Court Of Chancery Denies Post-Affirmance Request To Increase Fee Award
The Marilyn Abrams Living Trust v. Pope Investments LLC, C.A. No. 12829-VCL (Del. Ch. May 29, 2018)
When a party wins an attorneys’ fee award under the bad faith exception to the American Rule, and the final award is affirmed on appeal, may it also seek fees for successfully defending the appeal back in the trial court? May the same party seek to increase the original award back in the trial court when it inadvertently omitted some trial-court fees the first time around? More ›
ShareSupreme Court Adopts Rules To Determine If Contract Was Formed
Eagle Force Holdings LLC v. Campbell, No. 399, 2017 (Del. May 24, 2018)
When have the parties actually formed a contract? In this decision the Supreme Court adopts the Osborn decision as the analytical framework to determine if they manifested agreement, if the essential terms were adopted and so on.
ShareCourt Of Chancery Stresses Proper Procedure When Relying On A Contractual Safe Harbor In The MLP Context
In Re Energy Transfer Equity, L.P. Unitholder Litigation, C.A. No. 12197-VCG (Del. Ch. May 17, 2018)
Conflicted transactions are commonplace in the master limited partnership (MLP) context. The entity’s operating agreement usually authorizes conflicted transactions that are “fair and reasonable” to the entity, or some similar phrase. The same agreements often provide one or more safe harbors capable of creating a presumption of fairness and reasonableness, such as using a conflicts committee process. This decision teaches, among other things, that if managers want to take advantage of such a safe harbor, proper process matters. If, for example, a conflicts committee is not properly formed, its approval will not insulate the transaction from judicial review nor avoid potential liability for the conflicted managers. Technicalities matter and it is best to start all over again if a flaw is identified rather than trying to rewrite history.
ShareSelf-Dealing Conduct Supporting Fiduciary-Duty Claims Was Covered by Contractual Duties Imposed in the LLC Agreement
The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements. The act permits parties to eliminate common-law fiduciary duties, and replace them with contractual duties that are often more limited in scope than default common-law fiduciary duties. While parties may not eliminate the implied covenant of good faith and fair dealing in an operating agreement, the implied covenant only operates to imply terms essential to fill gaps necessary to meet the reasonable expectations of the parties as reflected in the express terms of the operating agreement. More ›
Delaware Super Lawyers® 2018 Recognizes 10 Morris James Attorneys
Delaware Super Lawyers® magazine has recognized five Morris James partners as top legal counsel in Delaware and five "Rising Stars®" attorneys. "Rising Stars®” is a recognition for lawyers who are 40 or under, or who have been practicing for 10 years or less.
Super Lawyers® selects outstanding lawyers from more than 70 practice areas throughout the United States who have attained a high degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations, and peer evaluations. Only the top five percent of attorneys in each state are honored as Super Lawyers in this annual list, and the Rising Star selection is limited to only 2.5 percent of eligible attorneys, according to Super Lawyers’ website.
Morris James attorneys recognized on the 2018 Delaware Super Lawyers® list are:
Business Litigation:
P. Clarkson Collins
Jason C. Jowers
Lewis H. Lazarus
Edward M. McNally
Employment and Labor:
David H. Williams
Business Litigation Rising Stars:
Meghan A. Adams
Albert J. Carroll
Bryan Townsend
Patricia A. Winston
Medical Malpractice Rising Stars:
Joshua Meyeroff
Court of Chancery Defends Aruba Networks Appraisal Decision
This opinion arises out of the appraisal proceeding relating to Hewlett-Packard’s purchase of Aruba Networks. The case led to two notable opinions, so far. More ›
ShareCourt of Chancery Declines To Restrain Controller In Proposed Viacom-CBS Deal
Arising out of the highly-publicized dispute over the proposed transaction involving CBS and Viacom, each controlled by the Redstones, this decision is both front-page newsworthy and legally significant. CBS and Viacom used to be one entity but split. The Redstones retained voting control in each through a dual-class voting structure. Later, the Redstones began pushing to merge the entities once again and both entities formed special committees to consider the proposal. More ›
ShareDelaware Rejects Adequate Alternative Forum as an Independent Threshold Consideration for Forum Non Conveniens Applications
The Delaware Supreme Court recently issued an important decision clarifying Delaware’s forum non conveniens FNC law in Hupan v. Philip Morris USA, Consol. No. 526, 2016 (Del. 3/22/2018). Delaware FNC law has long permitted defendants otherwise subject to jurisdiction to seek dismissal of an action if defending it in Delaware would result in an “overwhelming hardship.” In Hupan, the court declined the plaintiffs invitation to adopt the rule followed by the federal courts and a majority of state courts, which requires the court to determine first, as a threshold consideration, that an available alternative forum exists. Instead, the court ruled that the availability of an alternative forum should be considered as part of the FNC analysis, but not as outcome determinative if such a forum is lacking. Although the court’s ruling allows for the possibility of an FNC dismissal even when the plaintiff lacks an alternative forum, the decision affords Delaware control over the use of its limited judicial resources and protection of its citizens from overwhelming hardship when the disputes and litigants have no meaningful contact with Delaware. More ›
Court Of Chancery Applies LLC Contractual Fiduciary Duty
MHS Capital LLC v. Goggin, C.A. No. 2017-0449-SG (May 10, 2018)
Alternative entity agreements may eliminate common law fiduciary duties and often do, supplanting them with contractual fiduciary duties. These frequently include an obligation to act “in good faith” or “in the best interests of the company,” broadly or in certain circumstances. Thus, even with fiduciary duty exculpation clauses in LLC agreements, managers may still find themselves exposed to a member’s allegations that they failed to satisfy their standard of conduct, as this decision illustrates. This decision also is interesting for its discussion of the potential impact of bankruptcy court sale orders on the Court of Chancery’s ability to enter equitable relief.
