Contributors

Commentary

Does a Nonresident Del. Officer's Service to a Corporation Allow Courts to Compel Testimony?

James L. Hallowell and Lee R. Crain | April 18, 2018

Does a nonresident officer’s prior service to a Delaware corporation allow the Delaware courts to compel her to appear to testify at trial as a third-party…

Commentary

Accepting That LinkedIn Invitation May Be a Violation of a Nonsolicitation Agreement

Hugo V. Alvarez | April 16, 2018

Social media sites like Facebook and LinkedIn are increasingly being used today for professional purposes. Those purposes include maintaining professional networks and promoting certain brands and companies.

Commentary

A Year Later: The Impact in Delaware From the US Supreme Court’s 'TC Heartland'

James S. Green Jr. | April 11, 2018

Almost one year ago, the U.S. Supreme Court decided the landmark case of TC Heartland v. Kraft Foods Group Brands. The decision upended what had been the status quo on the issue of where venue lies in patent infringement actions.

Commentary

Chancery Addresses Subrogation Rights in the Context of Claims for Indemnification

Barry M. Klayman and Mark E. Felger | April 04, 2018

In Meyers v. Quiz-Dia, Vice Chancellor J. Travis Laster addressed the question of whether a party that paid the legal fees and expenses of persons entitled to indemnification could be subrogated to their rights to recover losses incurred in defending against claims filed against them.

Commentary

Boards of Directors May Be Required to Disclose Reasons Behind a Director's Vote Abstention

Kate A. Mahoney and Christopher B. Chuff | March 28, 2018

In a recent decision by the Delaware Supreme Court, Appel v. Berkman, the court held that a board’s failure to include information about the chairman of the board’s reasons for abstaining on the vote rendered the proxy statement materially misleading.

Commentary

Is Stockholder Litigation in Trouble in Delaware? An Update

Edward M. McNally | March 21, 2018

A series of recent Delaware court decisions have caused some plaintiffs law firms to decide stockholder litigation should no longer be filed in the Delaware courts.

Commentary

Important Lessons From 'In re Oxbow Carbon' for Drafting Joint Venture Exit Provisions

Robert B. Little and Eric B. Pacifici | March 14, 2018

The Delaware Court of Chancery recently issued an opinion that offers useful guidance for parties seeking to draft joint venture exit provisions.

Commentary

Delaware Public Policy Does Not Preclude D&O Insurance Coverage for Fraud

K. Tyler O’Connell | March 14, 2018

In Arch Insurance v. Murdock, a D&O insurance coverage dispute, the Superior Court’s complex commercial litigation division reasoned broadly to hold that, absent a contrary choice of law clause, Delaware law applies to Delaware corporations’ D&O insurance policies, and that Delaware public policy does not prohibit insuring losses from insureds’ breaching the fiduciary duty of loyalty through fraudulent conduct.

Commentary

Fairness Standard of Review Applies to Transaction Approved by Independent Majority of Directors

Lewis H. Lazarus | March 07, 2018

The Delaware Court of Chancery is often called upon to assess whether a plaintiff challenging an interested transaction who fails to make demand on the board to pursue claims based on alleged self-dealing or director interest can overcome the procedural hurdle of a motion to dismiss under Rules 23.1 and 12(b)(6).

Commentary

Financial Distress Is a Prerequisite to Good-Faith Bankruptcy Filing

Barry M. Klayman and Mark E. Felger | March 07, 2018

In In re Rent-A-Wreck of America, Bankruptcy Judge Laurie Silverstein dismissed voluntarily filed bankruptcy cases on the grounds they were not filed in good faith.

Commentary

Void-Voidable Distinction Revisited by Delaware Court of Chancery

Nathaniel J. Stuhlmiller | February 28, 2018

In three recent memorandum opinions, the Delaware Court of Chancery revisited the distinction between void and voidable acts under Delaware common law.

