Tyler O'Connell on Board of Directors

Chancery Rejects Argument that Books and Records Plaintiff Could “Retroactively” Comply with Statutory Demand Requirements

Martinez v. GPB Capital Holdings, LLC, C.A. No. 2019-1005-SG (Del. Ch. June 9, 2020) - The Delaware Court of Chancery largely entered judgment on the pleadings in favor of GPB Capital Holdings, LLC (“Defendant”), the...more

7/29/2020 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholders

Court of Chancery Sustains Aiding-and-Abetting Breach of Fiduciary Duty Claim Against Financial Advisor Based on its Conflicts of...

Morrison v. Berry, C.A. No. 12808-VCG (Del. Ch. June 1, 2020) - Even if fiduciary duty of care claims against a target company’s board of directors are exculpated, an aiding-and-abetting claim against a financial advisor...more

7/21/2020 / Aiding and Abetting , Board of Directors , Breach of Duty , Fiduciary Duty , Going-Private Transactions

Delaware Court of Chancery Declares Board Action Void For Equitable Reasons, Finding Corporate Directors Deceived Other Board...

Palisades Growth Capital II, L.P. v. Bäcker, C.A. No. 2019-0931-JRS (Del. Ch. Mar. 26, 2020). In keeping with longstanding Delaware precedent, the Delaware Court of Chancery recently held that it may void an action by a...more

4/30/2020 / Board Meetings , Board of Directors , Coronavirus/COVID-19 , Delaware General Corporation Law

Chancery Denies Motions for Summary Judgment in Tesla Litigation, Questions Remain as to Whether Musk is a Controlling Stockholder

In re Tesla Motors, Inc. S’holder Litig., C.A. No. 12711-VCS (Del. Ch. Feb. 4, 2020). The Delaware Court of Chancery denied plaintiffs’ and defendants’ (including Elon Musk’s) motions for summary judgment on the grounds that...more

3/11/2020 / Acquisitions , Board of Directors , Breach of Duty , Controlling Stockholders , Elon Musk , Fiduciary Duty , Shareholders , Tesla

Delaware Court of Chancery Grants Motion to Dismiss Disclosure Claims Because Hedge Fund had Sufficient Information to Consider...

Chatham Asset Mgmt., LLC v. Papanier, C.A. No. 2017-0088-AGB (Del. Ch. Jan. 13, 2020). The directors of a Delaware corporation that makes a self-tender offer must disclose all material facts. A fact is material if there is...more

2/26/2020 / Board of Directors , Breach of Duty , Fiduciary Duty , Motion to Dismiss

Supreme Court Affirms Dismissal of Uber Derivative Action for Failure to Plead Demand Futility

Mcelrath v. Kalanick, No. 181-2019 (Del. Jan. 13, 2020). This case exemplifies the Delaware courts’ approach to examining demand futility. In 2016, Uber Technologies, Inc. (“Uber”) acquired Ottomotto LLC (“Otto”), a...more

2/18/2020 / Board of Directors , Demand Futility , Derivative Suit , Google , Uber

Chancery Further Explains the “Proper Purpose” Requirement for Section 220 Demands

Lebanon County Employees’ Retirement Fund v. AmerisourceBergen Corp., C.A. No. 2019-0527-JTL (Del. Ch. Jan. 13, 2020). Section 220 of the Delaware General Corporation Law (“DGCL”) provides stockholders seeking information...more

2/12/2020 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Sustains Claims Against Board Chairman who Rolled Over Equity in Going-Private Transaction and Officers Who Crafted...

Morrison v. Berry, C.A. No. 12808-VCG (Del. Ch. Dec. 31, 2019). Plaintiff, a former stockholder of The Fresh Market, Inc. (the “Company”), brought claims arising out Apollo’s 2016 acquisition of the Company....more

1/29/2020 / Board of Directors , Breach of Duty , Business Judgment Rule , Fiduciary Duty , Mergers , Shareholders

Chancery Dismisses Stockholder Claims that a Minority Owner was a Controlling Stockholder or that a Majority of the Board was...

In re: Essendant, Inc. Stockholder Litigation, C.A. No. 2018-0789-JRS (Del. Ch. Dec. 30, 2019). When as here a Delaware corporation’s charter contains an exculpation provision under Section 102(b)(7) of the Delaware...more

1/29/2020 / Board of Directors , Breach of Duty , Controlling Stockholders , Fiduciary Duty , Merger Agreements , Mergers , Shareholder Litigation

Chancery Finds Proper Purpose in Books and Records Demand to Investigate Potential Wrongdoing in CBS-Viacom Merger, Orders...

Bucks Cty. Employees Ret. Fund v. CBS Corp., C.A. No. 2019-0820-JRS (Del. Ch. Nov. 25, 2019). A stockholder seeking books and records in Delaware states a proper purpose for inspection by demonstrating a credible basis to...more

12/11/2019 / Board of Directors , Books & Records , Breach of Duty , Fiduciary Duty , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Finds Request for “Corrective Action” to be a Litigation Demand, Dismisses Derivative Claims for Failure to Plead...

