Tyler O'Connell on Breach of Duty

Chancery Denies Motion for Reargument, Finding No Change to Delaware Legal Principles for Existence of “Control Group” of...

Silverberg v. Padda, C.A. No. 2017-0250-KSJM (Del. Ch. Oct. 18, 2019) - Delaware courts recognize that a group of stockholders can constitute a “control group” when those stockholders “are connected in some legally...more

11/20/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholders

Court of Chancery Orders Advancement of Fees for Former Directors and Officers who Sold their Stock in a Private Transaction

Nielsen v. EBTH, Inc., C.A. No. 2019-0164-MTZ (Del. Ch. Sept. 30, 2019). Delaware law permits advancement of fees and expenses for officers or directors who have such rights under certificates of incorporation, bylaws, or...more

11/1/2019 / Breach of Duty , Fiduciary Duty , Former Directors , Non-Disclosure Agreement , Stocks

Chancery Makes Post-Trial Award of $22K in Damages for $5.3 Million Fiduciary Breach Claim, and Orders an Accounting for...

Avande Inc. v. Evans, C.A. No. 2018-0203-AGB (Del. Ch. Aug. 13, 2019). A director of a Delaware corporation who stands on both sides of a challenged transaction must prove the entire fairness of the transaction. ...more

9/5/2019 / Breach of Duty , Business Judgment Rule , Entire Fairness Standard , Fiduciary Duty , Self-Interest

Chancery Declines to Stay or Dismiss Second-Filed Derivative Suit Against Google’s Parent Company

Irving Firemen’s Relief and Ret. Fund v. Page, C.A. No. 2019-0355-SG (Del. Ch. Jul. 1, 2019). Delaware courts typically apply the McWane first-filed doctrine to stay a later-filed Delaware case in favor of a case already...more

7/17/2019 / Breach of Duty , Derivative Suit , Fiduciary Duty , Google , Motion to Dismiss

Court of Chancery Addresses Stockholder Standing to Enforce Corporate Contracts, Declines to Dismiss Claim for Breach of...

Ark. Teacher Ret. Sys. v. Alon USA Energy, Inc., C.A. No. 2017-0453-KSJM (Del. Ch. Jun. 28, 2019). Section 203 of the Delaware General Corporation Law, an anti-takeover statute, prohibits a target from entering into a...more

7/12/2019 / Board of Directors , Breach of Contract , Breach of Duty , Delaware General Corporation Law , Fiduciary Duty , Shareholders

Delaware Supreme Court Reminds Counsel of Obligation to Prevent Clients’ Abusive Deposition Misconduct

In re: Shorenstein Hays-Nederlander Theatres LLC Appeals, Consol. C.A. Nos. 596, 2018 and 620, 2018 (Del. Jun. 20, 2019). “Depositions are court proceedings, and counsel defending the deposition have an obligation to...more

7/10/2019 / Breach of Contract , Breach of Duty , DE Supreme Court , Depositions , Fiduciary Duty

Officer and Director Entitled to Mandatory Indemnification Regardless of Circuitous Path to Victory

Brown v. Rite Aid Corporation, C.A. No. 2017-0480-MTZ (Del. Ch. May 24, 2019). Even when an indemnitee takes a circuitous path to victory, the indemnitee is entitled to indemnification under 8 Del. C. § 145(c) for...more

7/3/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Indemnification , Motion for Summary Judgment , Motion to Dismiss

Delaware Supreme Court Rejects MFW Defense Because of Delay in Safeguards

Olenik v. Lodzinksi, No. 392, 2018 (Del. Apr. 5, 2019). Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), deferential business judgment review governs mergers between a controlling stockholder and the controlled...more

4/11/2019 / Appeals , Board of Directors , Breach of Duty , Business Judgment Rule , Controlling Stockholders , DE Supreme Court , Entire Fairness Standard , Fiduciary Duty , Mergers , Standard of Review

Chancery Ends Trip for Uber Derivative Lawsuit

McElrath v. Kalanick, C.A. No. 2017-0888-SG (Del. Ch. Apr. 1, 2019). This derivative action arose out of Uber’s acquisition of a self-driving vehicle firm named Otto, which involved former Google employees. Google sued...more

4/5/2019 / Acquisitions , Breach of Duty , Derivative Suit , Fiduciary Duty , Uber

Chancery Applies Corwin Doctrine to Medium-Form Merger Absent Controller Conflict

English v. Narang, C.A. No. 2018-0221-AGB (Del. Ch. Mar. 20, 2019). Under the well-known Corwin doctrine, when a transaction not subject to the entire fairness standard of review is approved by a fully informed, uncoerced...more

4/1/2019 / Board of Directors , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Mergers

Chancery Finds Controlling Stockholder Impliedly Consented to Jurisdiction Through Board’s Adoption of Delaware Forum-Selection...

