Eric Hacker on Shareholders

Chancery Finds Egregious Conduct in Books and Records Action Justifying Fee-Shifting Against Corporation

PVH Polymath Venture Holdings Ltd. v. TAG Fintech Inc., C.A. No. 2023-0502-BWD (Del. Ch. Jan. 26, 2024) - Under the “bad faith” exception to the American Rule, Delaware courts will consider shifting fees when aggressive...more

5/24/2024 / Board of Directors , Books & Records , Fee-Shifting , Section 220 Request , Shareholders

Chancery Confirms Bad Faith Pleading Standard for Officer Caremark Claims

Segway Inc. v. Hong Cai, C.A. No. 2022-1110-LWW (Del. Ch. Ct. Dec. 14, 2023) - The Caremark doctrine recognizes the duty of oversight for directors of Delaware corporations. Under In re McDonald's Corp. Stockholder...more

4/4/2024 / Board of Directors , Breach of Duty , Caremark claim , Fiduciary Duty , Shareholders

Chancery Decision Explains Availability of Reformation as a Targeted Remedy

AECOM, et al. v. SCCI Nat’l Hldgs., Inc., C.A. No. 2022-0727-MTZ (Del. Ch. Sept. 27, 2023) - Although the Court of Chancery frequently resolves contractual disputes, it grants contractual reformation only when...more

2/7/2024 / Breach of Contract , Contract Terms , Fraud , Shareholders

Chancery Provides Additional Analysis of Primedia Claims in MFW Context

City of Dearborn Police and Fire Revised Retirement System (Chapter 23) et al. v. Brookfield Asset Management Inc., C.A. No. 2022-0097-KSJM (Del. Ch. June 21, 2023) - In a short letter decision, Chancellor McCormick...more

10/25/2023 / Derivative Suit , Mergers , Shareholder Litigation , Shareholders

Chancery Holds Unocal Claims for Injunctive Relief are not Subject to Corwin Cleansing

In re Edgio, Inc. Stockholder Litigation, C.A. No. 2022-0624-MTZ (Del. Ch. May 1, 2023) - Under Corwin, a fully informed, uncoerced vote of the disinterested stockholders can shift the standard of judicial review for...more

9/26/2023 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Delaware Supreme Court Affirms Dismissal Under Zapata

Diep v. Trimaran Pollo Partners, No. 313, 2021 (Del. June 28, 2022) - After the Court of Chancery denied an initial motion to dismiss, the company formed a special litigation committee (“SLC”) to investigate the claims and...more

10/11/2022 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Rejects Argument that Omitted Information Prevents Corwin Dismissal

Galindo v. Stover, C.A. No. 2021-0031-SG (Del. Ch. Jan. 26, 2022) - If a majority of fully informed, uncoerced, disinterested stockholders vote to approve a merger not involving a conflicted controlling stockholder, then...more

4/28/2022 / Board of Directors , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Mergers , Shareholders

Delaware Supreme Court Permits Substitution of Bankruptcy Trustee as Plaintiff to Resolve “Procedural Conundrum”

Lenois v. Lawal, No. 33, 2021 (Del. Dec. 9, 2021) - A company’s bankruptcy filing during an appeal of a dismissal of a derivative action presents questions of who, if anyone, has the standing to pursue the company’s...more

3/31/2022 / Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Dismisses Derivative Action Based On Alleged Liability Under DGCL § 174 For Stock Repurchases and Dividends

In re The Chemours Co. Deriv. Litig., C.A. 2020-0786-SG (Del. Ch. Nov. 1, 2021) - Broadly speaking, Sections 160 and 173 of the DGCL prohibit a corporation from repurchasing stock or issuing dividends if doing so would...more

2/24/2022 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Finds Breach of Fiduciary Duty Where Defendant Resorted to Extra-Contractual Self-Help

Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Post-trial Memorandum Opinion) Macrophage Therapeutics, Inc. v. Goldberg, C.A. No. 2019-0137-JRS (Del. Ch. Jun. 23, 2021) (Letter...more

8/17/2021 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Shareholders

Chancery Rejects Plaintiff’s Attempt to Recharacterize Pre-Suit Demands

The Raj & Sonal Abhyanker Fam. Tr. v. Blake, C.A. No. 2020-0521-KSJM (June 17, 2021) - Court of Chancery Rule 23.1 presents a would-be derivative plaintiff with two exclusive options: make a pre-suit demand on the board to...more

7/13/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

For the First Time, the Court of Chancery Recognizes the Viability of Reverse Veil-Piercing in Rare Circumstances

In a case of first impression, Vice Chancellor Joseph R. Slights III in Manichaean Capital, LLC v. Excela Technologies, Inc., C.A. No. 2020-0601-JRS (Del. Ch. May 25, 2021) refused to dismiss a claim to use reverse...more

6/9/2021 / Corporate Veil , Limited Liability Company (LLC) , Mergers , Piercing the Corporate Veil , Shareholders

Chancery Dismisses Stockholder’s Claim that Directors Provided Materially-Deficient Notice of their Intent to Use Equity Bonus...