Commentary

Del. Supreme Court Limits Stockholder Ratification of Director Compensation

James H. S. Levine and Douglas D. Herrmann | February 22, 2018

Over the past several years, the Delaware Court of Chancery has applied the stockholder ratification defense in challenges to director compensation awards made pursuant to stockholder approved equity incentive plans (EIPs).

Commentary

Court Re-evaluates Stockholder Ratification of Director Compensation for First Time in Decades

​Jefferson E. Bell and David A. Coon | February 21, 2018

In a Dec. 19, 2017, decision, In re Investors Bancorp Stockholder Litigation, the Delaware Supreme Court considered the limits of a stockholder ratification defense when directors make equity awards to themselves under an equity incentive plan or “EIP.”

Commentary

Guidance Provided to Evaluate the Implied Covenant of Good Faith and Fair Dealing

Albert H. Manwaring IV | February 21, 2018

The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements.

Commentary

Dismissal of Shareholder Derivative Action on Rule 23.1 Grounds Precludes Relitigation of Different Del. Plaintiffs

P. Clarkson Collins Jr. | February 14, 2018

The Delaware Supreme Court recently issued an important corporate law decision addressing issue preclusion in the context of multiple shareholder derivative actions.

Stockholders Agreement Interpreted to Not Run Afoul of DGCL

Barry M. Klayman and Mark E. Felger | February 14, 2018

Vice Chancellor J. Travis Laster held that a provision in a stockholders agreement that purported to limit the board’s authority to select the company’s chief executive officer was ineffective because it conflicted with the Delaware General Corporation Law.

Commentary

A Tale of Two Derivative Suits: Issue Preclusion and Comity Prevail

Michelle Reed and Matthew Lloyd | February 07, 2018

The Delaware Supreme Court declined to adopt a new standard governing issue preclusion of derivative actions, creating a tension with Delaware courts’ forceful encouragement that stockholders fully investigate their claims before pursuing such actions on behalf of a company.

Commentary

Where Do You Want to Be Sued?

Edward M. McNally | January 31, 2018

Where does your company want to be sued? Of course, the obvious answer is “nowhere.” But in this litigious country that is not realistic.

Commentary

Plaintiff Who Obtains a Corporate Benefit May Not Target a Stockholder to Pay a Fee Award

Justin T. Kelton | January 31, 2018

In a recent decision, Judge Andre G. Bouchard of the Delaware Court of Chancery addressed the question of whether a plaintiff who obtains a corporate benefit through litigation may target a particular stockholder to pay a common fund fee award.

Commentary

Chancery Greenlights Use of Books and Records Demands to Buttress Post-'Corwin' M&A Challenges

K. Tyler O’Connell | January 24, 2018

Stockholder M&A challenges in the Delaware Court of Chancery have declined in the wake of the well-known Trulia (and its federal corollary Walgreens) and Corwin decisions, which respectively reduced incentives for pre-closing M&A challenges by outlining a strict standard of review for disclosure-only settlements; and confirmed that, regardless of whether the process at issue complied with Revlon, transactions approved by an informed and uncoerced stockholder vote are subject to the protections of the business judgment rule.

Bankruptcy Judge Applies Anti-Forfeiture Statute to Save Debtor's Exercise of Option to Renew Lease

Barry M. Klayman and Mark E. Felger | January 17, 2018

In a recent decision, Bankruptcy Judge Christopher S. Sontchi addressed the question of whether a Chapter 11 debtor, the tenant under a commercial lease, could exercise an option to renew the lease during the bankruptcy proceedings, even though the debtor was in default under the lease and the lease specified that it could not be renewed if defaults existed at the time the option was exercised.

Commentary

Holiday Season Gifts Practitioners With Slew of Notable Opinions From Delaware Courts

Arthur R. Bookout | January 10, 2018

While many view the period between Thanksgiving and Jan. 1 as a hectic time of year, no one has been working harder than the Delaware courts.

