Tyler O'Connell on Board of Directors

Delaware Court of Chancery Upholds Incumbent Directors’ Decision not to Excuse Stockholders’ Non-Compliance with Advance Notice...

Rosenbaum v. CytoDyn Inc., 2021 WL 4775410 (Del. Ch. Oct. 13, 2021) - The Delaware Court of Chancery recently upheld incumbents’ decision not to include insurgent director nominees on the ballot due to their failure to...more

12/28/2021 / Advance Notice , Board of Directors , Bylaws , Fiduciary Duty , Shareholders

Chancery Finds Adversity Between Directors and Formation of Special Committee Shields Against Production of Company-Privileged...

In re: Howard Midstream Energy Partners, LLC, C.A. No. 2021-0487-LWW (Del. Ch. Sept. 22, 2021) - Issues of corporate privilege among directors entail a fact-specific analysis when a dispute arises among them. Here, the...more

12/17/2021 / Board of Directors , Discovery , Document Productions , Work-Product Doctrine

Chancery Applies Recent Zuckerberg Decision and Holds That Demand Was Not Excused

Genworth Fin., Inc. Consol. Deriv. Litig., C.A. No. 11901-VCS (Del. Ch. Sept. 29, 2021) - In a demand futility analysis, Delaware courts have traditionally applied the Rales and Aronson decisions. However, the Delaware...more

12/17/2021 / Board of Directors , Demand Futility , Derivative Suit , Initial Public Offering (IPO)

Chancery Dismisses Derivative Claims That Private Equity Sponsors Comprised A Control Group

Patel v. Duncan, C.A. No. 2020-0418-MTZ (Del. Ch. Sept. 30, 2021) - For stockholders to comprise a control group, the alleged group members must be connected in some “legally significant way – such as by contract, common...more

11/18/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Chancery Denies Motion to Dismiss in Part Because Certain Discussions Between CEO and Acquirer Were not Disclosed in Proxy When...

Teamsters Local 237 Additional Security Benefit Fund v. Caruso, C.A. No. 2020-0620-PAF (Del. Ch. Aug. 31, 2021) - Under Revlon, a director must focus on obtaining a transaction that provides the maximum value for...more

11/4/2021 / Board of Directors , Breach of Duty , Fiduciary Duty , Mergers , Shareholders

Applying Plain Contract Language, Chancery Awards $147 Million in Damages to Start-Up Company for Breach of Joint Venture...

Symbiont.io, Inc. v. Ipreo Hldgs., LLC, C.A. No. 2019-0407-JTL (Del. Ch. Aug. 13, 2021) - Delaware is a pro-contractarian state. When fashioning an award for a breach of contract, a Delaware court can consider: (1) the...more

10/14/2021 / Board of Directors , Breach of Contract , Joint Venture , Non-Compete Agreements

Chancery Grants Special Litigation Committee’s Zapata Motion, Finds Committee Was Sufficiently Independent and Reasonable

Diep v. Sather, C.A. No. 12760-CM (Del. Ch. July 30, 2021) - Under Zapata, when analyzing a motion to dismiss by a special litigation committee, the court evaluates whether the committee was independent, acted in good...more

9/21/2021 / Board of Directors , Breach of Duty , Derivatives , Fiduciary Duty , Motion to Dismiss

Chancery Confirms Operation of Savings Statute and Tortious Interference Framework in Dispute Involving Fiduciaries with Competing...

Skye Mineral Invs., LLC v. DXS Capital (U.S.) Ltd., C.A. No. 2018-0059-JRS (Del. Ch. July 28, 2021) - Delaware’s savings statute—10 Del. C. § 8118(a)—protects claims from being time-barred where they were timely brought in...more

9/10/2021 / Board of Directors , Breach of Duty , Fiduciary Duty , Statute of Limitations

Chancery Awards Attorneys’ Fees for Monetary and Therapeutic Benefits from Goldman Sachs Director Compensation Settlement and...

Stein v. Blankfein, C.A. No. 2017-0354-SG (Del. Ch. Jul. 12, 2021) - This decision concerns fee applications under the “corporate benefit” doctrine for benefits achieved in derivative litigation....more

9/8/2021 / Attorney's Fees , Board of Directors , Breach of Duty , Fiduciary Duty , Goldman Sachs

Chancery Dismisses Conclusory Allegations of Gross Negligence and Disloyalty Against Oracle Officers and Directors Related to...

In re Oracle Corp. Derv. Litig., C.A. No. 2017-0337-SG (Del. Ch. June 21, 2021) - While Delaware maintains a notice pleading standard, this decision reflects that conclusory allegations of breach of fiduciary duty leveled...more

8/17/2021 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Motion to Dismiss

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

Section 225 Action Filed Eight Months After Removal Barred by Laches

Simple Global, Inc. v. Banasik, C.A. No. 2018-0809-PAF (Del. Ch. June 24, 2021) - Under Delaware law, a director or officer who disputes her removal as such may be subject to equitable defenses if she does not proceed...more

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

Chancery Reasons That Board’s Decision To Address Alleged “Red Flags” Related To Pending Litigation, After Litigation Is Resolved,...

