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 Holds Creditors Lack Standing

Posted on November 03, 2010
CML V, LLC v. Bax, C.A. 5373-VCL (November 3, 2010) Creditors of a Delaware corporation have standing to sue derivatively when the corporation is insolvent. However, this decision holds that creditors of an LLC [and presumably an LLP] lack standing to sue derivatively...

Court Of Chancery Interprets LLP Exculpation Clause

Posted on October 29, 2010
In re Inergy L.P. Unitholder Litigation ,C.A. 5816-VCP (October 29, 2010) Delaware has consistently recognized that an LLP agreement may define the measure of the duties owed to limited partners by the general partner and those who control the GP...

Court of Chancery Interprets Conflict of Interest Provision of LLC Agreement

Posted on October 29, 2010
In re Atlas Energy Resources, LLC Unitholder Litigation, C.A. No. 4589-VCN (October 28, 2010) This case is another example of the care practitioners must take in drafting LLC agreements. In this decision, Vice Chancellor Noble applied the Kahn v. Lynch entire fairness standard of review to a merger between a publicly traded LLC and its controlling unitholder...

Court Of Chancery Awards Large Fees In Intangible Benefit CAse

Posted on October 28, 2010
San Antonio Fire & Police Pension Fund v. Bradbury, C.A. 4446-VCN (October 28, 2010) For all the occasional griping the plaintiffs' bar does over how it is sometimes treated in the Court of Chancery, this is a good example that a large fee award may be justly earned...

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Court Of Chancery Explains Effect Of Fiduciary Duty Waiver

Posted on October 11, 2010
Lonergan v. EPE Holdings LLC, C.A. 5856-VCL (October 11, 2010) Delaware law permits an LLC or an LLP agreement to eliminate fiduciary duties of managers or members. In addition, it is common in such agreements to provide for a "Special Approval " committee to permit self-dealing transactions by management...

Court Of Chancery Approves Move Of Annual Meeting

Posted on October 08, 2010
Airgas Inc . v. Air Products and Chemicals Inc., C.A. 5817-CC (October 8, 2010) In this decision, the Court approved a bylaw change that moved the stockholders' meeting forward by several months. The practical effect of that change was that it permitted the party trying to take over the Board to accelerate that process when otherwise the staggered board involved may have been in office longer...

Court Of Chancery Clarifies Termination Fee Calculation

Posted on October 05, 2010
In re Cogent Inc. Shareholder Litigation, C.A. 5780-VCP (October 5, 2010) A termination fee must be reasonable. That is well known. But how to calculate the fee to test its reasonableness is sometimes misunderstood. This decision explains how to do so...

Supreme Court Clarifies Unocal/Moran Relationship

Posted on October 04, 2010
Versata Enterprises Inc v. Selectica Inc. , C.A. 193, 2010 (October 4, 2010) This is the most important clarification of Delaware law under the Unocal and Moran decisions in several years and is worth a close study. The Supreme Court upheld the Court of Chancery decision that a 5% poison pill was valid under the Unocal tests and not preclusive under Moran despite the presence of a staggered board.

Court Of Chancery Orders LLC Dissolved

Posted on October 01, 2010
Vila v. BVWEBTIES LLC , C.A. 4308-VCS (October 1, 2010) This decision is a variation on the issue of when should a LLC be dissolved when the managers/ members are deadlocked. Merely because 1 of the managers is able to keep the business functioning at some level is not sufficient to avoid dissolution when its basic purpose is not being fulfilled.

Court Of Chancery Denies Arbitration Of Post Merger Dispute

Posted on September 29, 2010
Avnet Inc. v H.I.G. Source, Inc., C.A. 5266-VCP (September 29, 2010) In this definitive review of when post merger arbitration is required, the Court held that it would determine the issue of arbitrability, not the arbitrator. While affected by the gross delay in seeking arbitration, the decision is noteworthy more for its careful analysis of the case law dealing with such merger agreements and the types of disputes they submit to arbitration.

Court Of Chancery Enforces Stockholder Representative Agreement

Posted on September 20, 2010
Aveta Inc. v. Bengoa, C.A. 5074-VCL (September 20, 2010) In this continuation of a long saga, the Court held that when a stockholder representative is designated to act for the stockholders in calculating a post merger adjustment, then the stockholders are stuck with what their representative does...

Delaware Supreme Court's Determination That Record Does Not Permit Interlocutory Review of Court of Chancery's CNX Gas Decision Leaves for Another Day Questions

Posted on September 17, 2010
In re CNX Gas Corp. Shareholders Litig., Consol. C.A. No. 5377-VCL (July 5, 2010) The standard of review applicable to two-step unilateral freeze-out transactions remains uncertain following the Delaware Supreme Court's decision[1] to deny interlocutory review of the Court of Chancery's decision[2] to refrain from enjoining a majority shareholder's tender offer even though the Court of Chancery had certified the Injunction Decision for interlocutory review[3]...

Delaware Supreme Court's Determination That Record Does Not Permit Interlocutory Review of Court of Chancery's CNX Gas Decision Leaves for Another Day Questions Concerning Standard of Review in Two-Step Unilateral Freeze-out Transactions

Court Of Chancery Upholds Duty To Not Solicit Competing Offer

Posted on September 17, 2010
Wavedivision Holdings LLC v. Millennium Digital Media Systems LLC, C.A. 2993-VCS (September 17, 2010) There are many decisions pointing out that a board of directors may have a duty to accept a higher offer even after it has signed a merger agreement...

Court Of Chancery Declines To Interfere In Arbitration

Posted on September 15, 2010
SOC-SMG, Inc. v. Day & Zimmermann, Inc. , C.A. 5375-VCS (September 15, 2010) It should come as no surprise that the Court of Chancery will not interfere in an on-going arbitration proceeding by issuing discovery orders or disqualifying counsel.

