Lewis Lazarus at Morris James LLP

Chancery Grants Motion to Dismiss Breach of Fiduciary Duty Claims Against Officers in Controlling Stockholder Transaction Subject...

Kormos v. Playtika Hldg. UK II Ltd., C.A. 2023-0396-SG (Del. Ch. May 3, 2024) - In this decision involving breach of fiduciary duty claims against two officers, the Court granted the individual defendants’ motions to...more

8/16/2024 / Board of Directors , Breach of Duty , Controlling Stockholders , Entire Fairness Standard , Fiduciary Duty , Mergers

Chancery Dismisses Derivative Action Based on Plaintiff’s Failure to Allege Particularized Facts Demonstrating Demand Futility

The power to bring a claim for breach of duty causing injury to a Delaware corporation resides with the board of directors. It is part of their duty under Section 141(a) of the Delaware General Corporation Law to manage the...more

5/15/2024 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Dismisses Caremark Action Based on Insufficient Allegations of Bad Faith

Clem v. Skinner, et al., C.A. 2021-0240-LWW (Del. Ch. Feb. 19, 2024) - This Caremark decision involved the retail pharmacy company, Walgreens, and concerned billing practices for a particular insulin pen product that gave...more

5/6/2024 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Invalidates Elon Musk’s $55.8 Billion Pay Package

Tornetta v. Musk, et al., C.A. 2018-0408-KSJM (Del. Ch. Jan. 30, 2024) - Stockholders of Tesla, Inc. brought a derivative action against Elon Musk and six individual Tesla directors, alleging that the directors breached...more

4/26/2024 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Decides Scope of Expert’s Authority in Valuation Dispute Resolution Mechanism

Paul v. Rockpoint Group LLC, C.A. 2018-0907-JTL (Del. Ch. Jan. 29, 2024) - This dispute arose from a disagreement over the authority of an appraiser to include legal assertions and extrinsic evidence in his valuation. The...more

3/27/2024 / Breach of Contract , Contract Disputes , Contract Terms , Dispute Resolution

Chancery Dismisses Double-Derivative Claims for Failure To Plead Demand Futility

City of Hialeah Emps. Ret. Sys. v. Insight Venture Partners, C.A. No. 2022-0846-MTZ (Del. Ch. Dec. 28, 2023) - A venture capital fund invested in two different entities. One of the entities then acquired the other. In the...more

3/20/2024 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholder Litigation

Chancery Holds that LLC Agreement Did Not Confer Jurisdiction Over Contract and Tort Claims

Ramco Asset Mgmt. LLC v. USA Rare Earth, LLC, C.A. No. 2022-0665-SG (Del. Ch. Oct. 20, 2023) - Plaintiffs brought claims alleging improper dilution of their equity interests when transferring their holdings in an...more

2/9/2024 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

2023 Delaware Corporate and Commercial Case Law Year in Review

This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year. Our criteria for selection are that the decision either meaningfully changed...more

2/9/2024 / Board of Directors , Breach of Duty , Corporate Governance , Derivative Suit , Fiduciary Duty , Mergers , Shareholder Litigation , Shareholders

Chancery Concludes Accountant Provision in Stock Purchase Agreement Calls for Expert Determination Rather than Arbitration

ArchKey Intermediate Holdings Inc. v. Mona, C.A. No. 2021-0383-JTL (Del. Ch. Oct. 3, 2023) - Parties to a stock purchase agreement disputed post-closing price adjustments. The agreement called for an independent accountant...more

2/7/2024 / Breach of Contract , Breach of Duty , Fiduciary Duty , Shareholders , Stock Purchase Agreement

Chancery Denies Advancement for Director Suspected of Leaking Confidential Financial Information

Hoffman v. First Wave BioPharma, Inc., C.A. No. 2023-0097-MTZ (Del. Ch. September 27, 2023) - A company's board of directors suspected one of its members had leaked the company's financial information to a third party and...more

1/31/2024 / Breach of Duty , Fiduciary Duty , Indemnification , Shareholder Litigation

Chancery Upholds Claims Against LLC Officers and Others Arising from Squeeze-Out of Minority Unitholders

Cygnus Opportunity Fund, LLC v. Washington Prime Group, LLC, C.A. No. 2022-0718-JTL (Del. Ch. Aug. 9, 2023) - An Indiana corporation reorganized via bankruptcy into a Delaware LLC, and a senior note holder negotiated for...more

1/2/2024 / Board of Directors , Breach of Duty , Contract Terms , Fiduciary Duty , Limited Liability Company (LLC) , Mergers

Chancery Approves Revised Class Action Settlement After Denying Initial Proposal Due to Overly Broad Release

In re AMC Entm't Holdings, Inc. S'holder Litig., Consol. C.A. No. 2023-0215-MTZ (Del. Ch. July 21, 2023) - In re AMC Entm't Holdings, Inc. S'holder Litig., Consol. C.A. No. 2023-0215-MTZ (Del. Ch. Aug. 11, 2023) - The...more

12/11/2023 / Board of Directors , Breach of Duty , Class Action , Class Action Settlement , Fiduciary Duty

