Tyler O'Connell at Morris James LLP

Chancery Holds Stockholders Can Assert Disclosure Claims on Behalf of Other Stockholders but Must Do So Through a Derivative...

New Enterprise Associates 14, L.P. vs. Rich, C.A. No. 2022-0406-JTL (Del. Ch. March 9, 2023) - Delaware law establishes that directors owe a duty of disclosure which arises as "the application in a specific context of the...more

6/13/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty

Chancery Grants Injunction Under the Delaware Deceptive Trade Practices Act

Next Level Ventures, LLC v. AVID USA Technologies LLC, C.A. No. 2022-0699-MTZ (Del. Ch. March 16, 2023) - The Delaware Deceptive Trade Practices Act (the "DDTPA”), 6 Del. C. § 2531, et seq., prohibits confusing or creating...more

6/13/2023 / Injunctions , Sales & Distribution Agreements , Unfair or Deceptive Trade Practices

Chancery Addresses When Third Parties Are Within the Scope of the Privilege

Police and Fire Ret. Sys. of the City of Detroit v. Musk, C.A. No. 2020-0477-KSJM (Del. Ch. January 31, 2023) - A communication is privileged under Delaware Rule of Evidence 502(b) if it is confidential and "made for the...more

5/4/2023 / Attorney-Client Privilege , Board of Directors , Confidential Communications , Derivative Suit , Shareholders

Chancery Resolves Dispute About Competing Forum Selection and Arbitration Provisions

Fairstead Cap. Mgmt. LLC v. Blodgett, C.A. No. 2022-0673-JTL (Del. Ch. Jan. 6, 2023) - This case highlights the difficulties that can arise when relationships are governed by contracts with competing forum selection and...more

5/4/2023 / Arbitration , Arbitration Agreements , Breach of Contract , Contract Terms , Motion to Compel

Chancery Finds Delaware’s Officer Consent Statute Extends Beyond “Formal Officers” to De Facto or Acting Officers

Harris v Harris, C.A. No. 2019-0736-JTL (Del. Ch. January 19, 2023) - Delaware's Officer Consent Statute provides for service of process on anyone who "accepts election or appointment as an officer of a corporation…or who...more

5/4/2023 / Board of Directors , Breach of Duty , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Finds SPAC’s Sponsor and Board Potentially Violated Fiduciary Duties by Depriving Public Stockholders of the Information...

Delman v. GigAcquisitions3 LLC, C.A. No. 2021-0679-LWW (Del. Ch. January 4, 2023) - Delaware law establishes that fiduciaries of a corporation cannot be exempted from "their loyalty obligation and the attendant equitable...more

4/25/2023 / Breach of Duty , Controlling Stockholders , Entire Fairness Standard , Fiduciary Duty , Mergers , Share Price , Special Purpose Acquisition Companies (SPACs) , Stock Redemption

Delaware Court Enters Default Judgment for Extreme Spoliation

Spoliation of evidence can lead to significant litigation sanctions, including adverse inferences, fee-shifting, and—in egregious cases—the entry of a default judgment. In this recent case involving intentional spoliation of...more

3/28/2023 / Discovery , e-Discovery Professionals , Electronically Stored Information , Evidence , Spoliation

Chancery Finds Stockholder Conferred a Substantial Corporate Benefit by Challenging the Joint Vote of Two Classes of Common Stock...

Garfield v. Boxed Inc., C.A. No. 2022-0132-MTZ (Del. Ch. Dec. 27, 2022). Section 242(b)(2) of the DGCL requires the separate approval of different classes of stock for charter amendments that, inter alia, “increase or...more

2/15/2023 / Bylaws , Delaware General Corporation Law , Mergers , Shareholder Litigation , Shareholders

Chancery Finds Plaintiff Failed To State A Non-Exculpated Claim Against Special Committee Defendants In Complaint Challenging A...

