Delaware Business Litigation Report: Litigation

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Litigation

Delaware Business Litigation Report

Provides business-related litigation information which has been summarized by attorneys currently practicing in Delaware's courts. Searchable Case Summary Database contains summaries of court opinions released since January 2005. Provides links to other resources such as the Delaware Code and administrative rules.
By Morris James LLP

Post Frequency: 5.5/day

Last Entry: May 16, 2013 at 12:11:36

Is the Court of Chancery Reforming Merger Litigation?

Posted on May 16, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | May 15, 2013 There is an uproar going on about the practice of filing suit over every merger announced for a publicly traded company...

Court Of Chancery Explains When A Derivative Suit Survives A Merger

Posted on May 10, 2013
In Re Primedia Inc. Shareholders Litigation, C.A. No. 6511-VCL (May 10, 2013) This is a major decision. Generally, a merger ends the standing of a plaintiff to pursue derivative litigation. To get around this problem, derivative plaintiffs have alleged that the merger itself was invalid because the consideration paid to the stockholders eliminated in the merger did not include anything for the value of a pending derivative claim...

Court Of Chancery Upholds Acceptance Of One Offer Without Market Check

Posted on May 09, 2013
In re Plains Exploration & Production Company Stockholder Litigation, C.A. 8090-VCN (May 9, 2013) As this decision points out again, when a board of directors is disinterested in the transaction, its decision to accept the first offer for its company does not run afoul of the Revlon doctrine just because there was no pre-agreement market check...

Supreme Court Sets Reformation Rules

Posted on May 09, 2013
Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, C.A. 437, 2012 (May 9, 2013) This is an important decision because it sets the rules for when a contract may be reformed for a unilateral mistake. First, it is not a defense to a reformation claim that the other party failed to read the contract...

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Should Directors Sue Their Company for Its Misdeeds?

Posted on May 08, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | May 8, 2013 What should directors do when their company ignores their efforts to end corporate mismanagement? Until recently, this question rarely came up...

Court Of Chancery Agrees To Consider Post Merger Evidence

Posted on May 08, 2013
In re Rural Metro Corporation Shareholders Litigation, C.A. No. 6350-VCL (April 16, 2013) The Delaware appraisal statute is generally interpreted to preclude consideration of post-merger events in determining the fair value of the company. However, in this transcript ruling, the Court indicated that it would consider such evidence when: (1) it sheds light on what the parties were thinking at the time of the merger (such as on revenue projections) and (2) it helps prevent a true outlier (such as wildly wrong revenue projections)...

Court of Chancery Addresses At-Issue Exception to Attorney-Client Privilege

Posted on May 01, 2013
Authored by Katherine J. Neikirk This article was originally published in the Delaware Business Court Insider | May 1, 2013 In a little over a week, the Court of Chancery issued two decisions addressing the at-issue exception to the assertion of attorney-client privilege...

Court Of Chancery Explains A Fiduciary's Duty To Selling Stockholders

Posted on May 01, 2013
In Re Wayport Inc. Litigation, C.A. 4167-VCL (May 1, 2013) When does a corporate fiduciary owe a special disclosure duty to a minority stockholder whose stock he purchases? There are several approaches to this question and this decision fully reviews them all...

Court Of Chancery Rejects Special Rights For Minority Stockholders

Posted on April 30, 2013
Blaustein v. Lord Baltimore Capital Corporation, C.A. 6685-VCN (April 30, 2013) This decision affirms the long held law that Delaware does not recognize the "abuse of minority stockholders" theory whereby there is a duty to treat minority stockholders in such a way as to give them benefits that are not provided by contract or the law, such as dividends.

Court Of Chancery Explains When Board Must Respond To Demand

Posted on April 25, 2013
Rich v. Chong, C.A. 7616-VCG (April 25, 2013) The rules governing when a demand on a board to file suit is excused are well known. Less well known is what happens when a demand is made and nothing happens. This decision explains that the failure to even respond is itself evidence that the board cannot be trusted to fairly evaluate the need to sue...

When Is Advice of Counsel a Defense You Can Raise, but Not Disclose?

Posted on April 24, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | April 24, 2013 Most defendants in corporate fiduciary duty litigation want to say, "My lawyer said it was all right." They usually avoid making that point for fear of waiving the attorney-client privilege...

Court Of Chancery Permits Access To Litigation Reserves

Posted on April 18, 2013
JP Morgan Chase & Co. v. American Century Companies Inc., C.A. 6875-VCN (April 18, 2013) This decision explains the rare case when a litigant may gain access to the opposing party's litigation reserves. That information is usually subject to attorney-client privilege.

Does Allergan Spell Litigation Relief?

Posted on April 17, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | April 17, 2013 The corporate defense bar is excited over the Delaware Supreme Court's April 14 decision in Pyott v. Louisiana Municipal Police Employees' Retirement System, No...

Court Of Chancery Explains When Directors May Shield Other Directors

Posted on April 17, 2013
Kalisman v. Friedman, C.A. 8447-VCL (April 17, 2013) When may most of a Board of Directors deny another director access to the advice of counsel the majority received? This decision answers that interesting question and concludes "not very often...

Court Of Chancery Explains Privilege Waiver Law

Posted on April 10, 2013
In Re Comverge, Inc. Shareholders Litigation, C.A. 7368-VCP (April 10, 2013) When does the mere assertion that your client had "advice of counsel" waive the attorney-client privilege? This question comes up more often than you might think...

