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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

Chancery Dismisses Derivative Claims Alleging Insider Trading and Misleading Disclosures for Failure to Plead Demand Futility

In re Zimmer Biomet Hldgs., Inc. Deriv. Litig., C.A. No. 2019-0455-LWW (Del. Ch. Aug. 25, 2021) - Under Court of Chancery Rule 23.1, a stockholder-plaintiff may only bring a derivative suit on behalf of a company if the...more

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

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

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

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

Court of Chancery Stays Action for Violation of Rule against Claim Splitting Pending Resolution of a Duplicative Federal Action

Goureau v. Lemonis, C.A. No. 2020-0486-MTZ (Del. Ch. Mar. 30, 2021) Delaware follows the modern “transactional” view of claim splitting, which bars a plaintiff from bringing bring duplicative proceedings in different courts...more

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

Delaware Supreme Court Adopts Post-Merger Derivative Standing Framework From In re Primedia, Inc. Shareholders Litigation

Morris v. Spectra Energy Partners (DE) GP, LP, No. 489, 2019 (Del. Jan. 22, 2021) - In Delaware corporate law, “the standing inquiry has assumed special significance,” especially in the post-merger context. The Delaware...more

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

Chancery Excuses Demand Where General Partner and its Controller Faced Substantial Likelihood of Liability

Lipman v. GBP Capital Holdings, LLC, C.A. No. 2020-0054-SG (Del. Ch. Nov. 18, 2020) - In derivative actions, a plaintiff must either make a pre-suit demand or plead with particularity why demand should be excused. As this...more

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

Chancery Questions Utility of Aronson Test, Dismisses Derivative Suit of Facebook Stockholder for Failure To Allege Demand...

United Food and Comm. Workers Union v. Zuckerberg, C.A. No. 2018-0671-JTL (Del. Ch. Oct. 26, 2020) - In its recent decision in United Food and Comm. Workers Union v. Zuckerberg, the Court of Chancery discussed the legal...more

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

Chancery Sustains Breach of Fiduciary Duty Claim Against Long-Time Friend and Financial Advisor, and Addresses Double-Derivative...

Bamford v. Penfold, L.P., C.A. No. 2019-0005-JTL (Del. Ch. Feb. 28, 2019). After realizing that a 2016 reorganization stripped them of their voting and other governance rights in a highly profitable limited liability...more

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

Chancery Addresses Discovery and Privilege Implications of Oracle Special Litigation Committee’s Decision to Defer to...

In re Oracle Corp. Deriv. Litig., C.A. No. 2017-0337-SG (Del. Ch. Dec. 4, 2019). In this decision, the Delaware Court of Chancery considered the implications of a decision by a special litigation committee of Oracle...more

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

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

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

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

Chancery Declines to Stay or Dismiss Second-Filed Derivative Suit Against Google’s Parent Company

Irving Firemen’s Relief and Ret. Fund v. Page, C.A. No. 2019-0355-SG (Del. Ch. Jul. 1, 2019). Delaware courts typically apply the McWane first-filed doctrine to stay a later-filed Delaware case in favor of a case already...more

Chancery Ends Trip for Uber Derivative Lawsuit

McElrath v. Kalanick, C.A. No. 2017-0888-SG (Del. Ch. Apr. 1, 2019). This derivative action arose out of Uber’s acquisition of a self-driving vehicle firm named Otto, which involved former Google employees. Google sued...more

Chancery Addresses Pre-Suit Demand Refusal Standard for Special Committees

City of Tamarac Firefighters’ Pension Trust Fund v. Corvi, C.A. No. 2017-0341-KSJM (Del. Ch. Feb. 12, 2019). Under Delaware law, stockholders who wish to pursue a derivative claim on the corporation’s behalf face an...more

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