Commentary

Supreme Court Reverses Chancery's Dell Appraisal Decision

Brett M. McCartney | December 27, 2017

In one of the most anticipated opinions of 2017, Delaware’s Supreme Court reversed the Court of Chancery’s appraisal decision valuing Dell, Inc.’s shares after its management-led buyout in 2013. In its unanimous en banc decision, the Supreme Court ruled that the Court of Chancery abused its discretion by relying exclusively on its own discounted cash flow (DCF) analysis while affording no weight to the transaction price when valuing the company’s shares at the time of its 2013 going-private merger.

Commentary

Chancery Adopts Federal Test to Determine Whether to Stay a Civil Case Based on a Criminal Investigation

Albert H. Manwaring IV | December 20, 2017

Neither the Delaware Supreme Court, nor other Delaware state courts have “articulated a specific test” to analyze whether to stay a civil case based on the pendency of a criminal case or investigation.

Commentary

Court of Chancery Continues Line of Pro-Arbitration Cases

Thad A. Davis and Andrea Hadjiyianni | December 13, 2017

Parties intending to enter into arbitration agreements should take note of the recent Delaware Court of Chancery decision in In re Good Technology Stockholder Litigation, No. CV 11580-VCL, 2017 WL 4857341 (Del. Ch. Oct. 27, 2017). In Good Technology, the parties agreed that “any disputes arising out of [a term sheet] shall be referred to” a specified individual “who shall have sole authority and exclusive jurisdiction to resolve any such disputes.”

Commentary

Receiver's Disallowance of Creditor's Claim Subject to De Novo Review

Barry M. Klayman and Mark E. Felger | December 06, 2017

What should be the standard of review when the Court of Chancery considers an appeal from a receiver’s disallowance of a claim pursuant to section 296(b) of the Delaware General Corporation Law? In B.E. Capital Management Fund LP v. Fund.com Inc., C.A. No. 12843-VCL (Del. Ch. Oct. 4, 2017), Vice Chancellor Laster held that a receiver’s determination is subject to de novo review and the court has discretion to go beyond the record presented to the receiver by conducting an evidentiary hearing.

Commentary

Are Directors Liable if Their Company Violates the Law? The Practical Implications of 'Kandell'

Timothy R. Dudderar and Daniyal M. Iqbal | December 06, 2017

In a case involving allegations of unusually egregious conduct by directors of a Delaware corporation, the Delaware Court of Chancery in Kandell v. Niv, C.A. No. 11812-VCG (Del. Ch. Sept. 29) (Glasscock, V.C.) found that directors of FXCM, Inc. faced a substantial likelihood of liability for demand futility purposes on a claim alleging that they knowingly allowed FXCM to engage in an illegal business practice, despite the lack of allegations suggesting that the directors were ever explicitly notified that the practice was illegal.

Commentary

Impact of ‘Trulia’ on Merger Litigation in State and Federal Courts

John A. Neuwirth, Joshua S. Amsel, Christine T. Di Guglielmo and Evert J. Christensen Jr. | November 29, 2017

Since 'Trulia', there has been a decline in Delaware in the number of run-of-the-mill challenges to nearly every public company merger transaction. But while the volume of merger litigation in Delaware has been on the decline, there has been a noticeable surge in filings in other jurisdictions, particularly federal courts.

Commentary

Court of Chancery Dismisses Derivative Action for Failure to Plead Demand Futility

Lewis H. Lazarus | November 22, 2017

A cardinal principle of Delaware law is that directors manage the business and affairs of a Delaware corporation. This includes decisions regarding whether to pursue claims against officers and directors whose breach of duty may have injured the company.

Commentary

Bridging the GAAP: Contractual Interpretation Issues in 'Chicago Bridge & Iron'

Pamela L. Millard | November 22, 2017

On June 28, 2017, the Delaware Supreme Court reversed the Court of Chancery’s prior ruling in Chicago Bridge & Iron v. Westinghouse Electric, 2016 WL 7048031 (Del. Ch. Dec. 5, 2016), rev’d, 2017 WL 2774563 (Del. June 28), holding that an independent auditor appointed to resolve purchase price adjustment disputes relating to a sale transaction was not empowered to decide challenges to the seller’s compliance with GAAP in connection with a post-closing true up of net working capital.

