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 Explains Good Faith In Extending Time Limit To Accept Merger Consideration

Posted on January 19, 2010
Amirsaleh v. Board of Trade of the City of New York, C.A. 2822-CC ( January 19, 2010) A recent trend is to offer 2 types of consideration in connection with a merger and to permit the stockholders to pick which they prefer, such as stock or cash. Of course, the time to pick must be limited as a practical matter...

Court Of Chancery Sets Fee For "Cox Communications" Case

Posted on January 15, 2010
Brinckerhoff v. Texas Eastern Products Pipeline Co. LLC., C.A. 2427-VCL (January 15, 2010) In the famous Cox Communications case, the Court was critical of attorneys who settle fast after getting a modest and usually expected price increase in a merger and then ask for a big attorneys fee...

Supreme Court Upholds Denial Of fees

Posted on January 14, 2010
Alaska Electrical Pension Fund v. Brown, C.A. 240, 2009 (January 14, 2010) This decision upholds the unremarkable proposition that a class member whose attorneys do not contribute to an increase in merger consideration do not deserve a fee award. The case is interesting because it reflects an unusual clash among plaintiffs' attorneys over who did what to get the price increased and a company's successful defeat of a fee petition.

Court Of Chancery Affirms Business Judgment Rule Applies In Bet The Company Case

Posted on January 11, 2010
In re The Dow Chemical Company Derivative Litigation, C.A. 4319-CC (January 11, 2010) In an era when "too big to fail" seems to be an accepted reason to do the extraordinary, in this case the plainitffs tried to argue that a 'bet-the-company" deal requires a board to be right or be held for the consequences...

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Court Of Chancery Permits Limits On Advancement In Bylaws

Posted on January 08, 2010
Xu Hong Bin v. Heckmann Corporation, C.A. 4802-CC ( January 8, 2010) There is a dilemma over the broad rights to advancement of legal fees given the sometimes very large amounts demanded. This decision holds that some limits on advancement rights may be placed in the bylaws, even when advancement is provided for in the certificate of incorporation...

Court Of Chancery Retreats From Efficient Market Theory

Posted on January 05, 2010
In re Sunbelt Beverage Corp. Shareholder Litigation, C.A. 16089-CC (January 5, 2010) This is an interesting appraisal case for at least 2 reasons. First, it illustrates what not to do in getting a fairness opinion. A rush job with no intent to reach a fair result is doomed to be rejected...

Court of Chancery Holds Accountant Liable for Insider Trading

Posted on December 29, 2009
Deloitte LLP v. Flanagan, C.A. 4125-VCN (December 29, 2009) This decision holds a partner in an accounting firm liable for trading on the nonpublic information that he received in connection with his work at his firm. The Court upheld several theories of liability in what appears to be a case of first impression in Delaware...

Court of Chancery Imposes Severe Sanctions for Refusal to Arbitrate

Posted on December 24, 2009
Aveta Inc. v. Bengoa, C.A. 3598-VCL (December 24, 2009) After the entry of an order compelling arbitration, the defendant delayed the arbitration and even sought to re-litigate the underlying suit compelling arbitration. The Court was not impressed and found the defendant in contempt, imposing severe sanctions.

Court of Chancery Explains When Receiver Appointed

Posted on December 23, 2009
In re Texas Eastern Overseas, Inc., C.A. 4326-VCN (December 23, 2009) When it is "reasonably likely" that a corporation has some assets, the Court will appoint a receiver even if the corporation has been dissolved for 15 years.

Court of Chancery Sets New Ground Rules for Merger Litigation

Posted on December 22, 2009
NACCO Industries Inc. v Applica Incorporated, C.A. 2541-VCL (December 22, 2009) In this major opinion, the Court of Chancery has established new remedies for the breach of a merger agreement. The Court held that a jilted merger partner may recover for the "expectancy damages" it incurred when the other party to a merger agreement breached that agreement to take a better deal from a competing suitor...

