Posts in Directors

Court Of Chancery Permits Interlocutory Appeal On Poison Pill Contract Issues

Unisuper, Ltd. v. New Corporation, C.A. No. 1699-N (Del. Ch. Jan. 20, 2006). Opinion and order granting interlocutory appeal on two contract issues, after court dismissed corporate allegations of fraud, negligent misrepresentation and fiduciary duty breach. More › Share

Partial Summary Judgment Denied by Court Of Chancery On "Entire Fairness" And Disclosure Grounds

In re Tele-Communications Inc. Shareholders Litig., C.A. No. 16470, 2005 WL 3547674 (Del. Ch. Dec. 21, 2005), opinion revised and superseded by No. CIV. A. 16470, 2005 WL 3642727 (Del. Ch. Dec. 21, 2005), (revised Jan. 10, 2006)(Westlaw citation not available). This summary judgment action originates from a Consolidated Amended Complaint that alleged nondisclosure of material information <and a lack of fairness of the impugned merger transaction. More › Share

Court Refuses to Dismiss Suit to Invalidate Corporation's Extension of Poison Pill

Unisuper v. News Corp., C.A. No. 1699-N, 2005 WL 3529317 (Del. Ch. Dec. 20, 2005). In the context of converting from an Australian corporation to a Delaware corporation, News Corp.'s board adopted a policy that if a shareholder rights plan was adopted following reincorporation, the plan would have a one-year sunset clause unless shareholder approval was obtained for an extension. The policy also provided that if shareholder approval was not obtained, the company would not adopt a successor shareholder rights plan having substantially the same terms and conditions. Several weeks later, News Corp.'s board adopted a poison pill in response to a specific third-party takeover threat. One year later, the board extended the poison pill without a shareholder vote, in contravention of its prior policy. More › Share

Court of Chancery Partially Grants Motion For Summary Judgment Based Upon Plaintiffs' Lack Of Standing To Bring Derivative Claims As Result Of Merger

Gentile v. Rossette, C.A. No. 20213-NC, 2005 WL 2810683 (Del. Ch. Oct. 20, 2005). Plaintiffs, former shareholders of SinglePoint Financial, Inc. which merged into a subsidiary of Cofiniti, Inc., alleged that two former directors of SinglePoint breached their fiduciary duties in connection with the issuance of a large number of shares to one of the defendants and the merger. Defendants moved for summary judgment. More › Share

Entire Fairness Applied to Third-party Merger Transaction Where Controlling Shareholder Acquired Minority Stake in Resulting Company

In re LNR Propert Corp. Shareholders Litigation, C.A. No. 674-N, 2005 WL 3418631 (Del. Ch. Nov. 4, 2005, rev'd Dec. 14, 2005). Former shareholders filed fiduciary class action in connection with a cash-out merger, naming corporation and former directors as defendants. The complaint alleged that the corporation's controlling shareholder negotiated to sell the company to a third-party investment firm in all-cash deal. The complaint further alleged that, as part of the transaction, the controlling shareholder and other members of company management agreed to invest approximately $184 million to acquire a 25% equity stake in the surviving entity. Defendants moved to dismiss for failure to state a claim. More › Share

Court of Chancery Grants Summary Judgment In Favor Of Defendants Alleged To Have Breached Their Fiduciary Duties By Approving Asset Sale Likely To Result In Zero Value To Equity Owners

Blackmore Partners, L.P. v. Link Energy LLC, C.A. No. 454-N, 2005 WL 2709639 (Del. Ch. Oct. 14, 2005). Plaintiff Blackmore Partners L.P. instituted cause of action against Defendant Link Energy LLC and its directors, alleging breaches of fiduciary duty in connection with the sale of Link's assets for a price likely to leave zero value to Link's equity investors. Defendants moved for summary judgment. More › Share

Court of Chancery Grants Plaintiff's Motion To Amend Derivative Complaint Against Director-Defendants For Insider Trading

Zimmerman v. Braddock, C.A. No. 18473-NC, 2005 WL 2266566 (Del. Ch. Sept. 8, 2005). Plaintiff, a shareholder of priceline.com, Inc., moved for leave to amend his derivative complaint against directors of Priceline based upon three defendants' alleged insider trading and misappropriation of confidential information. Defendants argued amendment would be futile. More › Share

Court of Chancery Holds Series B Director Has Immediate Right To Sit On Board

FGC Holdings Ltd. v. Teltronics, Inc., C.A. No. 883-N, 2005 WL 2334357 (Del. Ch. Sept. 14, 2005). Plaintiff FGC Holdings Limited, owner of Series B Preferred Convertible Stock in Defendant Teltronics, Inc. sought declaratory judgment that its Series B Director designee had an immediate right to sit on Teltronics' board of directors. More › Share

