepts election or appointment as an officer of a corporation…or who...more

5/4/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Awards Plaintiffs Attorneys’ Fees and Costs in Section 225 Action for Obtaining a Substantial Benefit for the...

Totta v. CCSB, LLC, C.A. No. 2021-0173-KSJM (Del. Ch. Nov. 3, 2022) - Delaware follows the “American Rule”: each party bears its own legal fees and expenses. However, there are certain exceptions. This includes the...more

2/2/2023 / American Rule , Attorney's Fees , Board of Directors , Shareholders

In New AmerisourceBergen Decision, Chancery Applies 'Separate Accrual' Laches Analysis for 'Caremark' Red-Flags Claims

In the latest Delaware corporate decision concerning AmerisourceBergen’s role in the nation’s opioid epidemic, the Delaware Court of Chancery largely rejected arguments that laches barred fiduciary duty claims against...more

1/18/2023 / Board of Directors , Breach of Duty , Caremark claim , Derivative Suit , Fiduciary Duty , Shareholder Litigation

Chancery Suggests Alternative Approach To Contracts Providing That Prohibited Acts Are Void Ab Initio

XRI Investment Holdings LLC v. Holifield, et al., C.A. No. 2021-0619-JTL (Del. Ch. Sept. 13, 2022) - Under precedents such as CompoSecure, L.L.C. v. CardUX, LLC (Del. 2018), acts defined by an LLC agreement as “void” or...more

11/18/2022 / Board of Directors , Breach of Contract , Limited Liability Company (LLC) , LLC Agreements , Shareholders

Chancery Dismisses Claims Alleging Directors Approved Spring-Loaded Stock Options Before Press Releases on COVID-19 Vaccine...

In re Vaxart, Inc. S’holder Litig., Consol. C.A. No. 2020-0767-PAF (Del. Ch. June 3, 2022) - A small biotechnology company issued a press release that connected the company to the federal government’s Operation Warp Speed...more

11/15/2022 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Delaware Supreme Court Enforces Class Vote Requirement, Reasons There Is No Insolvency Exception to Section 271 Of The Delaware...

Stream TV Networks, Inc. v. SeeCubic, Inc., No. 360, 2021 (Del. June 15, 2022) - Section 271 of the Delaware General Corporation Law provides, among other things, that a majority vote of stockholders is required to sell...more

10/11/2022 / Board of Directors , Delaware General Corporation Law , Insolvency , Shareholder Approval , Shareholders

Chancery Sustains Fiduciary Duty Claims Arising From Option Grants At Pandemic-Low Price

Knight v. Miller, C.A. No. 2021-0581-SG (Del. Ch. Apr. 27, 2022) - In mid-March 2020, at a time when the COVID-19 pandemic caused the corporation’s stock price to trade at a periodic low, the corporation’s compensation...more

8/26/2022 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty

Chancery Finds AT&T Failed to Satisfy Entire Fairness Review in a Freeze-Out of Minority Partners in Local Spectrum Partnership

In re Cellular Telephone P’ship Litig., Coordinated C.A. No. 6885-VCL (Del. Ch. Mar. 9, 2022) - A controller that stands on both sides of a freeze-out transaction has the burden to prove that its acquisition was entirely...more

8/26/2022 / Board of Directors , Breach of Duty , Fiduciary Duty , Partnerships , Shareholders

Court of Chancery Dismisses Thinly-Pleaded Breach of LPA Claim and Breach of Fiduciary Duty Claim Disclaimed by LPA and Foreclosed...

Ryan v. Buckeye Partners L.P. et al., C.A. No. 2021-0432-JRS (Del. Ch. Feb. 9, 2021) - Delaware is a notice pleading jurisdiction. But, even under this forgiving standard, the Court of Chancery Rule 8 still requires that...more

5/23/2022 / Board of Directors , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Limited Partnership Agreements

Chancery Dismisses All Claims in Stockholder Challenge to Cash-Out Merger Transaction

Harcum v. Lovoi, C.A. No. 2020-0398-PAF (Del. Ch. Jan. 3, 2022) - In Harcum, the Delaware Court of Chancery dismissed all claims brought in a stockholder suit alleging fiduciary breaches in connection with the $1 billion...more

4/29/2022 / Board of Directors , Breach of Duty , Controlling Stockholders , Duty of Loyalty , Fiduciary Duty , 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

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 Revived a Dismissed Claim after Discovery Revealed a Desire for Liquidity that Resulted in a Divergent Interest in M&A...

