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Delaware Corporate and Commercial Case Law Year In Review – 2018

This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year 2018. The cases selected either meaningfully changed Delaware law or provided...more

Chancery Addresses Lawyer-Driven Effort Defense to Books and Records Inspection

Inter-Local Pension Fund GCC/IBT v. Calgon Carbon Corp., C.A. No. 2017-0910-MTZ (Del. Ch. Jan. 25, 2019). It is sometimes fair to characterize plaintiff-side representative litigation in the corporate context as...more

Delaware Supreme Court Addresses Emails and Jurisdictional Use Conditions in Books and Records Actions

KT4 Partners LLC v. Palantir Technologies Inc., No. 281, 2018 (Del. Jan. 29, 2019) (Strine, Chief Justice). Two prevailing questions for books and records inspections under Section 220 of the Delaware General Corporation...more

Chancery Addresses Books and Records Demand Under Section 220 by Papa John’s Founder

Schnatter v. Papa John’s Int’l, Inc., C.A. No. 2018-0542-AGB (Del. Ch. Jan. 15, 2019). As a general matter, under Section 220 of the DGCL, directors of a Delaware corporation enjoy the right to virtually unfettered access...more

Court of Chancery Addresses the Scope of Summary Control Disputes and Effectiveness of Written Consents

Brown v. Kellar, C.A. No. 2018-0687-MTZ (Del. Ch. Dec. 21, 2018) - Control disputes, like those under Section 225 of the DGCL, are summary, narrow proceedings limited to the issues regarding title to office. The Court of...more

Court of Chancery Invalidates Federal Court Forum-Selection Provision for Securities Cases

Sciabacucchi v. Salzberg, C.A. No. 2017-0031-JTL (Del. Ch. Dec. 19, 2018) - Delaware law permits a Delaware corporation to include a forum-selection provision in its certificate of incorporation governing all “internal...more

Court of Chancery Declines to Expand Dual-Natured Direct and Derivative Claims Under Gentile

Klein v. H.I.G. Capital LLC, C.A. No. 2017-0862-AGB (Del. Ch. Dec. 19, 2018) - Under the Delaware Supreme Court’s Gentile decision, a claim may be dual-natured, meaning partially derivative on behalf of the corporation and...more

Court of Chancery Addresses Overlapping Appraisal and Fiduciary Duty Action

In re Xura Stockholder Litigation, C.A. No. 12608-VCS (Del. Ch. Dec. 10, 2018) - Lately, the Delaware Supreme Court has given great weight to the deal price in appraisal cases. As a result, plaintiffs have put a greater...more

Court of Chancery Addresses Fiduciary Insider Trading Claims Under Brophy in Fitbit Litigation

In re Fitbit Inc. Stockholder Derivative Litigation, C.A. No. 2017-0402-JRS (Del. Ch. Dec. 14, 2018) - Delaware law recognizes a claim for breach of fiduciary duty based on insider trading under the Brophy decision....more

Delaware Supreme Court Explains the Ab Initio Requirement of MFW

Flood v. Synutra Int’l, Inc., C.A. No. 101, 2018 (Del. Oct. 9, 2018) - Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), commonly referred to as MFW, a controller may gain the benefit of business judgment review...more

Delaware District Court Explains Tolling Based on Books and Records Inspection

Norman v. Elkin, C.A. No. 06-005-LPS (D. Del. Sept. 4, 2018) - Litigation seeking to inspect a corporation’s records under Section 220 of the DGCL might toll the statute of limitations for certain claims under the right...more

Court of Chancery Addresses Confidentiality in Appraisal Context and Use of Discovery to Identify New Claims

In re Appraisal of Columbia Pipeline Group, Inc., C.A. No. 12736-VCL (Del. Ch. Aug. 30, 2018) - It is common and accepted practice for parties in Court of Chancery litigation to enter into a stipulated order governing the...more

Court of Chancery Addresses Contractual Fiduciary Duties, Secondary Liability, and Banker Liability in the MLP Context

