In Village Green Holding, LLC, et al. v. Jonathan Holtzman, et al., Vice Chancellor Tamika Montgomery-Reeves granted plaintiff Village Green Holding, LLC’s (“Village Green”) motion for preliminary injunction regarding the enforcement of a forum selection clause and defendant Jonathan Holtzman’s (“Holtzman”) attempt to litigate a dispute in a separate forum. In rendering its decision, the Court illustrated the circumstances under which it will enjoin litigation that is pending in an alternate forum pursuant to a contract’s forum selection clause.
In the ongoing dispute of Opportunity Partners L.P. v. Hill International, Inc., Vice Chancellor J. Travis Laster granted plaintiff Opportunity’s motion for preliminary injunction with respect to an annual meeting of stockholders and defendant’s motion to enter the injunction order as partial final judgment for purposes of appellate review. In reaching its decision on the preliminary injunction, the Court relied on strict interpretation of defendant Hill’s advance notice bylaws.
Defendant’s advance notice bylaws provided that stockholders’ notice of business or nominees to be presented in an annual meeting must be furnished “not less than sixty (60) days nor more than ninety (90) days prior to the meeting,” with an exception that “in the event that less than seventy (70) days notice or prior public disclosure of the annual meeting is given or made to stockholders,” the stockholders’ notice would be considered timely if received “no later than the close of business on the tenth (10th) day” thereafter.
In addressing a request for a preliminary injunction seeking the invalidity of a resolution adopted by the defendant directors through the exercise of disproportionate voting rights, the Delaware court reaffirmed that differential voting rights for directors of a Delaware corporation must be set forth in the certificate of incorporation.
In Sinchareonkul v. Fahnemann, the plaintiff, a director of Sempermed USA, Inc. (the “Company”), brought suit against two other directors of the Company, seeking declaratory judgments invalidating bylaw provisions that conferred disproportionate voting power on the defendants who are also directors of the Company. Semperit Technische Produkte Gesellschaft m. b. H. (“Semperit”), Sri Trang Agro-Industry Public Co., Ltd. (“Sri Trang”), and Siam Sempermed Corporation Ltd. (“Siam Sempermed”) agreed to form the Company in 1998 for the purposes of manufacturing latex surgical gloves and then distributing and selling them in the United States market.
On January 12, 2015, Vice Chancellor Glasscock issued an opinion in Parsons v. Digital River, Inc., et al., 2015 WL 139760 (Del. Ch. 2015) on a Motion to Expedite brought by Amy Parsons on behalf of similarly situated public stockholders (“Plaintiff”) as to disclosure claims concerning an imminent merger. The ruling on the disclosure claims was deferred after the Vice Chancellor denied Plaintiff’s Motion on December 31, 2014 as it related to Revlon claims raised, in order to allow Plaintiff to submit a supplemental brief clarifying why such claims would be material to stockholders.
The Motion was brought by Plaintiff against the Board of Directors of Digital River, Inc. (the “Company”) for breaches of fiduciary duties arising in connection with the Agreement and Plan of Merger entered into with Siris Capital Group, LLC, dated October 23, 2014 (the “Merger Agreement”). On November 18, 2014, Plaintiff initiated a class action to enjoin the proposed merger on the grounds that the Company was undervalued and that the Board of Directors failed to provide the stockholders with material information regarding the deal process.
Of the numerous disclosure claims raised by Plaintiff in the Motion to Expedite, Vice Chancellor Glasscock focused primarily on the claim regarding management retention, both because it was the most significant and it had not been rendered moot by the Company’s subsequent filing of a definitive proxy statement. Vice Chancellor Glasscock concluded that Plaintiff sought expedited discovery on the grounds that the disclosures were “simply not credible” without providing a factual basis for such assertion.
Because the disclosure claim was speculative, Vice Chancellor Glasscock found that the chance of receiving injunctive relief to be low and that the value of potential disclosure did not outweigh the cost of expedition. The Plaintiff’s Motion to Expedite was denied.
In C&J Energy Services, Inc. v. City of Miami General Employees’ and Sanitation Employees’ Retirement Trust, C.A. No. 655/657, 2014 (Del. Dec. 19, 2014) (Strine, C.J.), the Delaware Supreme Court reversed the Delaware Court of Chancery’s decision to (1) enjoin the stockholder vote on a merger between C&J Energy Services, Inc. (“C&J”) and a division (Nabors CPS) of Nabors Industries Ltd. (“Nabors”) for 30 days, and (2) require C&J to shop the company during the injunction period. The Chancery Court determined that the C&J board’s decision to forego actively shopping the company in favor of a passive, post-signing market check constituted a plausible breach of its Revlon obligations. On appeal, the Delaware Supreme Court found that the Chancery Court erred by: (1) applying an improper standard for a preliminary injunction, (2) holding that a company must affirmatively shop itself under Revlon absent possessing “impeccable knowledge” of the market, and (3) issuing a mandatory injunction on a preliminary record.
This action arose from the proposed acquisition by C&J of a subsidiary of Nabors, which contained the assets of Nabors’ CPS division, for $2.86 billion. To gain favorable tax treatment, Nabors will retain a majority interest (53%) in the entity surviving the merger (“New C&J”), and New C&J will be domiciled in Bermuda. C&J’s stockholders will own the minority interest. To mitigate the loss of control, a supermajority vote of New C&J’s stockholders will be required to effect major corporate actions. In addition, C&J stockholders will have the right to (1) designate a majority of the members of New C&J’s board, and (2) receive the same pro rata consideration as Nabors in any subsequent sale of New C&J. C&J’s current Chairman, CEO and chief negotiator, Joshua Comstock, also negotiated for the right to be New C&J’s CEO at a higher compensation level.