About This Blog
Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Subscribe to Blog
JDSupra RSS
Join us on LinkedIn
Follow us on TwitterTopics
Top Posts
- Chancery Grants Motion to Dismiss Breach of Fiduciary Duty Claims Against Officers in Controlling Stockholder Transaction Subject to Entire Fairness Review
- Chancery Addresses Acquirer’s Request For Joint Tortfeasor Settlement Credit
- Chancery Determines Certain Suits and Investigations Against Amazon Were Insufficient to Meet Credible Basis Standard to Inspect Corporate Books and Records
Top News
- February 19, 2021
- October 30, 2020
- April 1, 2024
Archives
Morris James Blogs
Showing 210 posts from 2015.
The Narrow Contours of the Implied Covenant of Good Faith
Delaware law implies a covenant of good faith and fair dealing into every contract. The Delaware Supreme Court's recent opinion in Nationwide Emerging Managers LLC v. NorthPointe Holdings LLC, No. 441, 2014 (Del. Supr., Mar. 18, 2015), makes clear, however, that the contours of the clause are quite narrow, particularly with respect to a negotiated written agreement between sophisticated parties. It may not be used by a party to obtain in court what it could not obtain at the bargaining table. More ›
ShareCourt Of Chancery Explains Effect Of Spin-Off
Miramar Police Officers' Retirement Plan v. Murdoch, C.A. No. 9860-CB (April 7, 2015) This is an interesting decision because it deals with what is the effect of a spin-off of corporate assets on existing contracts that apply to the parties' "transferees, successors and assigns." When a different line of business is spun-off, absent clear contrary language, the spun-off entity does not assume the obligations of its former parent under such contracts.
ShareGM Faces Constituency Director Conflict Issues
On Feb. 11, The Wall Street Journal reported that General Motors (GM) was evaluating a potential nominee to its board from four hedge funds, collectively holding more than 34 million of GM's shares. According to the report, the potential nominee's agreement with the funds included compensation in the form of a percentage of the funds' profits from their investment in GM. The potential nominee was seeking to join GM's board to urge GM to return more cash to its shareholders and boost its stock price. One of the funds backing the potential nominee stated that GM had too much cash on its balance sheet, and needed to return more of its capital to shareholders through dividends and share buybacks. More ›
ShareMorris James Launches Data Privacy and Information Governance Group
Morris James LLP has formed a Data Privacy and Information Governance Group. The Data Privacy and Information Governance Group is an interdisciplinary team of corporate and fiduciary duty attorneys, attorneys well-versed in electronic data storage and discovery, attorneys with bankruptcy and insurance-related backgrounds, and non-attorney IT staff knowledgeable about trends in data security and technology. Together, the group advises boards of directors and officers in assessing and managing risk and defending claims for alleged breach of fiduciary duty arising from data breaches. More ›
ShareCourt Of Chancery Issues Mother Of All In Pari Delicto Decisions
The Honorable Karen Weldin Stewart v. Wilmington Trust SP Services, Inc., C.A. 9306-VCP (March 26, 2015) This and the AIG decisions are the leading decisions on when the in pari delicto defense works. The Court carefully summarizes the 3 exceptions to when in pari delecto bars a recovery: (1) the adverse interest exception, (2) the fiduciary duty exception, and (3) the public policy exception such as in the case of the federal securities laws. Of these, the "greatest of all" is the fiduciary duty exception that even permits aiding and abetting clams to proceed.
ShareSuperior Court Upholds Multimillion Dollar Verdict
Professional Investigating & Consulting Agency, Inc. v. Hewlett-Packard Company Del Super. No. 12C-06-196 MMJ CCLD (March 23, 2015) This decision upholds a rare multimillion dollar jury verdict for interference with the plaintiff's business, including a $5,500,000 damage award for "humiliation" damages. The Court also awards attorney fees to the successful plaintiff. The opinion is an excellent review of when a jury verdict may be set aside by the Court.
ShareCourt Of Chancery Explains How Hard It Is To Appeal Arbitration Order
3850 & 3860 Colonial Blvd. LLC v. Griffin, C.A. 9575-VCN (March 30, 2015) This decision explains how hard it is to appeal an order staying litigation in favor of arbitration. Even when there are some good arguments over whether the dispute is subject to arbitration, the Supreme Court precedent strongly disfavors an interlocutory appeal.