Ligos v. Tsuff, C.A. No. 2020-0435-SG (Del. Ch. Dec. 1, 2022) - The Delaware Supreme Court’s Cornerstone Therapeutics decision established that, although a transaction involving a controller must satisfy entire fairness...more

2/15/2023 / Breach of Duty , Fiduciary Duty , Independent Directors , Mergers , Shareholder Litigation

Court of Chancery Awards Plaintiffs Attorneys’ Fees and Costs in Section 225 Action for Obtaining a Substantial Benefit for the...

Totta v. CCSB, LLC, C.A. No. 2021-0173-KSJM (Del. Ch. Nov. 3, 2022) - Delaware follows the “American Rule”: each party bears its own legal fees and expenses. However, there are certain exceptions. This includes the...more

2/2/2023 / American Rule , Attorney's Fees , Board of Directors , Shareholders

In New AmerisourceBergen Decision, Chancery Applies 'Separate Accrual' Laches Analysis for 'Caremark' Red-Flags Claims

In the latest Delaware corporate decision concerning AmerisourceBergen’s role in the nation’s opioid epidemic, the Delaware Court of Chancery largely rejected arguments that laches barred fiduciary duty claims against...more

1/18/2023 / Board of Directors , Breach of Duty , Caremark claim , Derivative Suit , Fiduciary Duty , Shareholder Litigation

Imposing “A Remedy Of First Impression,” Chancery Divests Party Of Stock Ownership As A Post-Judgment Contempt Sanction Under Rule...

In re Stream TV Networks, Inc. Omnibus Agreement Litig., C.A. No. 2020-0776-JTL (Del. Ch. Oct. 3, 2022) - Court of Chancery Rule 70 speaks to the Court’s discretion in fashioning sanctions for failure to comply with a...more

1/3/2023 / Common Stock , Creditors , Shareholders , Stock Ownership

Chancery Sustains M&A Fraud Claims Based On Near-Term EBITDA Projections

In re P3 Health Grp. Hldgs., LLC, C.A. No. 2021-0518-JTL (Del. Ch. Oct. 26, 2022) - This recent decision addresses three points of interest relevant to fraud claims....more

1/3/2023 / EBITDA , Federal Rule 12(b)(6) , Fraud , Motion to Dismiss

Chancery Grants Specific Performance For Release of Escrowed Funds, Rejects Sellers’ Representative’s Arguments to Withhold Funds...

Am. Healthcare Admin. Services Inc. v. Aizen, C.A. No. 2019-0793-JTL (Del. Ch. Nov. 18, 2022) - Parties to acquisition agreements often have discretion concerning when to instruct an escrow agent to distribute funds...more

12/8/2022 / Breach of Contract , Covenant of Good Faith and Fair Dealing , Implied Covenants

Chancery Rules That Delisted and Long-Dark Corporation Failed To Show Harm Warranting a Confidentiality Order for Basic Financial...

Rivest v. Hauppauge Digital, Inc., C.A. No. 2019-0848-PWG (Del. Ch. Sept. 1, 2022) - Plaintiff stockholder sought to inspect the books and records of a defendant company, requesting a narrow universe of annual and...more

11/29/2022 / Books & Records , Delaware General Corporation Law , Section 220 Request , Shareholder Litigation , Shareholders

Chancery Finds Asset Purchase Agreement Required Buyer to Indemnify Seller for Liability Under State Tobacco Settlement

ITG Brands LLC v. Reynolds Am., Inc., C.A. No. 2017-0129-LWW (Del. Ch. Sept. 30, 2022) - Plaintiff acquired four cigarette brands from the defendant under an asset purchase agreement. Prior to entering into the APA, the...more

11/29/2022 / Acquisitions , Asset Purchase Agreements , Contract Interpretation , Contract Terms , Mergers , Purchase Agreement

Chancery Suggests Alternative Approach To Contracts Providing That Prohibited Acts Are Void Ab Initio

XRI Investment Holdings LLC v. Holifield, et al., C.A. No. 2021-0619-JTL (Del. Ch. Sept. 13, 2022) - Under precedents such as CompoSecure, L.L.C. v. CardUX, LLC (Del. 2018), acts defined by an LLC agreement as “void” or...more

11/18/2022 / Board of Directors , Breach of Contract , Limited Liability Company (LLC) , LLC Agreements , Shareholders

Chancery Sustains Claims for Improper Termination of Agreements For Cause in Connection with a Joint Venture to Develop Data...

