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 Upholds Jurisdiction Over Nonresident Partner

Posted on October 09, 2009
Total Holdings USA Inc. v. Curran Composites, Inc., C.A. 4494-VCS (October 9, 2009). In a case of first impression, the Court of Chancery has upheld its jurisdiction over a nonresident partner in a Delaware partnership. The current version of the Delaware Uniform Partnership Act authorizes jurisdiction over nonresident partners for disputes arising out of the internal affairs of the partnership...

Court of Chancery Upholds Forum for Trade Secret Litigation

Posted on October 07, 2009
LeCroy Corporation v. Hallberg, C.A. 4328-VCP (October 7, 2009). This decision is another example of why Delaware is more frequently chosen to litigate trade secret or unfair competition disputes. For, while the defendant had no ties to Delaware other than its incorporation here, the Court declined to dismiss the litigation on venue grounds...

Vice Chancellor Strine Discusses Stockholders' Role in Corporate Troubles

Posted on October 06, 2009
In this New York Times piece, http://dealbook.blogs.nytimes.com/2009/10/05/dealbook-dialogue-leo-strine/, Vice Chancellor Strine discusses the role of stockholders, particularly institutional investors, in recent corporate woes.

Court of Chancery Explains Lynch, Again

Posted on October 02, 2009
In re John Q. Hammons Hotels Inc. Shareholder Litigation. C.A. 758-CC (October 2, 2009). The application of the Lynch doctrine to a merger is an often discussed topic. This decision does a great job of summarizing and explaining the rationale for applying the entire fairness test to a merger that has the majority stockholder on both sides of the deal...

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Court of Chancery Appoints Lead Counsel

Posted on October 02, 2009
Dutiel v. Tween Brands Inc., C.A. 4743-CC (October 2, 2009). The Court has recently explained the criteria to determine who should be appointed lead counsel in a class action. In this decision it added a new twist, giving advantage to counsel that has shown it gets along best with co-counsel in the case...

Court of Chancery Enforces Non-Compete Agreement

Posted on September 30, 2009
Concord Steel Inc. v. Wilmington Steel Processing Co. Inc., C.A. 3369-VCP ( September 30, 2009). This is another in a line of decisions enforcing agreements not to compete. What is striking about this case is the apparent utter disbelief of the defendants that the agreement would actually be enforced...

Court of Chancery Explains the "Parnex Exception"

Posted on September 30, 2009
In re NYMEX Shareholders Litigation, C.A. 3621-VCN (September 30, 2009). When is a claim that the merger was unfair a derivative and not a direct claim? This is a perplexing question under Delaware law. Generally, a claim that the merger price is too low because management manipulated the process to drive down value is derivative, because the claim asserts it is the company that was hurt by the actions taken...

Court of Chancery Rejects Attack on Board Discretion to Retain Directors

Posted on September 28, 2009
City of Westland Police & Fire Retirement System v. Axcelis Technologies, Inc., C.A. 4473-VCN (September 28, 2009). This is the first Delaware decision to deal with the so-called Pfizer policy on when directors may be retained despite a shareholder vote on dissatisfaction...

Conference Board Issues Report on Executive Compensation

Posted on September 23, 2009
On September 21, 2009, the Conference Board Task Force on Executive Compensation issued its recommendations on executive compensation. Recommendations include the use of clawback policies and the avoidance of controversial pay practices such as excessive golden parachutes and gross-ups...

Court of Chancery Enjoins Violation of No Compete

Posted on September 21, 2009
Zrii LLC v. Wellness Acquisition Group, Inc., C.A. 4374-VCP (September 21, 2009). This is an interesting case because of the limitations on the remedy imposed for violating a no competition agreement. The decision illustrates the rule that no matter how wrong the conduct, the remedy of an injunction will be limited to stopping the competition for the period provided for in the agreement...

Court of Chancery Enjoins Violation of Non-Compete

Posted on September 21, 2009
Zrii LLC v. Wellness Acquisition Group, Inc., C.A. 4374-VCP (September 21, 2009). This is an interesting case because of the limitations on the remedy imposed for violating a non-competition agreement. The decision illustrates the rule that no matter how wrong the conduct, the remedy of an injunction will be limited to stopping the competition for the period provided for in the agreement...

Court of Chancery Upholds Claw Back Agreement

Posted on September 16, 2009
eBay Domestic Inc. v. Holdings Inc., C.A. 7705-CC (September 16, 2009). This decision upholds the right to claw back privileged documents inadvertently produced in discovery, at least when there is an agreement permitting claw back rights.

District Court Applies Stone v. Ritter in Rule 23.1 Case

Posted on September 11, 2009
King v. Baldino, C.A. No. 08-54-GMS-MPT (D. Del. Aug. 26, 2009). This memorandum order issued by Magistrate Mary Pat Thynge is an example of the continued judicial reluctance to impose oversight responsibility on boards of directors, where the plaintiff fails to plead that the board was on notice, through 'red flags,' of corporate misconduct...

Court of Chancery Holds That Statutory Right to Fair Value May Be Arbitrable

Posted on September 10, 2009
Julian v. Julian, C.A. 4137-VCP (September 9, 2009). For a number of reasons, a plaintiff may seek to litigate his claim in the Court of Chancery rather than trust his case to arbitration. This decision illustrates how hard it is to avoid arbitration when the arbitration clause in the parties' contract is broadly drafted...

