Topic: Arbitration

Chancery Court considers who should decide whether certain disputes are arbitrable — the court or an arbitrator selected by the parties?

By: John Blair & Ernest Simons

In Greenstar IH Rep, LLC and Gary Segal v. Tutor Perini Corporation, Civil Action No. 12885-VCS (Del. Ch. Ct. February 23, 2017), the Delaware Court of Chancery granted in part and denied in part defendant’s motion for preliminary injunction, holding that the Court lacks subject matter jurisdiction to decide the question of substantive arbitrability when an employment agreement contains a broad arbitration provision that evidences the parties intent to arbitrate arbitrability.

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Chancery Court Compels Arbitration Based On Email Communications That Included All Essential Terms

By: Scott E. Waxman and Trevor M. Gates

In Gomes v. Karnell, No. 11814-VCMR (Del. Ch. Nov. 30, 2016), the Delaware Court of Chancery granted the defendants’ motion to compel arbitration and held that an email exchange between the parties’ attorneys formed a valid arbitration agreement.  The plaintiff, Mark Gomes (“Gomes”), an investment analyst with thousands of followers, alleged breaches of fiduciary duty, breaches of contract, waste, and aiding and abetting breaches of fiduciary duty.

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Chancery Court Finds Arbitration Clause in Limited Liability Company Agreement Survives Company’s Conversion into Corporation Despite Corporation’s Litigation Only Approach

By Scott Waxman and Peter C. Seel

In 3850 & 3860 Colonial Blvd., LLC v. Griffin, the Chancery Court denied a motion to dismiss and stayed the proceedings on all counts, finding that the arbitration clause in the limited liability company agreement controlled and the case must be submitted to an arbitrator to decide the issue of substantive arbitrability.

On February 26, 2015, the Chancery Court in 3850 & 3860 Colonial Blvd., LLC v. Griffin, C.A. No. 9575-VCN (Del. Ch. February 26, 2015) (Noble, V.C.) addressed the recurring theme of substantive arbitrability in a dispute that involved the conversion of a limited liability company into a corporation and their conflicting dispute resolution mechanisms. In 2007, defendant Christopher Griffin (the “Defendant”) formed Rubicon Media LLC (“Rubicon LLC”). In 2011, the Defendant reformed Rubicon LLC’s capital structure and, in 2013, converted Rubicon LLC into a corporation: Rubicon Inc. (“Rubicon Inc.,” and together with the Defendant, the “Defendants”). Among other things, the conversion of Rubicon LLC into Rubicon Inc. altered the rights of shareholders with respect to the dispute resolution process. The operative clause in the LLC Agreement (the “LLC Provision”) directs the parties to resolve disputes through mediation and arbitration, whereas the corresponding provision in the Certificate of Incorporation (the “Charter Provision”) designates the Delaware Court of Chancery as the exclusive forum for all disputes.

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