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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 157 posts from 2020.
Chancery Balances the Obligation to Defend an Arbitral Award from Collateral Attack with the Obligation to Defer to a Broad Agreement to Arbitrate
Gulf LNC Energy, LLC v. Eni USA Gas Marketing LLC, C.A. No. 2019-0460-AGB (Del. Ch. Dec. 30, 2019).
Plaintiff (“Gulf”) invested over $1 billion to construct a facility designed to unload imported liquefied natural gas (“LNG”) in Pascagoula, Mississippi. Defendant (“Eni”) entered a “Terminal Use Agreement” (“TUA”) with Gulf to use the facility over a twenty-year period. When domestic production of LNG through shale boomed, importation became economically unfeasible and Eni did not use the facility other than one initial shipment. The TUA contained a provision requiring that any types of disputes under the agreement be arbitrated. In an initial arbitration, the panel determined that the purposes of the twenty-year TUA were “substantially frustrated,” terminated the agreement as of 2016, and awarded Gulf nearly $500 million in compensation for the benefits conferred upon Eni by Gulf’s partial performance. The arbitrators explicitly did not address Eni’s claims that Gulf had breached the TUA, finding the claim “academic” and deserving of no further consideration in light of the agreement’s termination. More ›
ShareChancery Modifies Advancement Award, Finds Amended Claim Challenging Only Post-Separation Conduct No Longer Triggered Advancement Obligations
Carr v. Global Payment Inc., C.A. No. 2018-0565-SG (Del. Ch. Dec. 11, 2019).
Under Delaware law, an order requiring a company to advance attorneys’ fees and expenses may be modified if the claims that triggered the advancement obligation are amended to no longer do so. In this case, a company successfully amended its claims against a former director and officer to eliminate certain advancement obligations. More ›
ShareDelaware Superior Court CCLD Clarifies When a Plaintiff is on Inquiry Notice to Bring a Claim for Limitations Period Purposes
Even in circumstances where a statutory limitations period can be tolled, tolling typically will cease once a plaintiff may be charged with inquiry notice of its potential claims. In this dispute brought against the biopharmaceutical company AstraZeneca arising out of database subscription arrangement, the Complex Commercial Litigation Division of the Delaware Superior Court held that defendant AstraZeneca was entitled to summary judgment because the plaintiff Ocimum Biosolutions had inquiry notice of its claims for breach of contract and misappropriation of trade secrets more than three years before commencing suit. More ›
ShareChancery Provides Further Clarity Regarding Material Adverse Effect Clauses in Merger Agreements
Material adverse effect clauses provide a form of buy-side protection in merger agreements. These often are complex provisions permitting the buyer to avoid closing under the right circumstances, usually involving an actual or reasonably expected serious business deterioration. Channel Medsystems represents the latest decision from the Delaware courts interpreting and applying a material adverse effect clause. Here, the Court of Chancery held that a buyer’s termination of a merger agreement was invalid because the fraudulent conduct of an officer of the seller, which rendered certain contractual representations materially false, did not have, nor was reasonably expected at the time of termination to have, a material adverse effect on the seller. More ›
ShareChancery Addresses Discovery and Privilege Implications of Oracle Special Litigation Committee’s Decision to Defer to Stockholder-Plaintiff’s Prosecution of Derivative Claims
In re Oracle Corp. Deriv. Litig., C.A. No. 2017-0337-SG (Del. Ch. Dec. 4, 2019).
In this decision, the Delaware Court of Chancery considered the implications of a decision by a special litigation committee of Oracle Corporation to cede control of derivative claims to a stockholder-plaintiff – including whether that decision required the production of Oracle’s privileged documents that were provided to the committee and its counsel. More ›
ShareChancery Holds Plaintiffs’ Emails with Counsel on Defendants’ Server Are Privileged Due to Application of Argentine Law
Lynch v. Gonzalez, C.A. No. 2019-0356-MTZ (Del. Ch. Nov. 18, 2019).
The plaintiff brought suit seeking confirmation that it validly acquired from defendants a majority ownership interest and the concomitant right to manage Grupo Belleville Holdings, LLC (the “Company”), a Delaware limited liability company. The discovery motion at-issue addresses the confidentiality of emails between Plaintiff and his counsel – complicated by the fact that they are stored by a server owned and operated by the defendants. To explain, the defendants had provided the Argentina-based Company and its employees, including the plaintiff, with email addresses for the purpose of executing their job duties. The email addresses and the server on which the emails were stored were not owned by the Company, however; rather, it was known to all involved that they belonged to a separate company of the Defendants. The emails at issue were between plaintiff Lynch and two in-house Company attorneys who also provided legal advice to him on personal matters, distinct from advice they provided him in his capacity as the Company’s manager. In discovery, Lynch sought to vindicate the privilege. He moved to compel the defendants to turn over the emails, but the defendants refused. More ›
ShareChancery Enforces Delaware Forum Selection Clause and Examines the Limited Circumstances Where a Foreign Nation May Divest Delaware Courts of Jurisdiction
AlixPartners, LLP v. Mori, C.A. No. 2019-0392- KSJM (Del. Ch. Nov. 26, 2019).
In AlixPartners, the Court of Chancery confirmed its jurisdiction to adjudicate disputes relating to the internal affairs of a Delaware limited liability partnership and explained the limited circumstances in which foreign law may divest the Court of subject matter jurisdiction. The suit arose when an employer, the global business advisory firm AlixPartners, which operated as a limited liability partnership, sued an employee, who also held partnership interests, for breaches of the relevant LLP Agreement, Equity Agreement, and Employment Agreement. Pursuant to the LLP and Equity Agreements, the employee had received equity in two partnerships formed under Delaware law by AlixPartners. More ›
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