Supreme Court Reverses Important Decision Giving Delaware Primacy

Posted on April 04, 2013
Pyott v. Louisiana Municipal Police Employees' Retirement System, No. 380, 2012 (April 4, 2013) In a major decision, the Delaware Supreme Court dismissed a derivative suit on the basis that a prior dismissal of essentially the same suit by a different stockholder barred the Delaware litigation...

Court Of Chancery Limits Advancement

Posted on March 28, 2013
Emerging Europe Growth Fund L.P. v. Figlus, C.A. 7936-VCP (March 28, 2013) When may a partnership demand advancement of its litigation expenses from a limited partner who has arguably breached the partnership agreement? Only when the partnership agreement is very clear in granting that right, according to this decision.

Court of Chancery Explains Willie Gary

Posted on March 28, 2013
Li v. Standard Fiber LLC, C.A. 8191-VCN (March 28, 2013) Who decides if a dispute is subject to arbitration? The Delaware Supreme Court decision in the Willie Gary case sets the way to resolve this question. However, those rules are often hard to interpret...

Delaware Expands Stockholders' Right to Sue

Posted on March 27, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | March 27, 2013 On March 15, the Delaware Court of Chancery significantly expanded the right of a stockholder to make direct claims against corporate fiduciaries...

Do Directors of Foreign-Based Companies Have Greater Liability Exposure?

Posted on March 20, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | March 20, 2013 There is a minor uproar over the recent Delaware decision that some suggest holds the directors of a Delaware corporation to a higher standard of corporate governance when the corporation's business is in a foreign country...

Court Of Chancery Explains Fee Award In Disclosure Case

Posted on March 19, 2013
In re PAETEC Holding Corp. Shareholders Litigation, C.A. 6761-VCG (March 19, 2013) This decision gives a good explanation of how to calculate fees in a supplemental disclosure case. It is particularly noteworthy in comparing the fees awarded to those won in other cases.

Court Of Chancery Permits Suit For Trustee To Proceed

Posted on March 18, 2013
Zutrau v. Jansing, C.A. 7457-VCP (March 18, 2013) This decision permits a suit to proceed that seeks the appointment of a trustee for a solvent corporation based on allegations of breach of fiduciary duty. That may be particularly unusual for prior decisions have required that there be a prior adjudication of a serious breach of duty before an action seeking a trustee might be filed...

Court Of Chancery Explains The Gentile CAse

Posted on March 15, 2013
Carsanaro v. Bloodhound Technologies, Inc., C.A. 7301-VCL (March 15, 2013) This is a major decision. For some time lawyers have struggled to understand when a claim is derivative or direct. The distinction is important if for no other reason than derivative claims may be mooted by a merger that eliminates the plaintiff as a stockholder with standing to sue...

Court Of Chancery Enjoins Solicitation

Posted on March 08, 2013
Kallick v. Sandridge Energy Inc., C.A. 8182-CS (March 8, 2013) This is an important decision dealing with a so-called "Proxy Put." Briefly, a Proxy Put permits creditors to call corporate debt when a new board of directors is elected without the consent of the current board...

Court Of Chancery Sets Guidelines For Trades By Class Representatives

Posted on March 08, 2013
In re NYSE Euronext Shareholders Litigation, C.A. 8136-CS (Transcript March 8, 2013) This transcript sets 2 guidelines that a class representative should follow with respect to trading in the securities held by the class it represents. First, any trading should be first reviewed by class counsel to avoid problems with using insider information gained in the course of the litigation...

What to Expect From Your Delaware Counsel

Posted on March 07, 2013
Authored by Edward M. McNally This article was originally published in the Delaware Business Court Insider | March 6, 2013 Recently, the Delaware Court of Chancery has set out what it expects from Delaware lawyers serving as co-counsel in litigation controlled by non-Delaware attorneys...

Court Of Chancery Applies McWane Doctrine

Posted on February 28, 2013
In re Diamond Foods Inc. Derivative Litigation, C.A. 7657-CS (February 28, 2013) Under the McWane doctrine, a Delaware court will dismiss a case if another proceeding filed elsewhere is more advanced and will provide complete relief for any valid claim...

Court Of Chancery Explains The Gentile Doctrine

Posted on February 28, 2013
In re Nine Systems Corporation Shareholders Litigation, C.A. 3940-VCN (February 28, 2013) When is a claim that stockholders were wrongly diluted by the issuance of stock a derivative claim and not a direct claim? Under the Gentile rule, such a claim is derivative unless the dilution was done to benefit a controlling stockholder of a control group...

Court Of Chancery Explains What Is Commercially Reasonable

Posted on February 28, 2013
Edgewater Growth Capital Partners LP v. H.I.G. Capital Inc., C.A. 3601-CS (February 28, 2013) When a secured creditor forecloses on its line, the resulting sale must be "commercially reasonable." What does that mean exactly? This decision provides guidance to answer that question...

Court Of Chancery Explains Deal Protection Limits

Posted on February 25, 2013
In re Bioclinica Inc. Shareholder Litigation, C.A. 8272-VCG (February 25, 2013) This is yet another example of the Court of Chancery explaining that the deal protection rules set by Omnicare have long since been modified by the Court. The correct analysis is not to just adopt some rigid formula but to instead carefully test the actual impact of the deal protection measures on the possibility some other bidder may appear...

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