Mesirov v. Enbridge Energy Company, C.A. No. 11314-VCS (Del. Ch. Aug. 29, 2018) - This is the latest decision in a long-running saga in the master limited partnership (MLP) context involving Enbridge Energy....more

Court of Chancery Validates Cure of Defective Corporate Acts Affecting Herman Miller’s Acquisition of DWR

Charles Almond Trustee v. Glenhill Advisors LLC, C.A. No. 10477-CB (Del. Ch. Aug. 17, 2018)- Sections 204 and 205 of the DGCL permit corporations to cure and validate defective corporate acts under the right circumstances....more

Court of Chancery Addresses Contract Formation

CSH Theatres L.L.C. v. Nederlander of San Francisco Associates, C.A. No. 9380-VCMR (Del. Ch. July 31, 2018) - This drama arises from a dispute involving the Curran Theatre in San Francisco. The decision mostly deals with...more

Delaware District Court Stays Twitter Derivative Case Pending Securities Action

In re Twitter Inc. Shareholder Derivative Litigation, C.A. No. 18-62-VAC-MPT (D. Del. July 23, 2018) - Several Court of Chancery decisions discuss the appropriateness of staying a derivative action pending a related...more

Court of Chancery Explains MFW Requirements

Olenik v. Lodzinski, C.A. No. 2017-0414-JRS (Del. Ch. July 20, 2018) - Transactions between a Delaware company and its controlling stockholder usually are subject to rigorous entire fairness review. But, under the MFW...more

Court of Chancery Holds That Notice and an Opportunity To Be Heard Are Not Prerequisites to Dismissing an LLC Manager “For Cause”

A&J Capital, Inc. v. Law Office of Krug, C.A. No. 22018-0240-JRS (Del. Ch. July 18, 2018) - This decision holds that, absent contrary language in an LLC operating agreement, members do not need to provide notice and an...more

Court of Chancery Explains Burden Needed to Support Inspection for Suspected Wrongdoing

Barnes v. Sprouts Farmers Market Inc., C.A. No. 2017-0735-MTZ (Del. Ch. July 18, 2018) - An investor seeking books and records for the purpose of investigating wrongdoing or mismanagement must establish a “credible basis”...more

Court of Chancery Denies Director Access to Records in the Redstone-CBS Corp. Dispute

In re CBS Corporation, C.A. No. 2018-0342-AGB (Del. Ch. July 13, 2018) - It is well settled that members of the board of directors are entitled to essentially unfettered access to the corporation’s records to carry out...more

Court of Chancery Imposes Over $20 Million in Damages on Investment Fund and Its Manager

Basho Technologies Holdco B LLC v. Georgetown Basho Investors LLC, C.A. No. 11802-VCL (Del. Ch. July 6, 2018) - This notable decision issued by the Court of Chancery holds an investment fund and its manager liable for over...more

Court of Chancery Requires Bad Faith Disclosure Violations for Demand Futility

Ellis v. Gonzalez, C.A. No. 2017-0342-SG (Del. Ch. July 10, 2018) - The pre-suit demand on the board requirement for derivative litigation usually is not excused solely by a sufficiently pled disclosure violation....more

Delaware Supreme Court Reverses Corwin Dismissal and Stresses Importance of Disclosures

Morrison v. Berry, No. 445, 2017 (Del. July 9, 2018) - Corwin holds that approval of a transaction by a fully-informed, uncoerced majority of the disinterested stockholders invokes the deferential business judgment...more

Court Of Chancery Explains When Claim Is Direct And Survives A Merger

In re Straight Path Communications Inc. Consolidated Stockholder Litigation, C.A. No. 2017-0486-SG (Del. Ch. June 25, 2018) - When a merger closes, stockholders of the acquired company generally lose standing to pursue...more

Court of Chancery Finds Breach of Fiduciary Duty By Director Selfishly Opposing Cure of Defective Corporate Acts

CertiSign Holding Inc. v. Kulikovsky / Kulikovsky v. CertiSign Holding Inc., C.A. No. 12055-VCS (Del. Ch. June 7, 2018) - When a corporation accidentally issues defective stock or takes some other defective corporate act,...more

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