Court of Chancery Explains Disclosure Rules

Posted on December 18, 2009
In re 3Com Shareholders Litigation, C.A. 5067-CC (December 18, 2009) This decision explains that in litigating a disclosure claim it is important to relate the disclosures at issue to past decisions determining when a particular type of disclosure was actionable...

Court of Chancery Declines to Upset Unusual Arbitration Ruling

Posted on December 10, 2009
Zurich America Insurance Company v. St. Paul Surplus Lines Inc., C.A. 4095-VCP (December 10, 2009) In this case, the Court of Chancery declined to upset an arbitrator's decision and explained the limits on the Court's review of arbitration awards...

Court of Chancery Awards Fees Based on Improved Nonmonetary Terms of Offer

Posted on December 10, 2009
Off v. Ross, C.A. 3468-VCP (December, 10, 2009) In this unusual decision, the Court of Chancery awarded attorney fees after having previously declined to do so in a November 26, 2008 decision in the same case. The prior decision had been decided because of pending litigation that the Court did not want to affect by a premature approval of a settlement in this case...

Court of Chancery Explains Sanctions for eDiscovery Abuse

Posted on December 09, 2009
TR Investors LLC v. Genger, C.A. 3994-VCS (December 9, 2009) This is the most important recent decision on the Court's handling of discovery of emails and other e-documents. For spoliation, the Court imposed four forms of sanction: (1) it increased the burden of proof to a clear and convincing standard for the offending party to prove his case, (2) it held his testimony must be corroborated by other evidence to meet that burden, (3) it denied any claim of attorney-client privilege to certain documents, and (4) it imposed attorney fees for the sanction motion work...

Court of Chancery Limits When a Stockholder May Claim Appraisal

Posted on December 08, 2009
DiRienzo v. Steel Partners Holdings L.P., C.A. 4506-CC (December 08, 2009) While it is well known that appraisal rights are limited to stockholders of record, sometimes stockholders do not really understand what it means to be "of record." They think if their name is on a brokerage statement, they are a "stockholder of record...

Court of Chancery Reviews Advancement Law on Counterclaims

Posted on December 08, 2009
Paolino v. Mace Security International Inc., C.A. 4462-VCL (December 8, 2009) In this decision the Court examines when a corporate officer is entitled to have his fees advanced in defending a counterclaim against him. The opinion does so in the context of a full explanation of the Cochran...

Court of Chancery Summarizes Privilege Law

Posted on December 04, 2009
Cephalon Inc. v. John Hopkins University, C.A. 3505-VCP (December 4, 2009) This is a short, but excellent summary of the law of attorney/client privilege. It also is an example of how the Court conducts an in camera review of documents to decide privilege questions.

Expert Preparation Fees Permitted

Posted on December 03, 2009
Reid v. Johnston, C.A. 08C-01-025-JRS (December 3, 2009) In this case of first impression, the Court held that a party seeking to depose an opponent's expert must pay for the expert's preparation time. However, to prevent abuse, the Court limited the fees to a time period equal to the length of the actual deposition...

Court of Chancery Explains Beneficial Ownership

Posted on December 01, 2009
Mangano v. Pericor Therapeutics Inc., C.A. 3777-VCN (December 1, 2009) This decision illustrates another loop hole in a stockholder agreement designed to restrict voting rights. Briefly, the agreement provided that an otherwise controlling stockholder would place his stock in a voting trust that would then vote his stock as did the other stockholders...

Court of Chancery Extends Jurisdiction to Parent Entity

Posted on December 01, 2009
Vichi v. Koninklijke Philips Electronics N.V., C.A. 2578-VCP (December 1, 2009) This decision provides a full review of the basis for jurisdiction over foreign entities by the Court of Chancery. This includes a discussion of the limits of the conspiracy theory of jurisdiction...

