Litigation

Court Of Chancery Again Explains Preferred Stock Rights

Posted on March 29, 2011
Fletcher International LTD v. Ion Geophysical Corp., C.A. 5109-VCS (March 29, 2011) This is another in the line of decisions that stress that preferred stockholder rights are what is set out in the certificate of incorporation and nothing more.  Thus, if the preferred stockholders bargain for the right to consent to the sale of stock by any subsidiary, then they do not also have the right to vote on the sale of subsidiary stock by the parent...

Court Of Chancery Explains How To Divide Fees

Posted on March 29, 2011
In Re Allion Heathcare Inc. Shareholders Litigation, C.A. 5022-CC (March 29, 2011) How to divide the fees awarded in a multi-jurisdiction case is a recurring problem.  As the Chancellor explains in this opinion, it is preferable if the various courts are notified of a settlement and asked to decide which court should resolve any problems...

Court Of Chancery Summarizes Past Fee Awards

Posted on March 28, 2011
In Re Emerson Radio Shareholder Derivative Litigation, C.A. 3392-VCL (March 28, 2011) Delaware lawyers are often asked to estimate what the Court of Chancery will award in fees following settlement or trial of a derivative action. Well this decision summarizes those fee awards: 10 - 15% for a fast settlement 15 - 25% for contesting motions and other pretrial work that leads to a settlement 25 - 33% for winning after trial All these percentages apply to monetary settlements, but the Court also explains how to determine fees in cases invovling non-monetary settlements.

Directors Designated By Investors Owe Fiduciary Duties to the Company as a Whole and Not to the Designating Investor

Posted on March 24, 2011
Investors who make substantial investments often demand a seat on their company's board of directors.  That is a reasonable request as it permits the investor to have a representative on the board of directors with a voice in management of the company...

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Are Directors Vulnerable for Lack of Oversight When National Disaster Strikes?

Posted on March 23, 2011
The recent events in Japan prompt the question of whether the members of a corporation's board of directors have any exposure to liability when a natural disaster strikes their company.  The potential claim would be that as part of their duty to oversee the company's risk management that they should have better protected their company from losses resulting from a natural disaster...

Court Of Chancery Explains Confidentiality Limits

Posted on March 17, 2011
Espinoza v. Hewlett-Packard Company, C.A. 6000-VCP (March 17, 2011) Occasionally a complaint or other document is filed under seal in the Court of Chancery.  This decision explains how to do that and the limits on confidentiality you can expect...

Court Of Chancery Explains Valuation Technique Preferences

Posted on March 09, 2011
S. Muoio & Co. v. Hallmark Entertainment Investments Co., C.A. 4729-CC (March 9, 2011) There are several different ways to value an enterprise.  For a while, discounted cash flow seemed to be the courts' preference.  Then when the markets were thought to be "efficient," market values were given weight...

Justice Jacobs and Others Analyze Hostile Takeovers in Developed and Emerging Markets

Posted on March 08, 2011
In the most recent issue of the Harvard International Law Journal, John Armour, Justice Jacobs and Curtis Milhaupt analyze how hostile takeovers arise under similar circumstances in different countries and how countries enact substantially different regulatory responses to hostile takeovers...

Court Of Chancery Explains Disclosure Rules For Adviser Fees

Posted on March 04, 2011
In re Atheros Communications Inc. Shareholder Litigation, C.A. 6124-VCN (March 4, 2011) This decision outlines what must be disclosed to shareholders asked to approve a merger.  As to the financial adviser giving a fairness opinion, the disclosures should include whether its fee is contingent on a closing and if so, how much of the fee is contingent...

Court Of Chancery Explains Right To Inspect After Demand Refused

Posted on March 04, 2011
Louisiana Municipal Police Employees Retirement System v. Morgan Stanley & Co. Inc., C.A. 5682-VCL (March 4, 2011) This decision explains why a stockholder is entitled to inspect the documents surrounding a corporation's refusal to pursue derivative litigation when the board appears independent enough to be able to properly refuse the demand to sue...

Court Of Chancery Denies Receiver For LLP

Posted on February 25, 2011
Steven M. Mizel Roth IRA v. Laurus U.S. Fund LP, C.A. 5566-VCN (February 25, 2011) This decision has a good summary of the past decisions holding that it is rare for a receiver to be appointed for an LP.  This is particularly true for an investment fund that is still in the business of investing even if the plaintiff is unhappy with the results.

Court Of Chancery Denies Receiver For LP

Posted on February 25, 2011
Steven M. Mizel Roth IRA v. Laurus U.S. Fund LP, C.A. 5566-VCN (February 25, 2011) This decision has a good summary of the past decisions holding that it is rare for a receiver to be appointed for an LP.  This is particularly true for an investment fund that is still in the business of investing even if the plaintiff is unhappy with the results.

Court Of Chancery Imposes Fees For Late Discovery

Posted on February 23, 2011
Mickman v. American International Processing LLC, C.A. 4368-VCP (February 23, 2011) This decision reaffirms the settled rule that if you fail to obey a court order to provide discovery, the Court will assess fees for a motion to compel and few excuses will change that result.

Court Of Chancery Re-affirms Board's Use Of Poison Pill To Block Inadequate Tender Offer

Posted on February 22, 2011
Air Products and Chemicals, Inc. v. Airgas, Inc., C.A. No. 5249-CC / In re Airgas Inc. Shareholder Litigation, C.A. No. 5256-CC (February 15, 2011) The Court of Chancery denied an application by Air Products and Chemicals, Inc. to force the board of Airgas, Inc...