In re Mindbody, Inc., S’holder Litig., Cons. C.A. No. 2019-0442-KSJM (Del. Ch. Dec. 9, 2021) - A desire for liquidity can result in a divergent interest sufficient to plead fiduciary duty claims against a defendant...more

3/9/2022 / Board of Directors , Breach of Duty , Fiduciary Duty , Motion to Dismiss

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 Former Directors Bringing Wrongful Termination Claims Were Not Entitled to all Privileged Communications During...

SerVaas v. Ford Smart Mobility LLC, C.A. No. 2020-0909-LWW (Del. Ch. Nov. 9, 2021) - With limited exceptions, directors normally have “unfettered” access to corporate information. This decision indicates, however, that the...more

2/22/2022 / Board of Directors , Breach of Contract , Breach of Duty , Discovery , Fiduciary Duty , Privileged Communication

Chancery Holds Plaintiffs Adequately Pled Wrongful Refusal Where Board Did Not Correct Unauthorized Charter Amendments

Drachman v. Cukier, C.A. No. 2019-0728-LWW (Del. Ch. Oct. 29, 2021) - To survive a motion to dismiss in the demand refusal context, the plaintiff must allege facts that create a reasonable doubt that the board’s decision...more

1/11/2022 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Delaware Court of Chancery Dismisses Caremark Claim Arising From Marriott Cybersecurity Breach

Fire Ret. Sys. of St. Louis v. Sorenson, et al., 2021 WL 4593777 (Del. Ch. Oct. 5, 2021). The Delaware Court of Chancery dismissed pursuant to Rule 23.1 derivative claims arising from the hack of roughly 500 million...more

12/28/2021 / Board of Directors , Breach of Duty , Caremark claim , Demand Futility , Derivative Suit , Fiduciary Duty

Delaware Court of Chancery Upholds Incumbent Directors’ Decision not to Excuse Stockholders’ Non-Compliance with Advance Notice...

Rosenbaum v. CytoDyn Inc., 2021 WL 4775410 (Del. Ch. Oct. 13, 2021) - The Delaware Court of Chancery recently upheld incumbents’ decision not to include insurgent director nominees on the ballot due to their failure to...more

12/28/2021 / Advance Notice , Board of Directors , Bylaws , Fiduciary Duty , Shareholders

Chancery Finds Adversity Between Directors and Formation of Special Committee Shields Against Production of Company-Privileged...

In re: Howard Midstream Energy Partners, LLC, C.A. No. 2021-0487-LWW (Del. Ch. Sept. 22, 2021) - Issues of corporate privilege among directors entail a fact-specific analysis when a dispute arises among them. Here, the...more

12/17/2021 / Board of Directors , Discovery , Document Productions , Work-Product Doctrine

Chancery Applies Recent Zuckerberg Decision and Holds That Demand Was Not Excused

Genworth Fin., Inc. Consol. Deriv. Litig., C.A. No. 11901-VCS (Del. Ch. Sept. 29, 2021) - In a demand futility analysis, Delaware courts have traditionally applied the Rales and Aronson decisions. However, the Delaware...more

12/17/2021 / Board of Directors , Demand Futility , Derivative Suit , Initial Public Offering (IPO)

Chancery Dismisses Derivative Claims That Private Equity Sponsors Comprised A Control Group

Patel v. Duncan, C.A. No. 2020-0418-MTZ (Del. Ch. Sept. 30, 2021) - For stockholders to comprise a control group, the alleged group members must be connected in some “legally significant way – such as by contract, common...more

11/18/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Denies Motion to Dismiss in Part Because Certain Discussions Between CEO and Acquirer Were not Disclosed in Proxy When...

Teamsters Local 237 Additional Security Benefit Fund v. Caruso, C.A. No. 2020-0620-PAF (Del. Ch. Aug. 31, 2021) - Under Revlon, a director must focus on obtaining a transaction that provides the maximum value for...more

11/4/2021 / Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

Applying Plain Contract Language, Chancery Awards $147 Million in Damages to Start-Up Company for Breach of Joint Venture...

Symbiont.io, Inc. v. Ipreo Hldgs., LLC, C.A. No. 2019-0407-JTL (Del. Ch. Aug. 13, 2021) - Delaware is a pro-contractarian state. When fashioning an award for a breach of contract, a Delaware court can consider: (1) the...more

10/14/2021 / Board of Directors , Breach of Contract , Joint Venture , Non-Compete Agreements

Tyler O'Connell

Morris James LLP

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