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/day

Last Entry: March 29, 2011 at 12:53:19

Court Of Chancery Extends Revlon To Convertible Notes

Posted on April 29, 2010
Binks v. DSL.net Inc., C.A. 2823-VCN (April 29, 2010) In this unusual case filed by a pro se litigant, the Court extended Revlon duties to when a company issues convertible notes that will change control of the company upon conversion. This is consistent with past indications in other decisions.

Delaware Superior Court Creates Commercial Litigation Division

Posted on April 29, 2010
Delaware's Superior Court has joined the ranks of courts in other states by creating a "business court" for commercial disputes between companies. The new "court" is technically a division within the existing Delaware Superior Court and has major advantages for resolving business disputes...

Court Of Chancery Awards Big Damages In Stealing Business Case

Posted on April 23, 2010
Beard Research Inc. v Kates, C.A. 1316-VCP (April 23, 2010) This is an excellant primer on how to litigate a business tort case arising out of an employee's stealing all your confidential information and using it to lure away your customers to his new firm...

Court Of Chancery Upholds Forum Selection In England

Posted on April 23, 2010
Ashall Homes Limited v. ROK Entertainment Group Inc., C.A. 4643-VCS (April 23, 2010) This decision is interesting because it upholds a forum selection clause requiring litigation in England. How these parties could have not chosen Delaware seems unbeliveable...

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Court Of Chancery Rejects Market In Appraisal Determination

Posted on April 23, 2010
Global GT LP v. Golden Telecom Inc., C.A. 3698 (April 23, 2010) This is an interesting appraisal decision for 2 reasons. First, the Court declined to use the price set in the market as a strong indicator of value notwithstanding recent decisions in Delaware that had been inclined to do so...

Supreme Court Clarifies Vote Buying Rules

Posted on April 21, 2010
Crown EMAK Partners LLC v. Kurz, C.A. 64, 2010 (Del. April 21, 2010) This important decision focuses on the increasingly controversial issue of vote buying in stockholder elections. In general, vote buying occurs when a party acquires the right to vote stock it does not have legal title to or hold the beneficial interest in that stock...

Delaware Superior Court Awards Large Fee For Discovery Abuse

Posted on April 21, 2010
M&G Polymers USA LLC v. Carestream Health Inc., C.A. 07C-11-242 PLA (Del. Super., April 21, 2010) In this 193 page opinion, the Court imposed a large fee award for the failure to disclose important documents during discovery. The decision is a useful collection of authority on the parties' discovery obligations and the Court's powers to penalize offenders.

Supreme Court Clarifies Forum Non Conveniens Rules

Posted on April 20, 2010
Lisa, S.A. v. Mayorga, C.A. 410, 2009 (Del. April 20, 2010) This decision clarifies the effect of where an action is first filed. When the case is filed first in Delaware, a Delaware court may only dismiss it on the grounds the forum is inconvenient when the defendant can show it will be an "overwhelming hardship" to litigate it in Delaware...

Court Of Chancery Upholds Stockholder Representative Standing

Posted on April 15, 2010
Coughlan v. NXP B.V. , C.A. 5110-CC (April 15, 2010) When a payout in an M&A deal is dependent on post closing events, somehow the former stockholders must be represented if there are to be any adjustments. Appointment of a stockholder representative is often done for that purpose...

The Court of Chancery Reaffirms the Vitality of Claims Asserting Insider Trading as a Breach of the Fiduciary Duty of Loyalty

Posted on April 12, 2010
Pfeiffer v. Toll, C.A. 4140-VCL (March 3, 2010) Vice Chancellor Laster recently affirmed the continuing vitality of state law 'Brophy' claims for Delaware corporations injured by their fiduciaries' insider trading. In so ruling, the Court clarified the elements of a Brophy claim, explained why the claim is firmly grounded in the duty of loyalty applicable to Delaware fiduciaries and discussed why such claims complement and do not conflict with the federal securities law regime...

