Author: Mehreen Ahmed

DELAWARE COURT OF CHANCERY DENIES MOTIONS TO DISMISS CLAIMS ALLEGING BREACH OF CONTRACT

By Whitney J. Smith and Mehreen Ahmed

In Re WeWork Litigation, C.A. No. 2020-0258-AGB (Del. Ch. Oct. 30, 2020), concerns a transformative transaction involving The We Company, a real estate company specializing in shared workspaces more commonly known as WeWork. Adam Neumann (“Neumann”), the CEO of WeWork, brought a case against both SoftBank Group (“SBG”) and SoftBank Vision Fund (AIV MI) L.P. (“Vision Fund”) for two counts of breach of contract and breach of fiduciary duty as controlling stockholders. SBG and Vision Fund filed partial motions to dismiss the complaint. Vision Fund, but not SBG, sought to dismiss the contract claim against it, whereas, both SBG and Vision Fund sought to dismiss the fiduciary duty claim. In a memorandum opinion, the Delaware Court of Chancery denied Vision Fund’s motion to dismiss the contract claim, except as to one provision, and granted the motion to dismiss the fiduciary duty claim as that claim was duplicative of the contract claims against them.

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WINDFALL OR FAIR? BREACH OF FIDUCIARY DUTY AND UNJUST ENRICHMENT CLAIM SURVIVES MOTION TO DISMISS

By Whitney J. Smith and Mehreen Ahmed

In Gary D.  Voigt v. James S. Metcalf et. al. and NCI Building Systems, Inc., C.A. No. 2018-0828-JTL (Del Ch. Feb. 10, 2020), the court denied defendants’ motion to dismiss, finding that the transaction at issue should be reviewed under the entire fairness standard and that the plaintiff, a stockholder of NCI Building Systems, Inc. (“NCI”), successfully stated claims for breach of fiduciary duty and unjust enrichment against private equity firm Clayton, Dubilier, & Rice (“CD&R”) and most of NCI’s directors in connection with a stock-for-stock merger between NCI and Ply Gem Parent, LLC (“Ply Gem”). The headline issue for the motion to dismiss was whether the plaintiff had pled facts that made it reasonably conceivable that CD&R controlled NCI despite owning less than a majority of NCI’s outstanding shares.

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A SIGNATURE ALONE IS NOT DISPOSITIVE EVIDENCE OF AN INTENT TO BE BOUND IN AN AGREEMENT

By: Scott E. Waxman and Mehreen Ahmed

In Eagle Force Holdings, LLC, and EF Investments, LLC, v. Stanley V. Campbell, 2999991.08000 (Del. Ch. Aug. 29, 2019), the Delaware Court of Chancery (the “Court”) held that Stanley Campbell’s (“Campbell”) conduct and communications with the Plaintiff before and during the signing of the transaction documents did not constitute an overt manifestation of assent to be bound by the documents. Therefore, the breach of contract and breach of fiduciary duty claims failed.

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