Posts from 2018

Superior Court CCLD explains “Wrongful” Conduct in Tortious Interference Claim

KT4 Partners LLC v. Palantir Technologies Inc., C.A. No. 17C-12-212 EMD CCLD (August 22, 2018)

A claim for tortious interference with a contractual relationship must include an allegation that the conduct complained about was itself wrongful. This decision explains what is such “wrongful” conduct and concludes that the use of confidential information to contact a party to a contract to dissuade it from going forward is such wrongful conduct.

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Jason C. Jowers Named Fellow of Litigation Counsel of America

Jason C. Jowers has been selected as a Fellow of the Litigation Counsel of America. Mr. Jowers is the Vice Chair of the Corporate and Commercial Litigation Group at Morris James.  A 2000 graduate of the Rhodes College, Jason received his Juris Doctor degree from The George Washington University School of Law in 2003.  Mr. Jowers' practice focuses on corporate, alternative entity, and commercial litigation. He primarily represents members and managers of LLCs, officers and directors of corporations, and companies in high-stakes litigation in the Delaware Court of Chancery, Delaware Superior Court, Delaware Supreme Court, and United States District Court for the District of Delaware. Additionally, Jason handles arbitrations governed by the AAA Commercial Arbitration Rules, including cases governed by the Procedures for Large, Complex Commercial Disputes. He has led litigation teams in disputes involving mergers and acquisitions, corporate and LLC control issues, judicial dissolution, and complex commercial arrangements. More ›

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Court of Chancery Addresses Discovery Obligations Regarding Text Messages

In re Appraisal of Kate Spade Company, C.A. No. 2017-0714-AGB (Del. Ch. June 21, 2018)

The duty to collect and produce non-privileged relevant information extends beyond email to text messages and other forms of electronic communications. Standard practice in Delaware involves at least inquiring of custodians the extent to which they used text messages to engage in substantive communications on potentially relevant topics and to collect text message data when they answer affirmatively, absent an agreement to contrary between the parties. This bench ruling addresses that practice and reflects the Chancellor’s view that text messages often may be a critical source of information.

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Chancery Awards Fair Value of Member Interest to Expelled Member of Del. LLC

Delaware statutes enabling formation of unincorporated entities like limited liability companies (LLCs) and limited partnerships afford freedom for owners to structure business relationships as they see fit. This freedom carries with it the responsibility  to accurately and completely describe the parties’ rights and duties. It also means that when disputes arise among owners or managers, a Delaware court will resolve the dispute through application of principles of contract interpretation. Moreover, if the parties in their foundational agreement do not address an issue, the court will apply default rules under the applicable business entity statute. The recent case of Domain Associates LLC v. Shah, C.A. No. 12921-VCL (Aug. 13, 2018), well illustrates these principles—the court applied default rules under the Limited Liability Company Act to hold that an expelled member of a Delaware LLC was entitled to the fair value of his interest and not simply to the value of his capital account. More ›

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Court of Chancery Validates Cure of Defective Corporate Acts Affecting Herman Miller’s Acquisition of DWR

Charles Almond Trustee v. Glenhill Advisors LLC, C.A. No. 10477-CB (Del. Ch. Aug. 17, 2018)

Sections 204 and 205 of the DGCL permit corporations to cure and validate defective corporate acts under the right circumstances. This is another decision explaining when the Court will validate an attempted cure under Section 204. The opinion explains, among other things, that there is no set time limit to seek validation of a cure under Section 205. It further explains what sort of defective acts may be addressed in Section 205 proceedings. More ›

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Court of Chancery Enforces Agreement to Use Independent Auditor

Enterprise Holdings Inc. v. Rolen Stockholder Representative LLC, C.A. No. 2017-0422-AGB (Del. Ch. June 27, 2018)

Merger agreements sometimes provide for post-merger purchase price adjustments to be made by an independent accounting firm. This is another decision, in the form of a bench ruling, where the Court of Chancery readily enforces such an agreement, albeit with some guidance to the accountant on what issues are for the accountant to decide and what issues must remain for the Court.

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Delaware Superior Court Explains Impact Of European Data Rules On Forum Motion

Ethica Corporate Finance S.r.L. v. Dana Incorporated, C.A. No. N17C-10-145 EMD CCLD (August 16, 2018)

Under the Cryo-Maid decision, a forum non conveniens motion must consider the impact on a defendant forced to litigate in Delaware when discovery is needed in a foreign land.  Here the Court considered the impact of the recent amendments to the Italian Data Protection Code on discovery and found that it did not impose an undue hardship under the facts present in this case. This may become more important as those European laws on privacy protection start to be considered for their effect on litigation outside of the EU.