Solak v. Welch, et al., C.A. No. 2018-0810-KSJM (Del. Ch. Oct. 30, 2019). Under the Delaware Supreme Court’s decision in Spiegel v. Buntrock, 571 A.2d 767 (Del. 1990), a stockholder who makes a demand upon the board to...more

12/2/2019 / Board of Directors , Breach of Duty , Demand Futility , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Delaware Supreme Court Provides Additional Guidance on Pleading Direct Claims Against Controllers and Control Groups

Sheldon v. Pinto Technology Ventures, L.P., No. 81, 2019 (Del. Oct. 4, 2019). The Delaware Supreme Court affirmed the Court of Chancery’s dismissal of an alleged direct claim for dilution of the voting and economic...more

11/22/2019 / Board of Directors , Controlling Stockholders , Derivative Suit , Shareholder Litigation

Chancery Denies Motion for Reargument, Finding No Change to Delaware Legal Principles for Existence of “Control Group” of...

Silverberg v. Padda, C.A. No. 2017-0250-KSJM (Del. Ch. Oct. 18, 2019) - Delaware courts recognize that a group of stockholders can constitute a “control group” when those stockholders “are connected in some legally...more

11/20/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholders

Chancery Denies Former Derivative Plaintiff Standing to Challenge Merger That Extinguished Derivative Claims

Morris v. Spectra Energy P’tners (DE) GP, LP, C.A. No. 2019-0097-SG (Del. Ch. Sept. 30, 2019). When a stockholder derivative claim is extinguished in a merger, the former derivative plaintiff may have standing to contest...more

11/1/2019 / Board of Directors , Derivative Suit , Mergers , 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 Rejects Attempt to Allege Gentile v. Rossette Direct Claims for Dilutive Preferred Stock Issuances

Silverberg v. Padda, C.A. No. 2017-0250-KSJM (Del. Ch. Sept. 19, 2019). The Court of Chancery held that plaintiff common stockholders’ fiduciary duty claims challenging the company’s overpayment for dilutive preferred...more

10/15/2019 / Board of Directors , Derivative Suit , Fiduciary Duty , Minority Shareholders , Preferred Shares

Chancery Examines Framework of Fiduciary Disclosure Obligations in Soliciting Private Investments

Clark v. Davenport, C.A. No. 2017-0839-JTL (Del. Ch. July 18, 2019). This opinion decides a motion to dismiss fraud and related tort claims arising out of various investments against a former director and CEO and an...more

8/22/2019 / Board of Directors , Federal Rule 12(b)(6) , Fiduciary Duty , Fraud , Motion to Dismiss , Shareholders

Court of Chancery Addresses Stockholder Standing to Enforce Corporate Contracts, Declines to Dismiss Claim for Breach of...

Ark. Teacher Ret. Sys. v. Alon USA Energy, Inc., C.A. No. 2017-0453-KSJM (Del. Ch. Jun. 28, 2019). Section 203 of the Delaware General Corporation Law, an anti-takeover statute, prohibits a target from entering into a...more

7/12/2019 / Board of Directors , Breach of Contract , Breach of Duty , Delaware General Corporation Law , Fiduciary Duty , Shareholders

Officer and Director Entitled to Mandatory Indemnification Regardless of Circuitous Path to Victory

Brown v. Rite Aid Corporation, C.A. No. 2017-0480-MTZ (Del. Ch. May 24, 2019). Even when an indemnitee takes a circuitous path to victory, the indemnitee is entitled to indemnification under 8 Del. C. § 145(c) for...more

7/3/2019 / Board of Directors , Breach of Duty , Fiduciary Duty , Indemnification , Motion for Summary Judgment , Motion to Dismiss

Delaware Supreme Court Rejects MFW Defense Because of Delay in Safeguards

Olenik v. Lodzinksi, No. 392, 2018 (Del. Apr. 5, 2019). Under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014), deferential business judgment review governs mergers between a controlling stockholder and the controlled...more

4/11/2019 / Appeals , Board of Directors , Breach of Duty , Business Judgment Rule , Controlling Stockholders , DE Supreme Court , Entire Fairness Standard , Fiduciary Duty , Mergers , Standard of Review

Chancery Applies Corwin Doctrine to Medium-Form Merger Absent Controller Conflict

English v. Narang, C.A. No. 2018-0221-AGB (Del. Ch. Mar. 20, 2019). Under the well-known Corwin doctrine, when a transaction not subject to the entire fairness standard of review is approved by a fully informed, uncoerced...more

4/1/2019 / Board of Directors , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Mergers

Chancery Finds Controlling Stockholder Impliedly Consented to Jurisdiction Through Board’s Adoption of Delaware Forum-Selection...

In re Pilgrim’s Pride Corp. Derivative Litigation, Consol. C.A. No. 2018-0058-JTL (Del. Ch. Mar. 15, 2019). Stockholders that control Delaware corporations find themselves subject to fiduciary duties. According to this...more

3/20/2019 / Board of Directors , Breach of Duty , Controlling Stockholders , Fiduciary Duty , Minority Shareholders , Shareholder Litigation , Shareholders , Subsidiaries

Tyler O'Connell

Morris James LLP

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