Archive: June 15, 2016

Chancery Court Reaffirms Arbitrability to be Decided by Arbitrator if Claims are Not Frivolous on their Face

By: Scott E. Waxman and Douglas Logan

In Angus v. Ajio, the Delaware Court of Chancery denied Bruce Angus’ preliminary injunction to block arbitration initiated by Members of MoGo Sport, LLC (“MoGo”), a Delaware sports equipment and injury prevention company organized as a Delaware limited liability company. The court held that the arbitrability of the claims in the arbitration demand must be decided by the arbitrator and not the court if the party opposing arbitration cannot show the arbitration demand to be frivolous.

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Conflict Transaction Cleansed By Master Limited Partnership’s Special Committee

By Scott E. Waxman and Annamarie C. Larson

In Employees Retirement System of the City of St. Louis v. TC Pipelines GP, Inc., et al, (C.A. No. 11603-VCG), Vice Chancellor Glasscock granted the defendant’s motion to dismiss claims relating to the purchase of pipeline assets from the general partner’s parent.  The Court of Chancery held that the transaction was “fair and reasonable” to the master limited partnership because it was approved by a special committee and that the general partner did not breach the implied covenant of good faith and fair dealing.  In this case, the Court of Chancery reaffirmed parties’ abilities to contract freely when forming alternative entities such as a master limited partnership and confirmed that judicial review of such contractual terms is very limited.

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Court of Chancery, Applying Arkansas Law, Precludes Re-Litigation of Demand Futility Issue in the Context of a Derivative Suit Brought by Different Stockholder Plaintiffs

By Josh Gaul and H. Corinne Smith

In In re Wal-Mart Stores, Inc., C.A. No. 7455-CB (Del Ch. May 13, 2016), the Court of Chancery, applying Arkansas law, held that issue preclusion applies to different stockholder plaintiffs in the context of a derivative suit and, therefore, that the Arkansas district court’s holding that demand was not futile precludes re-litigation of the issue in the Delaware court system.

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