Pascal v. Czerwinski, C.A. No. 2020-0320-SG (Del. Ch. Dec. 16, 2020) - This decision concerned a motion to dismiss a stockholder’s direct claim that Director-Defendants breached their duties by providing a...more

2/9/2021 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Dismisses Challenge to Top Executives’ Stock Awards in Disney-Fox Merger, Finds Plaintiff Lacks Standing to Pursue...

Brokerage Jamie Goldenberg Komen Rev TRU U/A 06/10/08 Jamie L Komen Trustee for the Benefit of Jamie Goldenberg Komen v. Breyer, C.A. No. 2018-0773-AGB (Del. Ch. June 26, 2020) - Following a merger that alters a...more

8/4/2020 / Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholders , Standing

In a Books and Records Action, Court Critiques Defendant’s Motion to Dismiss, and Declines to Order Inspection of Documents Not...

Paraflon Investments, Ltd. v. Linkable Networks, Inc., C.A. No. 2017-0611-JRS (Del. Ch. Apr. 3, 2020). Sometimes it bears repeating that Section 220 actions are intended to be summary proceedings to evaluate a...more

5/14/2020 / Books & Records , Motion to Dismiss , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Denies Fees to Stockholder who Compelled Admittedly-Overdue Annual Meeting, But Primarily for his Own Interest in Forcing...

Martin v. Harbor Diversified, Inc., C.A. 2018-0762 SG (Del. Ch. Feb. 5, 2020). A plaintiff who achieves a corporate benefit for the enterprise may be eligible for attorney’s fees, but he is not entitled them....more

4/7/2020 / Annual Meeting , Delaware General Corporation Law , Shareholders

Chancery Denies Section 220 Bid for Executive Compensation Records Involving Facebook

Southeastern Pa. Trans. Auth. v. Facebook, Inc., C.A. No. 2019-0228-JRS (Oct. 29, 2019) - Shareholders of a Delaware corporation have a qualified right to access corporate books and records for a “proper purpose.” ...more

11/11/2019 / Books & Records , Business Judgment Rule , Duty of Loyalty , Executive Compensation , Facebook , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Enforces Preferred Stock Consent Rights, and Reasons that Designee of a Corporate Stockholder Is an “Affiliate” of that...

PWP Xerion Holdings III LLC v. Red Leaf Resources Inc., C.A. No. 2017-0235-JTL (Del. Ch. Oct. 23, 2019). Preferred stockholders frequently obtain the right to veto specific types of transactions....more

10/25/2019 / Board of Directors , Fiduciary Duty , Preferred Shares , Shareholders

Chancery Dismisses Merger Challenge Concerning Board’s Delegation of Merger Negotiations and Management’s Undisclosed Compensation...

In re Towers Watson & Co. Stockholder Litigation, C.A. No. 2018-0132-KSJM (Del. Ch. July 25, 2019). The ultimate responsibility for considering a merger falls on the board to carry out consistent with each directors’...more

8/6/2019 / Board of Directors , Breach of Duty , Business Judgment Rule , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Delaware Supreme Court Revives Fiduciary Duty Claims in Derivative Lawsuit Concerning Blue Bell’s Listeria Outbreak

Marchand v. Barnhill, No. 533, 2018 (Del. June 19, 2019). As this decision illustrates, while Delaware law imposes a high bar for pleading demand futility and fiduciary oversight claims under what is known as a Caremark...more

7/3/2019 / Blue Bell Creameries , Board of Directors , Breach of Duty , Caremark claim , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Merger Agreement’s Preservation of Privilege for Pre-Merger Communications Found to be Adequate, Notwithstanding that the...

Shareholder Representative Services LLC v. RSI Holdco, LLC, C.A. No. 2018-0517-KSJM (Del. Ch. May 29, 2019). This decision confirms that, in a post-merger dispute between an acquirer and the selling stockholders, broad...more

7/3/2019 / Attorney-Client Privilege , Merger Agreements , Mergers , Privileged Communication , Shareholders

Eric Hacker

Morris James LLP

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