Commentary

Delaware Courts Uphold Strict Limitations on Liability For Oversight Claims

Jason J. Mendro and Jeffrey S. Rosenberg | November 15, 2017

It is an all-too familiar accusation to many directors: If only you had done something more, the corporation could have avoided an injury or loss. Since the mid-1990s, Delaware courts have repeatedly recognized that attempting to pin personal liability on directors for their alleged inaction is “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment,” as in In re Caremark International Derivative Litigation, 698 A.2d 959, 967 (Del. Ch. 1996).

Commentary

Be Careful What You Ask For in a Section 225 Case

Edward M. McNally | November 14, 2017

Delaware recognizes the need to promptly resolve disputes over the composition of the board of directors of a Delaware corporation.

Commentary

Bankruptcy Court Affirms Authority to Approve Nonconsensual Third-Party Releases

Barry M. Klayman and Mark E. Felger | November 08, 2017

In a significant decision in a closely watched case, Bankruptcy Judge Laurie Selber Silverstein held in In re Millennium Lab Holdings II, Case No. 15-12284 (LSS) (Del. Bankr. Oct. 3, 2017), that the bankruptcy court had constitutional adjudicatory authority to approve the nonconsensual release of nondebtor, direct nonbankruptcy common law claims against third parties as part of a confirmation order.

Commentary

Chancery Approves Incorporation of Reference Condition in Section 220 Litigation

Brett M. McCartney | November 01, 2017

Books and records actions are heralded as the “tools at hand” for litigators pursuing shareholder claims against a corporation.

Commentary

Petition Denied to Remove Wilmington Trust as the Trustee of du Pont Family Trusts

Albert H. Manwaring IV | October 26, 2017

Wilmington Trust serves as the sole trustee for certain du Pont Family Trusts established in the 1940s and 1950s. For many years, Wilmington Trust…

Commentary

Chancery Finds Expert Valuations Are Inadmissible as Hearsay Evidence

Francis G.X. Pileggi and Alexandra Rogin | October 25, 2017

The Delaware Court of Chancery issued an important evidentiary ruling in Zohar II 2005-1 Ltd. v. FSAR Holdings, finding that expert valuation reports were inadmissible as hearsay.

Commentary

The Virtue of Predictability: Delaware’s Place in M&A Practice

Brian M. Lutz and Colin B. Davis | October 18, 2017

As has been widely reported, for the first time in 15 years, Delaware has been dethroned as the nation’s top court system according to a recent survey, which sought to explore “how fair and reasonable the states’ liability systems are perceived to be by U.S. businesses.”

Commentary

Chancery Declines Confidential Treatment to Nonparty’s Claimed Sensitive Business Info

Tyler O'Connell and Albert Caroll | October 18, 2017

American courts have long recognized that the public enjoys a First Amendment right of access to judicial proceedings and records. While forceful, the right is only presumptive, and the public’s interest in access may be overcome with an adequate showing of need.

Questions Raised on Required Clarity of Disclosures in SEC Filings

Robert B. Greco | August 23, 2017

Two recent decisions of the Delaware Court of Chancery separated by only two weeks took seemingly contradictory positions regarding the extent to which corporate disclosures must be made clear in proxy statements and other SEC filings.

Thicker Than Water: Families, Fiduciary Duties and Controlling Stockholders

Benyamin S. Ross and Taylor Hathaway-Zepeda | August 16, 2017

When is an extended family a control block? The Delaware Court of Chancery acknowledged that while familial relations among a group of stockholders are not per se sufficient to establish a controlling stockholder block, a family that regularly refers to itself as a single unit may constitute a controlling stockholder block.

Chancery Recommends Rule to Determine Preclusive Effect of Judgments in Prior Derivative Actions

Albert H. Manwaring IV | August 09, 2017

The predominant approach in most jurisdictions to determine whether the dismissal of a derivative action based on the failure to adequately plead demand futility bars re-litigation of this issue in a subsequent derivative action brought by a different stockholder plaintiff is to apply the traditional legal test for issue preclusion.