Court Of Chancery Permits Inspection of Pre-Ownership Events

Posted on February 21, 2011
Sanders v. Ohmite Holding LLC, C.A. 5145-VCL ( February 21, 2011) This decision determines that an owner of an LLC interest may obtain inspection of its books and records even with respect to events that occurred before he became a member.

Court Of Chancery Validates Top Up Options

Posted on February 21, 2011
Olson v. ev3, Inc., C.A. 5583-VCL (February 21, 2011) In recent years, top up options have been frequently used to speed up a merger by avoiding the time-consuming and expensive process of soliciting proxies to approve a merger after a successful tender offer...

Court Of Chancery Explains Categories Of Damages

Posted on February 16, 2011
Pharmaceutical Product Development Inc. v. TVM Life Science Ventures VI, LP,  C.A. 5688-VCS (February 16, 2011) Agreements sometimes try to limit any damages from a misrepresentation or contract breach by excluding consequential or special damages...

Court Of Chancery Creates Unique Remedy

Posted on February 14, 2011
In re Del Monte Foods Company Shareholders Litigation, C.A. 6027-VCL (February 14, 2011) This is an important decision if only for the creative remedy that the Court came up with to deal with the breach of faith by a target's investment bank...

Supreme Court Upholds Fee Award In No Damage Case

Posted on February 09, 2011
William Penn Partnership v. Saliba, C.A. 362, 2010 (February 9, 2011) In this unusual decision the Supreme Court upheld an award of attorneys fees and costs to plaintiffs who proved a breach of fiduciary duties owed to them but where there were no apparent damages from the breach...

Special Master Reports On Fee Request

Posted on February 08, 2011
Fuhlendorf v. Isilon Systems, Inc., C.A. 5772-VCN (February 8, 2011) In this report of a well-respected Delaware attorney serving as a special master, there is much to be learned about how to seek advancement of fees.  He does a good job of explaining Duthie v CorSolutions Medical Inc...

Court Of Chancery Illustrates Possible Waiver Of LP Agreement

Posted on February 04, 2011
Wimbledon Fund LP Absolute Return Fund Series v. SV Special Situation Fund LP,  C.A. 4780-VCS (February 4, 2011) May the provisions of a limited partnership agreement governing withdrawal be waived?  This decision says that is possible...

Court Of Chancery Explains Charter Interpretation Rules

Posted on January 31, 2011
KFC National Council and Advertising Cooperative Inc v. KFC Corporation, C.A. 5191-VCS (January 31, 2011) When a certificate of incorporation is ambiguous, the Court must decide what it means.  This decision explains how a court will do that job...

Court Of Chancery Explains Jurisdictional Discovery

Posted on January 31, 2011
Reid v. Siniscalchi,  C.A. 2874-VCN (January 31, 2011)  When personal jurisdiction over a defendant is challenged, the plaintiff has the right to take limited "jurisdictional discovery."  Exactly what that means is well explained by this decision.

Court Of Chancery Denies Relief Over Two Week Delay

Posted on January 28, 2011
CNL-AB LLC v. Eastern Property Funds I SPE (MSREF) LLC ,C.A. 6137-VCP (January 28,  2011) This decision again illustrates how fast a claim may be barred by inaction.  Here two weeks passed after the plaintiff  was on notice of its claim before suit was filed...

Supreme Court Upholds Late Inspection Suit

Posted on January 28, 2011
King v. Verifone Holdings Inc.,  No. 330, 2010  (January 28, 2011) This decision reinstates a books and records case that was dismissed by the Court of Chancery. The Court of Chancery held that a stockholder who first files a derivative complaint may not later file a books and records case...

Court of Chancery Discusses "Best and Final" Offer

Posted on January 24, 2011
Air Products & Chemicals, Inc. v. Airgas, Inc., C.A. No. 5249-CC  (January 20, 2011) This is another decision in the Airgas takeover battle.  In this decision, Chancellor Chandler addressed Air Products' motion to compel Airgas' compliance with the protective order and Airgas' motion in limine to preclude Air Products from offering evidence that its $70 offer was indeed its "best and final" offer...

Court of Chancery Guidelines for Preservation of Electronically Stored Information

Posted on January 24, 2011
  On January 18,  the Delaware Court of Chancery issued a one and a half page "Guidelines for Preservation of Electronically Stored Information."   In summary, the Guidelines are as follows: 1.  There is a common law duty to preserve potentially relevant electronically stored information (ESI) within a party's possession, custody, or control once litigation is commenced or when litigation is "reasonably anticipated...

Court Of Chancery Explains When Fair Is What You Get

Posted on January 21, 2011
Reis v. Hazelett Strip-Casting Corporation, C.A. 3552-VCL (January 21, 2011) When a reverse stock split eliminates minority stockholders, they are entitled to be paid the "fair value" of their stock. This decision explains what that means...

Court Of Chancery Explains Expedited Procedures

Posted on January 18, 2011
Lavi v. Wideawake Deathrow Entertainment LLC, C.A. 5779-VCS (January 18, 2011) The Delaware corporate and alternative entity laws have several provisions for expedited treatment of corporate disputes, such as over the right to inspect corporate records...

Court Of Chancery Outlines Remedies For Documentation Mistakes

Posted on January 14, 2011
Great-West Investors LP v. Thomas H. Lee Partners LP , C.A. 5508-VCN (January 14, 2011) Sometimes a contract cannot have been intended to mean what is says. This decision is an example where the contract read literally would require 1 party's compensation to double every year forever...

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