Superior Court Prevents AT&T From Voluntarily Dismissing the Majority of Defendants

AT&T Wireless Services, Inc. v. Federal Ins. Co., 2005 WL 2155695 (Del. Super. Ct. Aug. 18, 2005). The Plaintiff filed a notice of partial dismissal in an attempt to dismiss certain defendants. The defendants who were purportedly dismissed moved to quash the notice of dismissal. The court found that one defendant insurer could be dismissed because the entire action was being voluntarily dismissed. However, the court granted the motion to quash as to the other defendant because the dismissal only eliminated certain claims as opposed to the entire action. Plaintiff also sought leave of the court to dismiss a second group of defendants pursuant to Rule 41(a)(2). The court denied this motion. More › Share

Court of Chancery Denies Motion to Dismiss Complaint Where Board Materially Misled Shareholders About Search For New CEO

Shamrock Holdings, et al. v. The Walt Disney Co., et al., C.A. No. 1330-N, 2005 WL 1377490 (Del. Ch. June 6, 2005) Plaintiff dissident shareholders seek to void the result of a corporate election of directors, to compel the company to make full and fair disclosure of the CEO selection process, and (following such disclosure) compel another election of directors. Defendants filed a motion to dismiss Plaintiffs' complaint. The Court of Chancery denied the Motion. More › Share

Motion for Summary Judgment Granted Where Shareholders Ratified Internal Recapitalization

Rosser v. New Valley Corporation, et al., C.A. No. 17272-N, 2005 WL 1364624 (Del. Ch. May 27, 2005) Defendants filed a motion for summary judgment where Plaintiff alleged proposed internal recapitalization favored director shareholders. Plaintiff challenged the adequacy of the fairness opinion, the disclosures to shareholders and the sufficiency of the Proxy Statement because it failed to disclose separate valuations of New Valley's various assets and lines of business The Court of Chancery granted the Defendants' motion for summary judgment. More › Share

Court of Chancery Found Written Consent To Be Valid to Appoint Directors

Raphael F. Nevins v. George Bryan, et al., C.A. No. 19975-NC, 885 A.2d 233(Del. Ch. May 17, 2005) This was an action under 8 Del. C. § 225 to determine the proper directors and members of the Center for the Advancement of Distance Education in Rural America ("CADERA" or the "Corporation"). The court found that the appointment of the Director Defendants was proper and adequate. More › Share

Court of Chancery Dismisses Stockholders' Claims Because Claims were Derivative and Demand was Not Excused

In re J.P. Morgan Chase & Co. S'holder Litig., 2005 WL 1076069 (Del. Ch. April 29, 2005), aff'd, 2006 WL 585606 (Del. Mar. 8, 2006). J.P. Morgan Chase & Co. ("JPMC") and Bank One agreed to a business combination that was expected to create the second largest financial institution in the country. JMPC paid a premium over the market share price for Bank One, effectively making JPMC the acquirer and the Bank One the target. After the merger was completed, the stockholders of the acquirer sued its directors, alleging breaches of fiduciary duty with regard to the acquisition. Their claims stemmed from the allegation that the directors paid too much for the acquired bank. The defendants moved to dismiss the complaint on the basis that the claims were derivative, not direct, and that demand was not excused. The court granted defendants motion to dismiss. More › Share

Court of Chancery Finds Change of Control Payments are Reasonable if a Majority of a Board of Directors Ceased to be "Existing Directors"

California Public Employees' Retirement System v. Coulter, 2005 WL 1074354 (Del. Ch. April 21, 2005). Defendant Lone Star Steakhouse & Saloon, Inc. agreed to make change of control payments to certain employees if a majority of its board of directors ceased to be "Existing Directors." "Existing Directors" were those directors in office at the time of the change of control agreements and those new directors who were approved by Existing Directors. The views of new directors who were not approved as Existing Directors would not be considered in determining whether subsequent new directors would be considered Existing Directors. The question is whether such a provision contravenes the teachings of Carmody v. Toll Brothers, Inc., 723 A.2d 1180 (Del. Ch.1998), which concluded that directors may not be granted distinctive voting powers unless they are authorized by the certificate of incorporation, something Lone Star's certificate of incorporation does not do. More ›

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Superior Court Grants Corporation's Commercial Liability Insurer's Motion for Summary Judgment Based on Automobile Exclusion

Scottsdale Indem. Co. v. Lloyd, 04C-04-024 THG, 2005 WL 516852 (Del. Super. Ct. Mar. 4, 2005). A corporation's commercial liability insurer petitioned the court for a determination as to whether the policies automobile exclusion prevented coverage for damages arising from an accident involving one of the corporation's officers. The insurer moved for summary judgment, and the Superior Court found that the automobile exclusion did apply. More › Share