Pettry v. Smith et al., C.A. No. 2019-0796-JRS (Del. Ch. June 28, 2021) - As discussed in Caremark and its progeny, fiduciary duties require directors to monitor the business and affairs of a corporation. Here, the Court...more

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

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

Stockholders Lack Derivative Standing to Challenge Transactions Whose Terms Were Set Before They Became Stockholders

In re SmileDirectClub, Inc., 2021 WL 2182827 (Del. Ch. May 28, 2021) - Under the “contemporaneous ownership rule,” to have standing to bring derivative claims, stockholders in a Delaware corporation must own stock at the...more

6/23/2021 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Confirms the Challenges in Pleading Caremark and Non-Shareholder Action Disclosure Claims

Fisher v. Sanborn, C.A. No. 2019-0631-AGB (Del. Ch. Mar. 30, 2021) - Under Court of Chancery Rule 23.1, a plaintiff attempting to bring a derivative action on behalf of a corporation faces a heightened “particularized”...more

4/27/2021 / Board of Directors , Breach of Duty , Caremark claim , Demand Futility , Derivative Suit , Fiduciary Duty , 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 Declines to Order Specific Performance of $5.8 Billion Luxury Hotel Deal Scuttled by COVID-19 Changes to Hotel Business...

AB Stable VIII LLC v. MAPS Hotels and Resorts One LLC, C.A. No. 2020-0310-JTL (Del. Ch. Nov. 30, 2020) - Parties to a sale and purchase agreement (“SPA”) had planned to close a deal to sell fifteen luxury hotels for $5.8...more

1/22/2021 / Board of Directors , Breach of Contract , Mergers , Shareholders

Chancery Dismisses Derivative Action for Failure to Plead Demand Futility Despite Unocal Enhanced Scrutiny

Gottlieb v. Duskin, C.A. No. 2019-0639-MTZ (Del. Ch. Nov. 20, 2020) - Defendants moved to dismiss a derivative action for failure to plead demand futility under Rule 23.1. The complaint alleged that the director...more

1/22/2021 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholders

Mindbody Deal Case Provides Conflict Takeaways For Boards

The Delaware Court of Chancery's recent decision in In re: Mindbody Inc. Stockholders Litigation is important reading for lawyers whose practices include evaluating, addressing and — when necessary — litigating potential...more

12/4/2020 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Invokes Internal Affairs Doctrine to Dismiss Dispute Over Former Delaware Corporation Brought Over Two Years After Its...

Sylebra Capital Partners Master Fund, LTD v. Perelman, et. al., C.A. No. 2019-0843-JRS (Del. Ch. Oct. 9, 2020) - Defendant Scientific Games Corporation (the “Company”) is a gaming and lottery company that reincorporated in...more

12/2/2020 / Board of Directors , Breach of Duty , Bylaws , Fiduciary Duty , Internal Affairs Doctrine , Motion to Dismiss

Chancery Holds That Management Does Not Have Unilateral Authority to Preclude a Director From Obtaining the Company’s Privileged...

In Re WeWork Litig., Consol. C.A. No. 2020-0258-AGB (Del. Ch. Aug. 21, 2020) - In October 2019, The We Company’s (the “Company”) board of directors established a special committee (the “Special Committee”) to evaluate a...more

9/28/2020 / Board of Directors , Breach of Contract , Breach of Duty , Controlling Stockholders , Discovery , Fiduciary Duty , Privileged Communication

Chancery Rules Failure to Disclose “Intrinsic Value” Precludes Corwin Defense – But Does Not Necessarily Suggest a Breach of the...

In In re USG Corp. S’holder Litig., 2020 WL 5126671 (Del. Ch. Aug. 31, 2020), the Court of Chancery granted the director-defendants’ motions to dismiss post-closing money damages claims arising out of the sale of USG...more

9/17/2020 / Acquisitions , Board of Directors , Breach of Duty , Duty of Loyalty , Fiduciary Duty , Shareholder Litigation

Chancery Rejects Bid to Jettison USACafes and its Holding That, Absent Agreement to the Contrary, the Controllers of a Corporate...

Fannin v. UMTH Land Development, L.P. (In re: United Development Funding III, L.P.), C.A. No. 12541-VCF (Del. Ch. Jul. 31, 2020). The Court of Chancery has concluded that in certain situations, equity will, by default,...more

9/8/2020 / Board of Directors , Breach of Contract , Breach of Duty , Fiduciary Duty , Limited Partnerships

Court of Chancery Dismisses Aiding and Abetting Claim Against NetSuite’s Fiduciaries for Role in Alleged Overpayment by Oracle

In re Oracle Corp. Derivative Litig, Consol. C.A. No. 2017-0337-SG (Del. Ch. June 22, 2020) - At the pleadings stage, a claim for aiding and abetting a breach of fiduciary duty requires that it is reasonably conceivable...more

8/4/2020 / Acquisitions , Aiding and Abetting , Board of Directors , Breach of Duty , Fiduciary Duty

Tyler O'Connell

Morris James LLP

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