Joint Tortfeasors and Fiduciary Duty Claims

Posted on September 13, 2010
It is becoming increasingly clear that Court of Chancery judges believe the Delaware Uniform Contribution Among Tortfeasors Act ("DUCATA") applies to breach of fiduciary duty claims. E.g., Hampshire Group Ltd. v. Kuttner, 2010 WL 2739995, at *54 (Del...

Court Of Chancery Calculates Interest On A Judgment

Posted on September 10, 2010
Gentile v. Rossette, C.A. 20213-VCN (September 10, 2010) A frequently asked question is how does the Court of Chancery determine the interest due on a judgment when the Court is not bound by the legal rate imposed by other courts. This decision explains how the Court searches for a fair rate.

Court Of Chancery Explains Standard Of Review

Posted on September 09, 2010
eBay Domestic Holdings Inc. v. Newmark, C.A. 3705-CC (September 9, 2010) This decision is well worth reading for its careful explanation of what standard of review the Court will apply when director action adversely affects minority stockholders...

Court Of Chancery Explains Revlon Analysis

Posted on September 08, 2010
In re Dollar Thrifty Shareholder Litigation, C.A. 5458-VCS (September 8, 2010) Everyone knows that the Revlon decision says that a board has to seek the best deal when the company is for sale. This decision clearly explains how the Court will review the board's actions...

Court Of Chancery Sanctions Bad Privilege Log

Posted on September 07, 2010
This post was written by Edward M. McNally and Katherine J. Neikirk. Klig v. Deloitte LLP, C.A. 4993-VCL (September 7, 2010) This is the latest in a series of Court of Chancery decisions enforcing the discovery rules. In this case, plaintiff challenged his disassociation from the defendant...

Court Of Chancery Denies Reciever for LLC

Posted on September 02, 2010
Ross Holding and Management Company v Advance Realty Group LLC. , C.A. 4133-VCN (September 2, 2010) This decision affirms the power of the Court of Chancery under its equitable jurisprudence to appoint a receiver pendente lite for an LLC, even when the LLC agreement does not so provide...

Court Of Chancery Approves "Bonus" Fee In Indemnification Claim

Posted on August 27, 2010
O'Brien v. IAC/Interactive Corp. , C.A. 3892-VCP (August 27, 2010) This is an interesting decision because, perhaps for the first time, the Court explicitly orders payment of a contingent fee in an indemnification case. The fee in question involved a bonus for success in the underlying arbitration proceedings...

Supreme Court Clarifies Standing Rule In Double Derivative Actions

Posted on August 27, 2010
Lambrecht v. O'Neal, Del Supr., C.A. 135, 2010 (August 27, 2010) This decision sets out the standing requirement for a double derivative suit following a merger. In a stock-for stock merger, stockholders of the acquired company lose their stock in that company in return for stock in the new parent company who, in turn, becomes the sole stockholder of the company acquired in the deal...

Court Of Chancery Addresses "Blank Check Company" Agreement

Posted on August 23, 2010
Ruffalo v. TransTech Service Partners Inc., C.A. 5039-VCP (August 23, 2010) This decision addresses the rights of investors in a so-called "blank check company" where a pool of money is raised to invest in some to-be determined business. Not surprisingly, the investors' rights are determined by what the certificate of incorporation provides...

Court Of Chancery Clarifies Rules On Class Action For Fraud Claims

Posted on August 20, 2010
Dubroff v. Wren Holdings LLC, C.A. 3940-VCN (August 20, 2010) This decision clarifies when a class action may be brought arising out of a claim based on the duty of disclosure. Briefly, when there was no request for the stockholders to vote [such as when they just receive notice of a completed corporate action], then a plaintiff must prove "reliance, loss causation and damages...

Court Of Chancery Finds Claim For Violation Of Section 141 Is Direct

Posted on August 16, 2010
Grayson v. Imagination Station Inc., C.A. 5051-CC (August 16, 2010) Determining if a claim is direct or derivative is often difficult. Here the Court explains that a claim asserting the directors are acting outside their authority in violation of the relationship set out in Section 141 of the Corporation Code is direct...

Court Of Chancery Awards Fees For Contempt

Posted on August 13, 2010
Aveta Inc. v. Bengoa, C.A. 3598-VCL (August 13, 2010) This is an interesting decision for its explanation of the criteria the Court will consider in reviewing a fee application. The Court held that when the fee award is under the terms of a contract, then the primary criteria is to make the applicant whole for the fees it paid...

Court Of Chancery Explains Pill Limits

Posted on August 12, 2010
Yucaipa American Alliance Fund II, L.P. v. Riggio, C.A. 5465-VCS (August 12, 2010) In this important decision, the Court of Chancery explains the limits on what may be included in a poison pill. Briefly, the pill must not preclude a successful proxy contest...

Court Of Chancery Reiterates Duty Of Attorneys

Posted on August 09, 2010
Phillips v. Firehouse Gallery LLC, C.A. 3644-VCL (August 9, 2010) To its credit, the Court of Chancery has recently reminded attorneys of their obligations to cooperate in litigation. Here it levied a $5,000 fee to be paid personally by a lawyer who failed to carry out that responsibility.

Benchmark Litigation 2011 Names 5 Morris James Partners Among Top "Local Litigation Stars"

Posted on August 04, 2010
Morris James LLP is pleased to announce that five of its partners have been recognized among the top Delaware litigation attorneys in Benchmark Litigation 2011 - The Guide to America's Leading Litigation Firms and Attorneys. Morris James' Litigation Stars Rich Galperin Clark Collins Richard Herrmann Lewis Lazarus Edward McNally Benchmark Litigation focuses exclusively on litigation lawyers and firms in the United States...

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