ShareCourt Of Chancery Upholds Exclusive Remedy Clause
PR Acquisitions LLC v. Midland Funding LLC, C.A. 2017-0465-TMR (April 30, 2018)
This is an important decision because it teaches two important lessons. First, when an asset sale agreement contains explicit requirements on how to give notice of a claim on an escrow account, those requirements must be followed or the claim will be waived. Second, absent fraud, a contractual provision will be enforced that provides that the exclusive remedy for a buyer is a claim on an escrow fund. Thus, for example, a separate breach of contract or negligent representation claim will be dismissed.
ShareCourt Of Chancery Denies Garner Exception Absent A Fiduciary Duty
Morris v. Spectra Energy Partners (DE) GP, LP C.A. 12110-VCG (May 7, 2018)
The famous Garner case permits inspection of otherwise privileged communications when its strict criteria are satisfied. But as this decision decides for the first time in Delaware, Garner does not apply when there is no fiduciary relationship between the party seeking discovery and the party claiming the privilege. Here the LLP agreement waived any fiduciary duties. Thus, Garner did not apply and discovery was denied.
ShareChambers USA: America's Leading Lawyers for Business Recognizes 14 Morris James Lawyers and Issues 5 Firm Practice Rankings in the 2018 Edition
Fourteen Morris James partners have been named leaders in their respective fields by Chambers USA, and two additional partners were named “recognized practitioners” in Delaware for Corporate/M&A: Alternative Entities. Morris James also received five practice recognitions.
Recognitions:
Chancery**
Clarkson Collins Jr.
Lewis H. Lazarus
Edward M. McNally
Bankruptcy/Restructuring**
Carl N. Kunz III
Stephen M. Miller
Corporate/M&A: Alternative Entities
Ross Antonacci*
Lewis Ledyard*
Real Estate**
John M. Bloxom IV
Real Estate & Zoning/Land Use
Kimberly Hoffman
Labor & Employment**
James H. McMackin III
David H. Williams
Intellectual Property**
Kenneth Dorsney
Richard K. Herrmann
Mary B. Matterer
* Recognized Practitioner
** Recognized Practice Areas
Chancery Court Nullifies Cancellation of Certificate of Formation of Delaware LLCs
Parties who form Delaware limited liability companies to organize their business affairs do so to structure their relationships contractually. This enables them to organize the governance and economic rights in a manner tailored to the enterprise they are establishing. They do so secure in the knowledge that the Delaware Limited Liability Company Act expressly provides that it is the policy of the Delaware act “to give maximum effect to the principle of freedom of contract and to the enforcement of limited liability company agreements.” If the parties ever have a dispute over their internal affairs, then a Delaware court will apply well-settled principles of contract interpretation to resolve it. The recent decision of Capone v. LDH Management Holdings, C.A. No. 11687-VCG (Del. Ch. Apr. 25, 2018), illustrates the court’s application of contract law principles to determine that two Delaware LLCs’ affairs were not wound up in compliance with the Delaware LLC Act resulting in the nullification of prior-filed certificates of cancellation. More ›
Ryan Keating Contributes to Bloomberg Law on Delaware Data Breach Compliance
Ryan T. Keating was quoted in the Bloomberg Law article, "Delaware Ramps Up Data Breach Compliance Mandates," regarding the impact of the new statute.
"The most significant change in the new statute, which updates the state’s 2005 data breach notification law, is that companies are required to “implement and maintain reasonable procedures and practices” to prevent data breaches, Ryan Keating, a member of Wilmington, Del.-based Morris James LLP’s data privacy and information governance group, told Bloomberg Law.
The amended statute does not offer guidance on what constitutes “reasonable” security, so companies developing security programs “would be wise to consider security standards published by NIST and other organizations,” Keating said, referring to the Commerce Department’s National Institute of Standards and Technology."
To view the full article, click here.
ShareCourt of Chancery Explains What Is A Proper Claim Reserve When Dissolving
Capone v. LDH Management Holdings LLC, C.A. No. 11687-VCG (April 25, 2018)
Under the LLC Act, as with the DGCL, an entity planning to dissolve and distribute its assets is required to set aside some reserve of assets to pay all known claims. Failure to set aside sufficient assets may result in revocation of the entity’s certificate of cancellation, thereby reviving the entity, as happened in this case. This decision explains when claims are “known” by the entity (i.e., the entity has actual knowledge of the claims) and how the entity may value those claims for purposes of retaining sufficient assets to potentially satisfy them. Importantly, the reserve need not match all potential damages dollar-for-dollar. The value of claims may be discounted based on their lack of merit, for example.
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