Chancery Rejects Declining-Percentage Method, Awards $266.7 Million in Attorneys’ Fees for $1 Billion Class Action Settlement

In re Dell Techs. Inc. Class V S'holders Litig., C.A. No. 2018-0816-JTL (Del. Ch. July 31, 2023, revised Aug. 22, 2023) - Stockholders filed class actions in the Court of Chancery challenging the terms of a redemption of a...more

12/11/2023 / Board of Directors , Breach of Duty , Class Action , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Approves Reduced Fee Award for Derivative Settlement Based on Therapeutic Benefits

Sciabacucchi v. Howley, C.A. No. 2021-0938-LWW (Del. Ch. July 3, 2023) - A stockholder filed a derivative action alleging breach of fiduciary duty and unjust enrichment in connection with a board compensation committee’s...more

11/10/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation

Chancery Denies Books and Records Request Related to Disney’s Opposition to Florida Legislation Prohibiting LGBTQ+ Topics in...

Simeone v. The Walt Disney Company, C.A. No. 2022-1120-LWW (Del. Ch. June 27, 2023) - The Walt Disney Company opposed Florida legislation that limits instruction on sexual orientation and gender identity in Florida...more

11/1/2023 / Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Grants Single-Member Special Litigation Committee’s Motion To Terminate Derivative Claims

In re Baker Hughes, a GE Company, Derivative Litigation, C.A. No. 2019-0201-LWW (Del. Ch. Apr. 17, 2023) - After the Court of Chancery made a pleadings stage determination that the demand was futile, a board of directors...more

9/20/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Court of Chancery Sustains Derivative Complaint Based on Allegations That the Board Acted in Bad Faith

Delaware’s demand futility analysis for derivative claims is designed to prevent stockholders from divesting the board of its control of an asset and enabling stockholders to pursue weak claims. To plead demand futility under...more

9/20/2023 / Board of Directors , Breach of Duty , Delaware General Corporation Law , Derivative Suit , Fiduciary Duty

Chancery Determines That Former Executives Are Not Entitled to Equity Awards Under Separation Agreement

SeaWorld Entm't, Inc. v. Andrews, C.A. No. 2020-0955-NAC (Del. Ch. May 19, 2023) - SeaWorld Entertainment, Inc. granted unvested equity awards to employees. Pursuant to equity agreements, the awards would vest if the...more

9/12/2023 / Breach of Contract , Motion to Dismiss , Separation Agreement

Following Flawed Business Acquisition, Chancery Dismisses Derivative Complaint for Failure to Plead Demand Futility

City of Coral Springs Police Officers' Pension Plan v. Dorsey, C.A. No. 2022-0091-KSJM (Del. Ch. May 9, 2023) - A terrible business decision does not ensure the Court of Chancery will sustain a derivative claim. A...more

8/24/2023 / Breach of Duty , Demand Futility , Fiduciary Duty , Shareholders

Chancery Relies on Unanimous Dictionary Entries To Confirm Unambiguity of Supply Agreement

Thermo Fisher Scientific PSG Corp. v. Arranta Bio MA, LLC, C.A. No. 2022-0608-NAC (Del. Ch. Apr. 4, 2023) - The plaintiff and the defendant entered into a supply agreement under which the defendant would manufacture...more

8/23/2023 / Breach of Contract , Breach of Duty , Contract Terms , Fiduciary Duty

Supreme Court Affirms Chancery’s Interpretation of Word “And” in Option Agreements

Weinberg v. Waystar, Inc., No. 274, 2022 (Del. March 16, 2023) - The appellant was a former chief marketing officer of the appellee, a Delaware corporation. Soon after her termination, the appellant timely exercised her...more

6/21/2023 / Breach of Contract , Employment Contract , Restrictive Covenants

Chancery Rules That Moving Situs of Trust to Delaware Supports Personal Jurisdiction Under the State’s Long-Arm Statute

Harris v. Harris, C.A. No. 2019-0736-JTL (Del. Ch. Jan. 12, 2023) - Three children filed suit against their mother and her associates, alleging they had seized control of a family-owned corporation and engaged in...more

5/4/2023 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Personal Jurisdiction

Court of Chancery Re-Affirms that Director-Designating Investor is Entitled to Privileged Communications from Company Counsel in...

An employee, agent or principal of an investor is often designated to serve on a company’s board of directors when that company receives an investment or acquires the investor. That board member then becomes privy to legal...more

4/19/2023 / Appraisal , Books & Records , Delaware General Corporation Law , Mergers , Section 220 Request

Supreme Court Interprets an Alleged Irrevocable Proxy and Finds It Does Not Run with Shares and Bind Subsequent Owner

KTS Strategies brings years of experience providing clients in a diverse range of industries with comprehensive policy and advocacy advice before federal, state, and local agencies. In North Carolina, we advise local...more

4/7/2023 / Delaware General Corporation Law , Irrevocable Proxy , Limited Partnerships , Partnership Agreements

Delaware Corporate and Commercial Case Law Year in Review - February 2023