Court of Chancery Explains Limitations for Receiver Litigation

Posted on November 30, 2009
In the Matter of Texas Eastern Overseas Inc., C.A. 4326-VCN (November 30, 2009) This decision answers the question of whether it is possible to have a receiver appointed for a dissolved Delaware corporation more than 3 years after it is dissolved. Section 278 of the Delaware General Corporation Law provides for a 3 year statute of limitations for litigation against a dissolved Delaware corporation...

Court of Chancery Explains Anti-Reliance Clause

Posted on November 13, 2009
Airborne Health, Inc. v. Squid Soap, LP, C.A. 4410-VCL (November 13, 2009) In this decision, the Court explains that an anti-reliance clause is different from an integration clause. The anti-reliance clause bars claims of reliance on extra contractual promises and must be very specific in doing so...

Court of Chancery Holds Arbitrator Decides Limitations Defense

Posted on November 13, 2009
Lefkowitz v. HWF Holdings LLC, C.A. 4381-VCP (November 11, 2009) The Delaware Arbitration Act has a unique provision that permits the Court of Chancery to enjoin an arbitration when the claim asserted is barred by a statute of limitations...

Court of Chancery Expands Dissolution Remedy

Posted on November 12, 2009
Lola Cars International Limited v. Krohn Racing LLC, C.A. 4479-VCN (November, 12, 2009) The Delaware Limited Liability Company Act permits the Court of Chancery to dissolve an LLC when it is not "reasonably practicable to carry on the business" of the LLC...

Court of Chancery Explains Duty of Good Faith and Fair Dealing

Posted on November 09, 2009
Amirsaleh v. Board of Trade of The City of New York, Inc., C.A.2822-CC (November 9, 2009) The law of good faith and fair dealing in contracts is a 'judicial tool used to imply terms in a contract that protect the reasonable expectations of the parties...

Court of Chancery Demonstrates its Understanding of Modern Discovery

Posted on October 31, 2009
eBay Domestic Holdings, Inc. v. Newmark, C.A. 3705-CC (October 29, 2009) Modern discovery is often subject to problems, particularly with electronic "documents." As a result, some courts have imposed harsh sanctions for a party's failures to follow all the requirements...

Court of Chancery Resolves How to Treat Preemption Issue

Posted on October 28, 2009
Petroplast Petrofisa Plasticos S.A. v. Ameron International Corp., C.A. 4304-CC (October 28, 2009) When does the Uniform Trade Secrets Act preempt claims arising out of the misuse of documents based on other legal theories such as conversion? While not answering that question definitively, this decision does go a long way to clarifying how to decide that issue at the pleading stage...

District Court Finds Late Fee is Not Liquidated Damages

Posted on October 20, 2009
Leeseberg v. Converted Organics Inc., C.A. No. 08-926-GMS (D. Del. Oct. 7, 2009). Applying Delaware law, the district court concluded that a late fee provision was not a liquidated damages clause and dismissed the defendant's motion to dismiss the plaintiff's claim for actual damages...

District Court Rejects Recommendation that Complaint Is Not Adequately Specific

Posted on October 20, 2009
Collins & Aikman Corp. v. Stockman, C.A. No. 07-265-SLR/LPS (D. Del. Sept. 30, 2009). Upon review of the Report and Recommendation issued by Magistrate Judge Leonard P. Stark, and the objections thereto, the district court rejected Judge Stark's recommendation that the complaint did not contain adequately specific allegations that the defendants knew or should have known that the company's financial statements were false in connection with a Rule 10b-5 claim...

Court of Chancery Explains McWane Exceptions

Posted on October 15, 2009
Choice Hotels International Inc. v. Columbus-Hunt Park DR BNK Investors LLC, C.A. 4353-VCP (October 15, 2009) Delaware courts frequently must decide if a case filed in Delaware should be stayed in favor of another action filed elsewhere. While we wonder why anyone would want to leave Delaware, it happens...

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