Shareholder Litigation

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Lessons For Corporate Directors From The Wyndham Data Breach Derivative Action

On October 20, 2014, Wyndham Worldwide Corporation won dismissal of a shareholder derivative suit seeking damages arising out of three data breaches that occurred between 2008 and 2010. Dennis Palkon, et al. v. Stephen P....more

Delaware Court Determines That 17.5% Stockholder Seeking To Take Company Private Could Be Deemed A Controller And Therefore...

On November 26, 2014, the Delaware Court of Chancery denied a motion to dismiss a complaint challenging a going-private transaction where the company's CEO, Chairman and 17.5% stockholder was leading the buyout group. In his...more

Platinum Partners Value Arbitrage Fund L.P. v. Echo Therapeutics, Inc., C.A. No. 10303-VCN (Del. Ch. Nov. 14, 2014) (Noble, V.C.)

In this letter opinion, the Court of Chancery denied a motion to expedite proceedings in which a stockholder sought to call a special meeting to remove a majority of the corporation’s directors....more

In re Novell, Inc. S’holder Litig., C.A. No. 6032 (Del. Ch. Nov. 25, 2014) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted summary judgment in favor of defendants on claims alleging that directors acted in bad faith by favoring a bidder in a sale process for reasons other than the pursuit...more

Delaware Court Provides Guidance on Acceptable Deal Protection Mechanisms and Scope of Third Party Aiding and Abetting Liability...

On November 25, 2014, the Delaware Court of Chancery issued a decision in In Re Comverge, Inc. Shareholders Litigation, which: (1) dismissed claims that the Comverge board of directors conducted a flawed sales process and...more

Investor Claims NetTALK Executives Took Control of Board

On November 5, Telestrata, LLC brought a derivative shareholder action and direct action against NetTALK.com, Inc., a publicly traded telecommunication company, and NetTALK’s directors and officers, alleging that the...more

New York Appellate Court Affirms Business Judgment Rule for Going-Private Transaction

New York companies seeking to go private with a controlling shareholder may now be less vulnerable to shareholder litigation. On November 20, 2014, the New York Appellate Division, First Department, affirmed a New...more

Federal District Court in New Jersey Dismisses Shareholder Derivative Action against Wyndham Relating to Data Breach

On October 20, 2014, the United States District Court in New Jersey granted a 12(b)(6) motion to dismiss in favor of Wyndham Worldwide Corporation’s directors and officers in a shareholder derivative action arising out of the...more

Cybersecurity Litigation Monthly Newsletter

In August, Paytime, Inc., a payroll services company, moved to dismiss a putative class action filed in the wake of a data breach in which the personal and financial information of more than 230,000 people was compromised. ...more

Business-Judgment Rule Applied in New York to Going-Private Transaction with Procedural Protections

The New York Appellate Division, First Department, ruled Thursday that the business-judgment rule – not the entire-fairness standard of review – can apply to a going-private transaction with the majority shareholder where the...more

Delaware Court of Chancery Applies Business Judgment Rule to Directors Who Approve Merger Supported by Large Shareholders

In its October 24, 2014, decision in In re Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541, the Delaware Court of Chancery confirmed that the business judgment rule is applicable in evaluating claims for breach...more

Delaware Chancery Requires Payment of Merger Consideration to Dissenting Stockholder After Expiration of Appraisal Period

The Delaware Court of Chancery recently dismissed corporate mismanagement and breach of fiduciary duty claims filed by a dissenting stockholder, but ordered that the surviving corporation in a merger was required to pay the...more

Blog: Another Twist On Restrictive Bylaw Provisions: Minimum Support Thresholds

In this article, Reuters discusses yet another creative permutation on restrictive bylaw provisions — requiring that plaintiffs in certain shareholder litigation provide consents to the litigation from shareholders holding...more

In re TPC Group Inc. S'holders Litig., C.A. No. 7865-VCN (Del. Ch. Oct. 29, 2014) (Noble, V.C.)

In this letter opinion, the Court of Chancery denied plaintiffs’ application for an award of attorneys’ fees and held that plaintiffs’ class action litigation was not the cause of the increase in the merger price achieved...more

Wyndham Decision Provides Guidance to Corporate Directors and Officers in Responding to a Data Breach

U.S. District Judge Stanley R. Chesler of the District of New Jersey recently provided much needed guidance to directors and officers on their duties and responsibilities with regard to cybersecurity. In Palkon v. Holmes, et...more

Fee-Shifting Provisions and the SEC

As noted in a prior blog, some companies have recently adopted fee-shifting provisions (i.e., language providing that a suing stockholder must pay the corporation’s legal fees and expenses if the stockholder does not obtain a...more

Delaware Court of Chancery Rejects Entire Fairness Review in Absence of Conflicted Transaction

On October 24, the Delaware Court of Chancery dismissed a lawsuit filed by certain minority stockholders of Crimson Exploration, Inc. in In re: Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541-VCP (Del. Ch. Oct...more

Delaware Court of Chancery Provides Guidance on Controlling Stockholder Issues

In a new decision, In re Crimson Exploration Inc. Stockholder Litigation, Vice Chancellor Donald Parsons of the Delaware Court of Chancery provides guidance on when, particularly in the deal context, a significant but...more

All Shares Are Equal But With Proxy Access Some Shares Are More Equal Than Others

In George Orwell’s famous satire of Stalin’s Soviet Union, Animal Farm, the animals started out with seven commandments. The seventh commandment was “All Animals Are Equal”. As time passed, three of the original...more

Data Breach Case Update: Shareholder Derivative Suit Dismissed

We recently discussed the increase in data breach litigation which resulted after several high-profile data breaches. You can read those articles here and here. Not surprisingly, several of these suits involve class actions...more

Delaware Court Establishes "Taxonomy" For Controlling Stockholder Claims

In a recent decision, the Delaware Court of Chancery (Parsons, V.C.) dismissed a shareholder class action complaint alleging that a target company’s board of directors and private equity firm controlling stockholder breached...more

Activism: Every Season is Now Open Season

Activism has become omnipresent and now targets virtually every industry sector regardless of a company’s size. The number of campaigns are up, the amount of capital allocated to activism is at an all-time high and activists...more

In re KKR Financial Holdings LLC S'holder Litig., Consol. C.A. No. 9210-CB (Del. Ch. Oct. 14, 2014) (Bouchard, C.)

In this opinion, the Court of Chancery dismissed a purported class action by stockholders of KKR Financial Holdings LLC (“KFN”) challenging its acquisition by KKR & Co. L.P. (“KKR”) in a stock-for-stock merger, rejecting...more

Business Judgment Rule Protects Board's Decision to Maximize the Value of an Insolvent Delaware Corporation Even If It Puts...

Directors of an insolvent corporation face a host of difficult questions. Should they wind up operations or file for bankruptcy to preserve assets for creditors, or chart a riskier course that could lead the company back to...more

M&A Update: No Control, No Conflict, No Problem

On October 24th, the Delaware Chancery Court dismissed a lawsuit challenging the merger of Crimson Exploration and Contango Oil & Gas. Minority Crimson stockholders alleged that Oaktree Capital Management, Crimson’s largest...more

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