Timely, brief summaries of cases handed down by the Delaware Court of Chancery and the Delaware Supreme Court.
By: Joanna Diakos Kordalis and Zack Sager
In Solak v. Welch, the Court of Chancery found that a letter from a stockholder to the board of directors, which requested remedial action to address allegedly excessive non-employee director compensation, was a pre-suit demand and dismissed the stockholder’s complaint for failing to allege wrongful demand refusal.
Read MoreBy Scott E. Waxman and Frank J. Mazzucco
In Kosinski v. GGP Inc., C.A. No. 2018-0540-KSJM (Del. Ch. Aug. 28, 2019), the Delaware Court of Chancery (the “Court”) granted a stockholder’s request, following a merger, to review a company’s books and records under Section 220 of the Delaware General Corporation Law (“DGCL”).
Read MoreBy Scott E. Waxman and Frank J. Mazzucco
In In Re Hawk Systems, Inc., C.A. No. 2018-0288-JRS (Del. Ch. Sept. 4, 2019), the Delaware Court of Chancery (the “Court”) denied a plaintiff’s request for a declaration that he was the majority stockholder, sole director, and chief executive officer of a company.
Read MoreBy Scott E. Waxman and Frank J. Mazzucco
In Arkansas Teacher Retirement System v. Alon USA Energy, Inc., et al., C.A. No. 2017-0453-KSJM (Del. Ch. Jun. 28, 2019), the Delaware Court of Chancery found that a plaintiff stockholder, in connection with a merger, had standing as a third-party beneficiary to bring claims for breach of fiduciary duty and breach of a stockholder agreement.
Read MoreBy: Scott Waxman and Zack Sager
In Morris v. Spectra Energy Partners (DE) GP, LP, the Court of Chancery held that the plaintiff, who previously lost standing to maintain a derivative action after it ceased to be a unit holder of a limited partnership, also lacked standing to directly challenge the fairness of the transaction that extinguished its right to pursue the derivative action.
Read MoreBy: Shoshannah D. Katz and Serena M. Hamann
In the statutory appraisal proceeding, In re Appraisal of Columbia Pipeline Group, Inc., Cons. C.A. No. 12736-VCL (Del. Ch. August 12, 2019), the Delaware Court of Chancery determined that the fair value of Columbia Pipeline Group, Inc. (“Columbia” or the “Company”) common stock at the effective date of acquisition by TransCanada Corporation (“TransCanada”) was the deal price of $25.50 per share, not the $32.47 per share price proposed by the petitioners. The petitioners argued that the Court should determine fair value using the discounted cash flow method (“DCF”), while TransCanada proposed use of the deal price minus synergies and Columbia’s unaffected trading price as valuation indicators. The Court ruled the sale process in this case was sufficiently reliable to make the deal price a persuasive indicator of fair value.
Read MoreBy Remsen Kinne and Frank J. Mazzucco
In Stein v. Blankfein et al., C.A. No. 2017-0354-SG (Del. Ch. May 31, 2019), the Delaware Court of Chancery, in considering a motion to dismiss, allowed a stockholder’s derivative claim to proceed against an entity’s non-employee directors alleging that such director compensation was grossly excessive and thus represented a breach of the fiduciary duty of loyalty.
Read MoreBy: David Forney and Rich Minice
In Nielsen v. EBTH Inc., C.A. No. 2019-0164-MTZ (Del. Ch. Sep. 30, 2019), the Delaware Court of Chancery reaffirmed its standard favoring advancement of expenses to officers or directors of a company where the corporation provides mandatory advancement rights either by its certificate of incorporation (“Charter”) or separate indemnification agreements. The court granted summary judgment in favor of the plaintiffs because they (i) either used their corporate powers or such powers were necessary for the commission of the alleged misconduct in the underlying action; or (ii) the alleged misconduct in the underlying action is inextricably intertwined with the actions taken in the plaintiffs’ former capacities as officers or directors, such that the plaintiffs would necessarily be required to disprove allegations that they acted improperly as such. Advancement is appropriate when either of the two prongs for this nexus test are met.
Read MoreBy: Scott E. Waxman and Douglas A. Logan
In Klein and Cambridge Therapeutic Technologies, LLC, v. Wasserman et al., C.A. No. 2017-0643-KSJM (May 29, 2019), the Delaware Court of Chancery addressed claims of breach of fiduciary duties, tortious interference, and civil conspiracy. Defendants’ motion to dismiss the claims was granted in part and denied in part.
Read MoreBy Scott E. Waxman and Frank J. Mazzucco
In Li v. LoanDepot.com, LLC, C.A. No. 2019-0026-JTL (Del. Ch. Apr. 24, 2019), the Delaware Court of Chancery upheld the enforceability of a forum selection clause in a company’s operating agreement.
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