Albert Carroll on Shareholders

Chancery Addresses Books and Records Demand Under Section 220 by Papa John’s Founder

Schnatter v. Papa John’s Int’l, Inc., C.A. No. 2018-0542-AGB (Del. Ch. Jan. 15, 2019). As a general matter, under Section 220 of the DGCL, directors of a Delaware corporation enjoy the right to virtually unfettered access...more

1/21/2019 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Court of Chancery Addresses the Scope of Summary Control Disputes and Effectiveness of Written Consents

Brown v. Kellar, C.A. No. 2018-0687-MTZ (Del. Ch. Dec. 21, 2018) - Control disputes, like those under Section 225 of the DGCL, are summary, narrow proceedings limited to the issues regarding title to office. The Court of...more

12/31/2018 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Invalidates Federal Court Forum-Selection Provision for Securities Cases

Sciabacucchi v. Salzberg, C.A. No. 2017-0031-JTL (Del. Ch. Dec. 19, 2018) - Delaware law permits a Delaware corporation to include a forum-selection provision in its certificate of incorporation governing all “internal...more

12/21/2018 / Board of Directors , Breach of Duty , Fiduciary Duty , Forum Selection , Initial Public Offering (IPO) , Registration Statement , Securities Act of 1933 , Shareholders

Court of Chancery Declines to Expand Dual-Natured Direct and Derivative Claims Under Gentile

Klein v. H.I.G. Capital LLC, C.A. No. 2017-0862-AGB (Del. Ch. Dec. 19, 2018) - Under the Delaware Supreme Court’s Gentile decision, a claim may be dual-natured, meaning partially derivative on behalf of the corporation and...more

12/21/2018 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Addresses Overlapping Appraisal and Fiduciary Duty Action

In re Xura Stockholder Litigation, C.A. No. 12608-VCS (Del. Ch. Dec. 10, 2018) - Lately, the Delaware Supreme Court has given great weight to the deal price in appraisal cases. As a result, plaintiffs have put a greater...more

12/17/2018 / Board of Directors , Breach of Duty , Duty to Preserve , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Court of Chancery Addresses Fiduciary Insider Trading Claims Under Brophy in Fitbit Litigation

In re Fitbit Inc. Stockholder Derivative Litigation, C.A. No. 2017-0402-JRS (Del. Ch. Dec. 14, 2018) - Delaware law recognizes a claim for breach of fiduciary duty based on insider trading under the Brophy decision....more

12/17/2018 / Board of Directors , Breach of Duty , Fiduciary Duty , Fitbit , Insider Trading , Shareholders

Delaware Supreme Court Explains the Ab Initio Requirement of MFW

Flood v. Synutra Int’l, Inc., C.A. No. 101, 2018 (Del. Oct. 9, 2018) - Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), commonly referred to as MFW, a controller may gain the benefit of business judgment review...more

10/15/2018 / Business Judgment Rule , Controlling Stockholders , Entire Fairness Standard , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Delaware District Court Explains Tolling Based on Books and Records Inspection

Norman v. Elkin, C.A. No. 06-005-LPS (D. Del. Sept. 4, 2018) - Litigation seeking to inspect a corporation’s records under Section 220 of the DGCL might toll the statute of limitations for certain claims under the right...more

9/6/2018 / Books & Records , Breach of Contract , Breach of Duty , Damages , Fiduciary Duty , Section 220 Request , Shareholders

Court of Chancery Enforces Redemption Rights and Addresses the Potential Effect of a Merger on Previously-Exercised Put Rights

QC Holdings Inc. v. Allconnect Inc., C.A. No. 2017-0715-JTL (Del. Ch. Aug. 28, 2018) - This decision is necessary reading for drafters of redemption rights. It involves the interpretation of a redemption rights agreement...more

8/29/2018 / Board of Directors , Common Stock , Mergers , Preferred Shares , Shareholders , Stock Redemption

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....more

8/21/2018 / Breach of Duty , Controlling Stockholders , Entire Fairness Standard , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Court of Chancery Clarifies Nature of Dilution Claims in Charter-Liberty Broadband Equity Issuance and Allows Derivative Challenge...

Sciabacucchi v. Liberty Broadband Corporation, C.A. No. 11418-VCG (Del. Ch. July 26, 2018) - This is the second notable decision arising out of litigation involving Charter Communication’s equity issuance to its largest...more

8/1/2018 / Acquisitions , Charter Communications , Derivatives , Equity Securities , Shareholders

Delaware District Court Stays Twitter Derivative Case Pending Securities Action

In re Twitter Inc. Shareholder Derivative Litigation, C.A. No. 18-62-VAC-MPT (D. Del. July 23, 2018) - Several Court of Chancery decisions discuss the appropriateness of staying a derivative action pending a related...more

7/30/2018 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Securities Exchange Act , Shareholder Litigation , Shareholders

Court of Chancery Explains When Market and Deal Price Are Not Fair Value In Appraisals

Blueblade Capital Opportunities LLC v. Norcraft Cos. Inc., C.A. No. 11184-VCS (Del. Ch. July 27, 2018) - This is an important appraisal decision because it examines, post-Dell and DFC, when the market price and deal price...more