Court of Chancery Tackles Contested Advancement Issue

Posted on September 10, 2009
Martinez v. Regions Financial Corporation, C.A. 4128-VCP (September 9, 2009). There is a recurring problem of what is the Court to do when the parties fight over the reasonableness of fees requested in an advancement case. As the fee requests are recurring, the Court has made it clear it does not want to be put in the role of monitoring play in the sandbox every month...

Court of Chancery Explains Beneficial Ownership Proof Requirement

Posted on August 31, 2009
Smith v Horizon Lines, Inc., C.A. 4573-CC (August 31, 2009) When the statute governing demands for inspection rights was changed to permit a demand by a beneficial owner, it also required proof of beneficial ownership. This decision explains what form that proof must take...

Court of Chancery Approves Settlement in Countrywide Financial Case

Posted on August 27, 2009
Vice Chancellor Noble has approved a settlement in the class action arising from the merger of Countrywide Financial Corporation and Bank of America. The opinion approving the settlement can be viewed here.

Court of Chancery Explains Scope of Permitted Release

Posted on August 24, 2009
In Re Countrywide Corporation Shareholders Litigation, C.A. 3464-VCN (August 24, 2009) This is another in a series of decisions explaining the limits of a release in settlement of a class action. The opinion particularly focuses on when a common law fraud or federal securities law claim may be released.

Court of Chancery Addresses Affect of Typical Merger Agreement Provision

Posted on August 21, 2009
Case Financial Inc. v. Alden, C.A. 1184-VCP (August 21, 2009) This decision is of interest because it explains the affect of a common merger agreement provision that is often misunderstood. It is common for such an agreement to say that representations expire at a certain date, such as the merger date...

Court of Chancery Addresses Effect of Typical Merger Agreement Provision

Posted on August 21, 2009
Case Financial Inc. v. Alden, C.A. 1184-VCP (August 21, 2009) This decision is of interest because it explains the effect of a common merger agreement provision that is often misunderstood. It is common for such an agreement to say that representations expire at a certain date, such as the merger date...

Laster Nominated for Vice Chancellor

Posted on August 20, 2009
J. Travis Laster, a highly-regarded Delaware corporate litigator and founding partner of the firm Abrams & Laster, has been nominated by Governor Jack Markell to fill Vice Chancellor Lamb's seat on the Court of Chancery. An article from the Delaware New Journal announcing the nomination can be viewed here.

Court of Chancery Explains Limits of Review of Arbitration Award

Posted on August 18, 2009
World-Win Marketing Inc. v. Ganley Management Co., C.A. 3905-CC (August 18, 2009). The extent to which a court will review an arbitration award is a tricky question. The court may do so when the arbitrator exceeds his authority. But, what does that really mean? This decision explains this vague standard of review...

Three Nominated for Vice Chancellor

Posted on August 14, 2009
Delaware's Judicial Nominating Commission, a panel tasked with screening candidates for judgeships in Delaware, has forwarded three candidates to Governor Jack Markell for his consideration as potential replacements for Vice Chancellor Lamb on the Court of Chancery...

Court of Chancery Extends Time To Seek Indemnification

Posted on August 14, 2009
Wesley T. O'Brien v. IAC/Interactive Corp., C.A. 3892-VCP (August 14, 2009). In this decision, the Court dealt with an odd set of facts that are not likely to be repeated. However, the opinion is noteworthy because the Court declined to bar a suit for indemnification even when the complaint had been filed more than three years after the right to indemnification arose...

Delaware State Bar Association Submits Comments on SEC Proxy Access Proposal

Posted on August 10, 2009
In what may be the first time that the Delaware State Bar Association (DSBA) has ever submitted comments upon a proposed SEC rule, the DSBA has recently submitted comments upon proposed Rule 14a-11, the SEC's proposed proxy access rule...

Summary of Amendments to Delaware Alternative Entity Statutes

Posted on August 06, 2009
The Harvard Law School Forum on Corporate Governance and Financial Regulation has posted a useful summary of the recent amendments to Delaware's alternative entity statutes, drafted by Delaware practitioner Louis G. Hering. The post can be viewed here.

ABA Corporate Governance Committee Issues Report on Corporate Roles and Responsibilities

Posted on August 06, 2009
In response to the ongoing financial crisis, the Corporate Governance Committee of the ABA Section of Business Law formed a Task Force on the Delineation of Governance Roles and Responsibilities in the summer of 2008. The Task Force included Lawrence Hammermesh, the Ruby Vale Professor of Corporate and Business Law at Widener University here in Delaware...

Court of Chancery Upholds Advancement Right in Employment Contract

Posted on August 06, 2009
Martinez v. Regions Financial Corporation, C.A. 4128-VCP (August 8, 2009). This decision deals with an unusual right to have attorney fees advanced to an employee who is suing to enforce her interpretation of her employment agreement. The Court upheld the right to advancement based on the broad language used that made it clear that even if the employee lost her suit, she was entitled to attorney fees...

Court of Chancery Awards Fees in Small Class Action

Posted on July 31, 2009
In re National City Corp. Shareholders Litigation, C.A. 4123-CC (July 31, 2009). This is an example of the Court of Chancery, even absent an objection from the corporation involved, carefully examining a fee request. The Court cut the request, because the benefit conferred was not significant...

Court of Chancery Finds Plaintiff Caused Transaction to be Withdrawn

Posted on July 30, 2009
Kuo v. Genius Products Inc., C.A. 3329-CC (July 30, 2009). It is settled law that, when a corporation abandons a proposed corporate transaction after a suit is filed, to avoid payment of fees, the corporation must prove the litigation was not the cause of the transaction's termination...

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