Delaware Law Updates: 2017 Year To Date Review

by McCarter & English, LLP

McCarter & English, LLP

Our Delaware Corporate and Alternative Entity Law attorneys closely follow the opinions coming from Delaware’s Supreme Court and Court of Chancery. Our 2017 Year to Date Review is a collection of brief summaries of selected cases concerning Delaware Corporate and Alternative Entity Law. While this list is a selection of important cases, our intent is to provide our readers with the rationale behind a court’s holding to ultimately provide information that may be helpful in strategic and business decisions concerning litigation and commercial arrangements. Our Delaware Corporate and Alternative Entity Law attorneys are experienced in all aspects of Delaware law, including representing our clients in a variety of business transactions and Delaware opinion work. The Delaware Corporate and Alternative Entity attorneys also represent public and private Delaware corporations, LLCs, LPs and GPs in corporate, commercial, shareholder and other litigation in the Delaware Court of Chancery.

Delaware Court of Chancery Addresses Fee-Shifting Bylaws and Raises the Question of Whether Fee-Shifting Could Be Plausible by a Stockholder’s Own Conduct or Act Under Section 102(b)(6) of the DGCL (2/1/17)
This opinion confirms that corporate bylaws that attempt to shift litigation expenses, including attorneys’ fees, to stockholders would be held to be invalid under Delaware law. Read this article

Pleading Failures Doom Disclosure Claims in Short-Form Merger Case (2/8/17)
United Capital serves as a reminder that appraisal is generally the only remedy available to stockholders in a short-form merger, and that even where potentially significant facts have not been disclosed (such as the specifics of personal relationships underlying disclosed conflicts), pleading disclosure violations can be difficult. Read this article

Pleading Breach of the Implied Covenant of Good Faith and Fair Dealing in the Publicly Traded Master Limited Partnership Context (2/17/17)
Dieckman serves as a reminder that even though Delaware limited partnerships are granted wide contractual freedom, including the freedom to disclaim all fiduciary duties, they cannot disclaim the implied covenant of good faith and fair dealing. Read this article

Delaware Supreme Court Redefines Contractual Good-Faith Standard and Cautions Limited Partners That Their Obligations Under the LPA Can Be Enlarged Without Their Consent (4/27/17)
This opinion is noteworthy because the Delaware Supreme Court, through this opinion, has provided a new, less stringent test for bad-faith conduct, departing from its earlier standard. Read this article

The Steadfast Refusal of the Delaware Courts to Grant Creditors Quasi-Standing to Assert Fiduciary Claims at Insolvency (5/3/17)
This decision highlights: 1) Delaware courts remain steadfast against the growing trend in other jurisdictions permitting creditor suits against LLCs and their members; and 2) lawyers advising clients involved with high-yield creditor ventures should pay close attention to agreements and create specific contract rights related to management duties to creditors, including potentially heightened duties as the venture approaches insolvency. Read this article

Delaware Court of Chancery Affirms Fraud Exception to Parties’ Contractual Allocation of Risk (5/31/17)
This opinion is noteworthy in light of the Court’s recognition of certain exceptions to the widely accepted practice of honoring the allocation of risk agreed to between contracting parties, particularly in the case of fraud. Read this article

Delaware Court of Chancery Provides Clarity on the “Quasi-Appraisal” Remedy and Post-Closing Claims (6/2/17)
This opinion reinforces that plaintiffs cannot easily sidestep the Corwin protections by pleading garden-variety disclosure claims. Read this article

Delaware Supreme Court Explores the Definition of “Commercially Reasonable Efforts" (6/5/17)
The Delaware Supreme Court’s holding is noteworthy concerning its interpretation of the covenants to exercise “commercially reasonable efforts” and “reasonable best efforts” as imposing an affirmative obligation on the parties. Read this article

Appraisal Arbitrage Risk; Delaware Court Finds Fair Value to Be Lower Than Merger Price (6/6/17)
SWS exemplifies the risks inherent in an appraisal arbitrage strategy and demonstrates the Court of Chancery’s willingness to declare an appraisal fair value that is lower than a merger price. Read this article

Venture Capital Firms and Founders Should Heed Delaware Court Decision (6/23/17)
The Court’s decision is significant in light of the role that venture capitalists play in the development of startups and emerging growth companies and their evolving relationship with the founders of these companies. Read this article

Delaware Court of Chancery Upholds Continuous Ownership Rule in Dismissing Derivative Claims of Mismanagement (7/7/17)
The plaintiffs’ remaining claim met a similar fate based on the Court’s finding that the plaintiffs failed to set forth a claim for inseparable fraud. Read this article

Delaware Supreme Court Rejects Over-Expansive Application of True-Up Provision in Purchase Agreement  (7/21/17)
This decision highlights the importance of construing specific contractual provisions in the context of the entire agreement. Read this article

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McCarter & English, LLP | Attorney Advertising

Written by:

McCarter & English, LLP

McCarter & English, LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.