7/30/2018 / Appraisal , Fair Market Value , Fair Valuation , Merger Agreements , Mergers , Shareholders , Stocks

Court of Chancery Explains MFW Requirements

Olenik v. Lodzinski, C.A. No. 2017-0414-JRS (Del. Ch. July 20, 2018) - Transactions between a Delaware company and its controlling stockholder usually are subject to rigorous entire fairness review. But, under the MFW...more

7/23/2018 / Board of Directors , Breach of Duty , Controlling Stockholders , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Explains Burden Needed to Support Inspection for Suspected Wrongdoing

Barnes v. Sprouts Farmers Market Inc., C.A. No. 2017-0735-MTZ (Del. Ch. July 18, 2018) - An investor seeking books and records for the purpose of investigating wrongdoing or mismanagement must establish a “credible basis”...more

7/23/2018 / Books & Records , Breach of Duty , Fiduciary Duty , Mismanagement , Section 220 Request , Shareholder Litigation , Shareholders

Court of Chancery Denies Director Access to Records in the Redstone-CBS Corp. Dispute

In re CBS Corporation, C.A. No. 2018-0342-AGB (Del. Ch. July 13, 2018) - It is well settled that members of the board of directors are entitled to essentially unfettered access to the corporation’s records to carry out...more

7/17/2018 / Board of Directors , Common Stock , Fiduciary Duty , Shareholders

Court of Chancery Imposes Over $20 Million in Damages on Investment Fund and Its Manager

Basho Technologies Holdco B LLC v. Georgetown Basho Investors LLC, C.A. No. 11802-VCL (Del. Ch. July 6, 2018) - This notable decision issued by the Court of Chancery holds an investment fund and its manager liable for over...more

7/12/2018 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Requires Bad Faith Disclosure Violations for Demand Futility

Ellis v. Gonzalez, C.A. No. 2017-0342-SG (Del. Ch. July 10, 2018) - The pre-suit demand on the board requirement for derivative litigation usually is not excused solely by a sufficiently pled disclosure violation....more

7/11/2018 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Duty of Loyalty , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Court Of Chancery Explains When Claim Is Direct And Survives A Merger

In re Straight Path Communications Inc. Consolidated Stockholder Litigation, C.A. No. 2017-0486-SG (Del. Ch. June 25, 2018) - When a merger closes, stockholders of the acquired company generally lose standing to pursue...more

6/27/2018 / Breach of Duty , Business Judgment Rule , Controlling Stockholders , Entire Fairness Standard , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Court of Chancery Finds Breach of Fiduciary Duty By Director Selfishly Opposing Cure of Defective Corporate Acts

CertiSign Holding Inc. v. Kulikovsky / Kulikovsky v. CertiSign Holding Inc., C.A. No. 12055-VCS (Del. Ch. June 7, 2018) - When a corporation accidentally issues defective stock or takes some other defective corporate act,...more

6/12/2018 / Board of Directors , Breach of Duty , Controlling Stockholders , Duty of Loyalty , Fiduciary Duty , Shareholders

Court of Chancery Awards Fees Under the Corporate Benefit Doctrine in Director Qualifications Bylaw Dispute

Full Value Partners L.P. v. Swiss Helvetia Fund Inc., C.A. No. 2017-0303-AGB (Del. Ch. June 7, 2018) - A representative plaintiff who confers a non-monetary benefit on the represented class will be entitled to an award of...more

6/12/2018 / Attorney's Fees , Board of Directors , Bylaws , Shareholders

Court Of Chancery Holds That Dr. Pepper And Keurig Reverse Triangular Merger Does Not Trigger Appraisal Rights

City Of North Miami Beach General Employees’ Retirement Plan v. Dr. Pepper Snapple Group Inc., C.A. No. 2018-0227-AGB (Del. Ch. June 1, 2018) - In a reverse triangular merger, a parent company uses a subsidiary to acquire...more

6/5/2018 / Appraisal , Appraisal Rights , Mergers , Section 262 , Shareholders

Court Of Chancery Dismisses Derivative Complaint Alleging Disclosure Violations

Steinberg v. Bearden, C.A. No. 2017-0286-AGB (Del. Ch. May 30, 2018) - This is an interesting decision for its discussion of when pre-suit demand on the board is not excused for a derivative complaint alleging the...more

6/1/2018 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Court Of Chancery Explains When A Minority Stockholder Has Control

In re Tesla Motors Inc. Stockholder Litigation, C.A. No. 12711-VCS (Del. Ch. Mar. 28, 2018) - Under Delaware law, a controlling stockholder need not be a majority stockholder. Rather, a controlling stockholder might be a...more

4/6/2018 / Acquisitions , Board of Directors , Breach of Duty , Controlling Stockholders , Elon Musk , Minority Shareholders , Shareholder Litigation , Shareholders , Tesla

Court of Chancery Applies Revlon to a Warrant to Buy

Carr v. New Enterprise Associates, Inc., C.A. No. 2017-0381-AGB (Del. Ch. Mar. 26, 2018) - This decision addresses a host of interesting topics. First, it declines to invoke the so-called step-transaction doctrine under...more

3/28/2018 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Albert Carroll

Morris James LLP

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