Supreme Court Divides Over When Fair Dealing Claim Exists

Posted on April 06, 2010
Nemec v. Shrader , C.A. 305, 2009 (April 4, 2010) In a rare split amongst the Justices, the Delaware Supreme Court has divided over when the duty of good faith and fair dealing applies. The majority opinion is an example of the views of Chief Justice Steele who is noted for his stance that a contract should be held to fix the parties' rights and there is little room to add to those rights under the so-called duty to act in good faith and with fair dealing...

Court Of Chancery Limits Remedy For Charter Breach

Posted on March 24, 2010
Fletcher International Inc. v. ION Geophysical Corp., C.A. 5109-VCP (March 24, 2010) When a provision in a certificate of incorporation is violated, the question that often arises is what is the remedy. Often the Court will enjoin the violation, but not always...

Court Of Chancery Rejects SLC Report

Posted on March 11, 2010
London v Tyrrell, C.A. 3321-CC (March 11, 2010) When should the recommendations of a SLC to not pursue a derivative suit be accepted? As this opinion points out, certainly not when the defendants appoint their relative to the SCL and those that are indebted to them...

Court Of Chancery Explains Rights Of Preferred Stock

Posted on March 08, 2010
LC Capital Master Fund, Ltd. v. James, C.A. 5214-VCS (March 8, 2010) Lately, there seems to be a lot of interest in the rights of preferred stock compared to the rights of common stock and how the board of directors should act when caught in the middle of their conflicting claims...

Court of Chancery Dumps Class Counsel

Posted on March 08, 2010
In re Revlon, Inc. Shareholders Litigation, Consol. C.A. No. 4578-VCL (March 16, 2010) Vice Chancellor Laster took the unusual step of removing and replacing co-lead counsel and Delaware liaison counsel in a proposed settlement of a class action challenging a proposed merger by a controlling stockholder and a subsequent exchange offer by the target company...

Court Of Chancery Upholds Nullification Claim

Posted on March 05, 2010
Thor Merritt Square LLC v. Bayview Malls LLC, C.A. 4480-VCP (March 5, 2010) On occasion, the members of an LLC try to end its life by filing a certificate of cancellation with the Delaware Secretary of State. This is done in the hope that it will provide a defense to suits over the LLC's obligations...

Court Of Chancery Applies Brophy To Insider Trading

Posted on March 03, 2010
Pfeiffer v. Toll, C.A. 4140-VCL (March 3, 2010) The by now ancient Brophy decision upheld a claim against insiders for trading on confidential corporate information. This decision affirms that Brophy is still good law in Delaware. That is no real surprise, given the Court's strict enforcement of the duty of loyalty...

Court Of Chancery Upholds NOL Pill

Posted on February 26, 2010
Selectica Inc. v. Versata Enterprises, Inc., C.A. 4241-VCN ( February 26, 2010) In a case with an unusual factual setting, the Court of Chancery has upheld a poison pill with a 5% trigger. The very low trigger is explained by the need to protect a NOL that might be adversely affected by the acquisition of 5% of a company's stock...

Court Of Chancery Discusses Scope Of Arbitration

Posted on February 25, 2010
RBC Capital Markets Corp. v. Thomas Weisel Partners LLC, C.A. 4709-VCN (February 25, 2010) Many decisions discuss when arbitration is required by an agreement. This one deals with the rarer problem of what claims may be presented to arbitrators in a matter that the parties concede must be arbitrated...

Court Of Chancery Interprets Exculpation Clause In LLC Agreement

Posted on February 24, 2010
Kelly v. Blum, C.A. 4516-VCP (February 24, 2010) It is well known that an LLC agreement may limit the right to sue for breaches of fiduciary duty. What is less well thought out is what language needs to be used to do so. This decision tells you what to say if you want to limit liability.