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Court of Chancery Explains Need for Adequate Pre-Trial Expert Disclosures

Project Boat Holdings LLC v. Bass Pro Group LLC, C.A. No. 12606-VCS (Del. Ch. Aug. 10, 2018)

Court rules require pre-trial disclosures regarding testifying experts and the subjects they will opine on. Adequate disclosure is a prerequisite to admissibility. Insufficient disclosure could result in the Court disallowing or striking expert trial testimony. This decision explains the type of disclosures that are sufficient and those that are deficient, granting in part and denying in part a motion to strike.

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Court of Chancery Reviews Post-Closing Payments

Fortis Advisors LLC v. Stora Enso AB, C.A. No. 12291-VCS (Del. Ch. Aug. 10, 2018)

Many merger agreements provide for additional payments after closing depending on the target’s performance. This decision examines certain language controlling the buyer’s obligations to achieve the post-closing milestones. The relevant language was subject to more than one reasonable construction, thus ambiguous, and extrinsic evidence would be necessary to resolve the dispute. Accordingly, the Court denied the buyer’s motion to dismiss.

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Court of Chancery Awards Fair Value to Forced-Out LLC Member

Domain Associates LLC v. Shah, C.A. No. 12921-VCL (Del. Ch. Aug. 13, 2018)

An LLC agreement may provide what payout a departing member receives for his or her interest.  It also may provide that a member may be forced to withdraw by his or her other members.  This decision addresses what should happen when an LLC agreement provides for a forced withdrawal but is silent on the issue of the payout.  Adopting the reasoning of a prior Delaware decision in the limited partnership context, the Court holds the forced-out member should receive the same sort of “fair value” awarded in stock appraisal cases.  This is another example of how rules of law or equity may fill in gaps in LLC agreements and why such agreements must be drafted carefully.

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Court of Chancery Explains Investment Bankers’ Discovery Obligations

Cumming v. Edens, C.A. No. 13007-VCS (Del. Ch. July 12, 2018)

This transcript ruling makes two important points about discovery obligations in the Court of Chancery.  First, blanket form objections to document requests amount to a waiver of otherwise valid objections. Objections to scope and burden and the like need to be spelled out specifically with supporting facts.  Second, investment bankers, even as third parties to a litigation, generally will not get far with objecting to requests on the basis of burden.  Given their role in many transactions, they are front and center, house a lot of critically relevant information, and have been paid well enough to cover the expenses associated with production.  In short, they are not your typical third party who may be given some more leeway when it comes to discovery burdens.

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Delaware Superior Court Upholds Recovery Of Insurance Defense Costs

Catlin Specialty Insurance Company v. CBL & Associates Properties Inc., C.A. No. N16C-07-166 PRW CCLD (August 9, 2018)

This is an important decision because it upholds the right of an insurance company to recover defense costs it advanced when it is later determined there was no insurance coverage for the underlying litigation. While the opinion applies Tennessee law, some parts of the opinion suggest that the Court would reach the same result if Delaware law applied. That is so even though the Court recognized that permitting such a recovery is the minority positon in the United States. The opinion is also useful for its explanation of how an insurer may preserve its right to recover those advances by making it clear that it is advancing the costs subject to its right to recover them later if a court decides there was no insurance  coverage.

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Best Lawyers® Recognizes 29 Morris James Attorneys in Thirty-two Practice Areas

Twenty nine Morris James attorneys in thirty-two practice areas were selected by their peers for inclusion in The Best Lawyers in America© 2019 edition. Additionally, three of those attorneys were named “Lawyer of the Year” for their respective practices, including David H. Williams for Education Law, Employment Law – Management, and Litigation – Labor and Employment, Richard Galperin for Healthcare Law, Medical Malpractice - Defendants, and Personal Injury Litigation – Defendants, and John M. Bloxom, IV for Real Estate. Congratulations to Kenneth L. Dorsney, Shannon S. Frazier, Kevin G. Healy, Eric J. Monzo, John H. Newcomer, Jr., K. Tyler O’Connell and Jill Spevack Di Sciullo for being recognized for the first time. More ›

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Federal District Court Explains Incorporation By Reference Rules

Askari v. Pharmacy Corporation of America, C.A. 16-1123-RGA (D. Del. August 8, 2018)

It is not always clear when two agreements are to be read as one. This is because incorporating one agreement into a second agreement may not be explicit. This decision sets out the principles under Delaware law that govern how to decide if two agreements should be read together, including that there must be an “explicit manifestation of intent” to incorporate one document into another.

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Federal District Court Dismisses Contradictory Claims

Hiller & Associates LLC v. Garden Fresh Restaurants LLC, C.A. 18-152-VAC-MPT (D. Del. August 9, 2018)

This is an interesting decision because it dismisses a counterclaim that is contradicted by the claimant’s answer to the complaint. Thus it goes beyond the normal rule that requires a factual pleading to be accepted as true when considering a motion to dismiss.

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