In re Pilgrim’s Pride Corp. Derivative Litigation, Consol. C.A. No. 2018-0058-JTL (Del. Ch. Mar. 15, 2019). Stockholders that control Delaware corporations find themselves subject to fiduciary duties. According to this...more

3/20/2019 / Board of Directors , Breach of Duty , Controlling Stockholders , Fiduciary Duty , Minority Shareholders , Shareholder Litigation , Shareholders , Subsidiaries

Court of Chancery Explains Interplay of Laches Defense, the Statute of Limitations and “Extraordinary Circumstances” Excusing Late...

Winklevoss Capital Fund, LLC v. Shaw, C.A. No. 2018-0398-JRS (Del. Ch. Mar. 1, 2019) - As this decision explains, the Court of Chancery will apply the equitable doctrine of laches (untimeliness) at the pleadings stage to...more

3/15/2019 / Breach of Duty , Fiduciary Duty , Investment , Statute of Limitations

Chancery Enjoins Unfair Merger Pending Corrective Disclosures, But Declines to Order a “Go Shop”

FrontFour Capital Grp. LLC v. Taube, C.A. No. 2019-0100-KSJM (Del. Ch. Mar. 11, 2019) - This decision involves an increasingly rare occurrence in Delaware: an expedited pre-closing fiduciary duty challenge to a proposed...more

3/15/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

Chancery Applies the Corporate Opportunity Doctrine and Finds Duty of Loyalty Breach

Personal Touch Holding Corp. v. Felix Glaubach, D.D.S., C.A. No. 11199-CB (Del. Ch. Feb. 25, 2019). Under the corporate opportunity doctrine, one way for a fiduciary to breach her duty of loyalty is to take personal...more

3/4/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholders

Chancery Addresses Earn-Out Dispute Involving Alleged Breaches of Fiduciary Duty and the Implied Covenant

Glidepath Ltd. v. Beumer Corp., C.A. No. 12220-VCL (Del. Ch. Feb. 21, 2019). Contingent payments based on an acquired business’s future performance are a frequent feature in M&A transactions. In this case, after selling...more

3/4/2019 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Shareholders

Chancery Dismisses Books and Records Action Based on Pending Plenary Action

CHC Investments LLC v. Firstsun Capital Bancorp, C.A. No. 2018-0610-KSJM (Del. Ch. Jan. 24, 2019). One proper purpose for a books and records inspection under Section 220 of the Delaware General Corporation Law is to...more

2/19/2019 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Addresses Pre-Suit Demand Refusal Standard for Special Committees

City of Tamarac Firefighters’ Pension Trust Fund v. Corvi, C.A. No. 2017-0341-KSJM (Del. Ch. Feb. 12, 2019). Under Delaware law, stockholders who wish to pursue a derivative claim on the corporation’s behalf face an...more

2/19/2019 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Addresses Lawyer-Driven Effort Defense to Books and Records Inspection

Inter-Local Pension Fund GCC/IBT v. Calgon Carbon Corp., C.A. No. 2017-0910-MTZ (Del. Ch. Jan. 25, 2019). It is sometimes fair to characterize plaintiff-side representative litigation in the corporate context as...more

2/5/2019 / Board of Directors , Books & Records , Breach of Duty , Delaware General Corporation Law , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Delaware Supreme Court Addresses Emails and Jurisdictional Use Conditions in Books and Records Actions

KT4 Partners LLC v. Palantir Technologies Inc., No. 281, 2018 (Del. Jan. 29, 2019) (Strine, Chief Justice). Two prevailing questions for books and records inspections under Section 220 of the Delaware General Corporation...more

2/5/2019 / Appeals , Books & Records , Breach of Duty , Email , Fiduciary Duty , Section 220 Request , Shareholders

Court of Chancery Grants Preliminary Injunction Based on Insider’s Stock Issuances to Himself

Applied Energetics, Inc. v. Farley, C.A. No. 2018-0489-TMR (Del. Ch. Jan. 23, 2019). This opinion addresses two bedrock issues of Delaware corporate law, specifically, proper board authorization under 8 Del. C. § 141 and...more

1/28/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , 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

Tyler O'Connell

Morris James LLP

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