Court Of Chancery Explains How To Apply For Fees

Posted on February 24, 2010
Global Link Logistics Inc. v. Olympus Growth Fund III, L.P., C.A. 4444-VCP ( February 24, 2010) This decision explains what should be in a fee application to the Court of Chancery. Redacted bills, explainations of what the time was for and why it was spent are all required in a contested matter.

Court Of Chancery Explains Damage Calculations In Trade Secret Litigation

Posted on February 18, 2010
Agilent Technologies Inc. v. Kirkland, C.A. 3512-VCS ( February 18, 2010) Calculating damages in trade secret litigation is often difficult. Lost profits may overlap with unjust enrichment claims and the whole process may be affected by possible injuntive relief...

Court Of Chancery Denies Power To Eliminate Board Seats

Posted on February 09, 2010
Kurz v. Holbrook, C.A. 5019-VCL (February 9, 2010) This significant decision holds that you cannot eliminate a director by amending the bylaws to reduce the number of seats on the board of directors. Of course, this only came up in the odd context of a stockholder who could not vote for directors and hence could not vote to eliminate them as well...

Court Of Chancery Holds Old Guys Do Not Rule

Posted on February 05, 2010
Concord Steel Inc v. Wilmington Steel Processing Co. Inc., C.A. 3369-VCP (February 5, 2010) In this decision, the Court modestly reduced an attorney fee award because too much of the legal work was done by a senior partner when a lower cost associate could have been used...

Court of Chancery Now Open for Arbitration of Corporate and Commercial Business Disputes

Posted on February 04, 2010
The Delaware Court of Chancery ('Court of Chancery' or 'Court') has announced new rules for arbitration procedures of business disputes. This offers businesses another attractive option to resolve not only the corporate governance disputes traditionally associated with the Court of Chancery but also other commercial and business disputes...

Court Of Chancery Bars Late Statutory Contribution Claim

Posted on January 29, 2010
Global Link Logistics Inc. v. Olympus Growth Fund III, L.P., C.A. 4444-VCP (January 29, 2010) If you are a co-defendant in an arbitration case with a claim for contribution, you had better assert it in the arbitration proceedings. Otherwise, you may lose the right under the Joint Tortfeasors Act to make your co-defendant pay more than his pro rata share...

Court Of Chancery Explains Damages For Breach Of Non-compete Agreement

Posted on January 29, 2010
Great American Opportunities Inc. v Cherrydale Fundraising LLC., C.A. 3718-VCP (January 19, 2010) This decision is a landmark case on Delaware law on non-compete agreements with employees. It establishes so many new precedents that it is hard to briefly summarize...

Court Of Chancery Limits Confidentiality Agreements

Posted on January 27, 2010
New Radio Group LLC v. NRG Media LLC, C.A. 4951-VCL (January 27, 2010) Litigants frequently seek to keep their dirty linen secret in litigation by asking the court to seal the court's files to public inspection. Chancery Rule 5(g) deals with the limits on that confidentality order and this decision shows that litigants cannot ask the Court for more than 5(g) permits...

Court of Chancery Holds Jilted Suitor May Recover Damages Even After Target Pays Termination Fee and Expense Reimbursement

Posted on January 22, 2010
NACCO Industries Inc. v. Applica Incorporated, C.A. No. 2541-VCL (December 22, 2009) In this decision, the Court's newest Vice Chancellor, the Hon. J. Travis Laster, substantially denied a motion to dismiss a complaint filed by a jilted suitor who sought damages from the target and the winning bidder...

Court Of Chancery Explains How To Limit Fraud Claims Post Deal

Posted on January 22, 2010
Mitsubishi Power Systems Americas Inc. v. Babock & Brown Infrastructure Group US LLC, C.A. 4499-VCL (January 22, 2010) Deal attorneys try to limit the ability of a buyer to make post deal claims for misrepresentation. That is hard to do by contractual provisions that plainitffs are all too clever at avoiding and courts are often reluctant to enforce...

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