ShareSupreme Court Explains Again The Limits Of The Fair Dealing Covenant
Nationwide Emerging Managers LLC v. Northpointe Holdings LLC, No. 441, 2014 (March 18,2015) This is yet another Supreme Court decision marking the bounds of the covenant of good faith and fair dealing. The covenant is not to be used to modify the terms of a contract, to add terms the parties chose to not include or to provide a remedy that the parties never intended would apply in the event of a breach. While Delaware courts try to reach a "fair" result, that will not warrant letting a party alter what it bargained for after the fact.
ShareCorpCast Episode 2: Advancement 101
We’re back with the second episode of CorpCast, Morris James LLP’s podcast discussing Delaware corporate and commercial law and practice. In “Advancement 101,” we discuss the fundamentals of advancement actions in Delaware’s Court of Chancery, distinguish advancement rights from indemnification rights, and provide frameworks for thinking about advancement both from the perspective of a director or officer seeking advancement and from the perspective of a company facing an advancement demand. We will also touch on some of the common practice pitfalls in this area of the law and consider several reasons why Delaware may be the best venue to bring an advancement action. More ›
ShareStating Proper Purpose Doesn't Guarantee Books-and-Records Entitlement
It is well settled that stockholders of Delaware companies generally have the right to inspect the company's books and records upon the showing of a proper purpose. However, as demonstrated in the Court of Chancery's decision in Fuchs Family Trust v. Parker Drilling, C.A. No. 9986-VCN (Del. Ch. Mar. 4, 2015), that right is not absolute. Even where a proper purpose exists, the demand is properly denied where the requested books and records would not advance that purpose. More ›
ShareCourt Of Chancery Explains Notice Required For Moot Claims
Swomley v. Schlecht, C.A. 9355-VCL (March 12. 2015) This decision explains what notice is required when a representative litigation is to be dismissed as moot and a fee paid to the plaintiff's attorneys. Notice should be given to the class or the other stockholders in the way and form spelled out in this case. Further, the case may be re-filed by another stockholder who has the right to claim it was not moot. No hearing is required before the case is dismissed after the notice is given.
ShareDelaware Supreme Court Leaves Open The Question Of Whether Breach Of Contract Is A Business Judgment
Friedman v. Khosrowshahi, No. 442,2014 (March 6, 2015) In this interesting order affirming a Chancery decision, the Supreme Court went out of its way to make a point. A stockholder suit alleging that the board breached a stock option plan may state a claim for breach of contract that does not necessarily involve a business judgment rule analysis but instead may involve a breach of the duty of loyalty. If so, then it may not be easily dismissed under a Rule 23.1 motion.
ShareCourt Of Chancery Interprets Forum Selection Clause
Wilmington Savings Fund Society, FSB v. Caesars Entertainment Corporation, C.A. 10004-VCG (March 18, 2015) This is an interesting decision because it holds that a forum selection clause must be "clear and unambiguous" before it will be held to provide an exclusive forum for all disputes. Clauses that just refer to specific types of disputes, such as contract disputes, will then not control where other disputes may be filed.
ShareCourt of Chancery Addresses Application of Fee-Shifting Bylaw
The Rites of Spring are upon us: budding flowers, warmer temperatures, and a Delaware court issuing an important decision just before the annual Tulane Corporate Law Institute begins. This year the honor of issuing that decision fell to Chancellor Bouchard who issued his opinion in Strougo v. Hollander, C.A. No. 9770-CB (Del. Ch.) on March 16, 2015. The opinion addressed plaintiff’s motion for partial judgment on the pleadings that a fee-shifting bylaw adopted after the challenged transaction did not apply to him. The Court found that the fee-shifting bylaw did not apply to the plaintiff in this case, and in reaching this conclusion, made some interesting comments that will undoubtedly further the debate over the proposed legislation to eliminate fee-shifting bylaws and regulate forum selection bylaws. More ›
ShareChancery Enjoins Board in Potential Stockholder Dilution Scheme
Directors and officers of struggling corporations seeking capital or startups willing to trade equity for cash should read the Delaware Court of Chancery's recent transcript ruling in Elite Horse Investments Ltd. v. T3 Motion, C.A. No. 10550-CB (Del. Ch. Jan. 23, 2015), carefully and consider it a cautionary tale. If control of a business can be purchased, sitting directors and officers should not be surprised when the new controlling stockholder or control group installs their own directors and replaces management. Moreover, directors and officers should think long and hard before attempting defensive measures aimed at protecting their positions or other entrenchment motives. As discussed below, the Court of Chancery will not hesitate in enjoining such conduct. More ›
Share
