Posts from 2011

Court Of Chancery Clarifies Majority Shareholder Coercion

In Re John Q. Hammons Hotels Inc. Shareholder Litigation, C.A. 758-CC (January 14, 2011)

When a controlling shareholder  has the power to veto any proposed transaction, it is sometimes claimed that his support for a particular deal has forced the other shareholders to accept that deal or get nothing.  This decision rejects such a claim and holds that the controlling shareholder's veto power in itself is not coercion that the other shareholders may complain about later.

This opinion is also an excellent summary of the exceptions to the entire fairness rule of the Kahn case and is worth reading for that reason  as well.

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Court Of Chancery Outlines Remedies For Documentation Mistakes

Great-West Investors LP v. Thomas H. Lee Partners LP , C.A. 5508-VCN (January 14, 2011)

Sometimes a contract cannot have been intended to mean what is says. This decision is an example where the contract read literally would require 1 party's compensation to double every year forever. The opinion contains a good overview of the remedies available in such a situation.

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Court Of Chancery Vacated Arbitration Award That Violates Law

Donegal Mutual Ins. Co. v. Progressive Northern Ins. Co., C.A. 5049-CC (January 11, 2011)

Arbitration between insurance companies is different.  To begin with, the arbitrators are expected more than most to follow the statutory scheme they are supposed to enforce.  Here, when the arbitrator made a clear mistake of law, the Court vacated the award.  Whether it would do so in a less clear cut case involving other sorts of arbitration claims remains to be seen.

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