W.D.C. Holdings, LLC v. IPI Partners, LLC, C.A. No. 2020-1026-JTL (Del. Ch. June 22, 2022) - Two entities entered into a joint venture to develop data centers for Amazon. One entity managed the joint venture day to day,...more

11/15/2022 / Breach of Contract , Breach of Duty , Fiduciary Duty , LLC Agreements

Chancery Dismisses Claims Alleging Directors Approved Spring-Loaded Stock Options Before Press Releases on COVID-19 Vaccine...

In re Vaxart, Inc. S’holder Litig., Consol. C.A. No. 2020-0767-PAF (Del. Ch. June 3, 2022) - A small biotechnology company issued a press release that connected the company to the federal government’s Operation Warp Speed...more

11/15/2022 / Board of Directors , Breach of Duty , Fiduciary Duty , Shareholder Litigation , Shareholders

Chancery Holds That Controlling Stockholder Approving Exclusive Forum Selection Clause In Charter Amendment Impliedly Consented To...

In Re Carvana Co. S’holders Litig., C.A. No. 2020-0415-KSJM (Del. Ch. Aug. 31, 2022) - In Delaware, parties may waive the requirement of personal jurisdiction either expressly or impliedly....more

11/8/2022 / Breach of Duty , Fiduciary Duty , Motion to Dismiss , Personal Jurisdiction

Chancery Dismisses Claims in Favor of Arbitration in Dispute over Sale of Pittsburgh Penguins

Wildfire Productions, L.P. v. Team Lemieux LLC, C.A. No. 2021-1072-PAF (Del. Ch. June 29, 2022) - The Federal Arbitration Act and the public policy of Delaware favor the resolution of disputes through arbitration....more

11/4/2022 / Arbitration , Breach of Duty , Consent Agreements , Federal Arbitration Act , Fiduciary Duty , Motion to Compel

Chancery Declines to Order Acquirer to Make Contingent Payments after Discontinuing Development of a Medical Product

Pavel Menn v. ConMed Corp., C.A. No. 2017-0137-KSJM (Del. Ch. June 30, 2022) - Plaintiff was a representative of stockholders who had entered into a stock purchase agreement (“SPA”), in which the defendant acquired a...more

11/4/2022 / Acquisitions , Breach of Contract , Contract Terms , Stock Purchase Agreement

Chancery Finds That Stockholder’s Broad Section 220 Demand Lacked The Precision And Plus Factors Required To Entitle Shareholder...

Oklahoma Firefighters Pension & Ret. Sys. v. Amazon.com, Inc., C.A. No. 2021-0484-LLW (Del. Ch. June 1, 2022) - In reviewing the propriety of a stockholder’s Section 220 demand to inspect corporate records, Delaware courts...more

10/18/2022 / Books & Records , Breach of Duty , Fiduciary Duty , Inspection Rights , Section 220 Request

On Motion To Dismiss, Court of Chancery Holds That Alleged Disclosure Violations Were Insufficient To Rebut Corwin Protections Of...

Teamster Members Ret. Plan v. Randall S. Dearth et al., C.A. No. 2020-0807-MTZ (Del. Ch. May 31, 2022) - Under the Supreme Court’s decision in Corwin and its progeny, a transaction approved by a fully informed, uncoerced...more

10/11/2022 / Acquisitions , Breach of Duty , Corwin Doctrine , Fiduciary Duty , Motion to Dismiss , Shareholder Litigation

Delaware Supreme Court Enforces Class Vote Requirement, Reasons There Is No Insolvency Exception to Section 271 Of The Delaware...

Stream TV Networks, Inc. v. SeeCubic, Inc., No. 360, 2021 (Del. June 15, 2022) - Section 271 of the Delaware General Corporation Law provides, among other things, that a majority vote of stockholders is required to sell...more

10/11/2022 / Board of Directors , Delaware General Corporation Law , Insolvency , Shareholder Approval , Shareholders

Tyler O'Connell

Morris James LLP

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