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Board of Directors Standard of Review Fiduciary Duty

Cadwalader, Wickersham & Taft LLP

Delaware Supreme Court Reverses Court of Chancery on Standard of Review Applicable to Reincorporation Transactions in...

In its unanimous decision rendered on February 4, 2025, the Delaware Supreme Court reversed the Delaware Court of Chancery’s ruling in the widely followed “TripAdvisor” case (Palkon v. Maffei) regarding the standard of review...more

A&O Shearman

Delaware Supreme Court Holds Business Judgment Rule Applies To Controlled Corporation’s Change Of Corporate Domicile From Delaware...

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On February 4, 2025, the Delaware Supreme Court, on interlocutory appeal, reversed the decision of the Delaware Court of Chancery to deny defendants’ motion to dismiss breach of fiduciary duty claims against directors and a...more

A&O Shearman

Delaware Court Of Chancery Finds That Controller Sale Of Company Did Not Harm Minority Interests

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On January 7, 2025, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery issued a post-trial decision in favor of defendant, a private equity fund (the “Fund”), finding that the Fund’s sale of a portfolio...more

A&O Shearman

Delaware Court Of Chancery Holds Stockholder Vote Following Post-Trial Decision Cannot Retroactively Ratify A Transaction That...

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As we previously reported, in January 2024, the Court held in a stockholder derivative suit against the CEO and directors of a sustainable energy and electric vehicle company (the “Company”) that a record-setting $55.8...more

A&O Shearman

Delaware Supreme Court Holds MFW Is Applicable To Controlling Stockholder Transactions Even Outside Of Freeze-Out Context

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On April 4, 2024, in an opinion authored by Chief Justice Collins J. Seitz, Jr., the Supreme Court of Delaware sitting en banc held that the framework articulated in Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014)...more

A&O Shearman

Delaware Chancery Court Applies Entire Fairness To State Of Incorporation Conversions

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On February 20, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery denied in part and granted in part a motion to dismiss a stockholder action against TripAdvisor, Inc. and its parent (together, the...more

A&O Shearman

Court Of Chancery Rescinds CEO Compensation Package Under Entire Fairness Review

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In a January 30, 2024, post-trial ruling, Vice Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery rescinded a compensation package valued at $55.8 billion awarded by Tesla, Inc. to its CEO,...more

A&O Shearman

Delaware Court Of Chancery Holds That Controlling Stockholder Conduct Did Not Breach Fiduciary Duties But Rendered Buyout...

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On January 24, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery awarded a stockholder plaintiff class more than $18 million, finding that the acquisition of the “Hometown” division of Sears Hometown...more

Paul Hastings LLP

Delaware Chancery Upholds Rejection of Advance Notice; Strikes Down Certain Bylaw Amendments

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In Kellner v. AIM Immunotech Inc., et al., Vice Chancellor Will of the Delaware Court of Chancery upheld the company’s rejection of an advance notice of nomination finding that the Board acted reasonably and equitably in...more

A&O Shearman

Delaware Supreme Court Affirms Decision Rejecting Fiduciary Duty Claims As To Allegedly Conflicted Acquisition Because It...

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On June 6, 2023, in an opinion authored by Justice Karen L. Valihura, the Supreme Court of Delaware sitting en banc unanimously affirmed judgment in favor of defendant, the CEO/Founder and then-Chairman (the “Chairman”) of...more

A&O Shearman

Delaware Court Of Chancery Concludes Founder And Largest Shareholder Was Not A Controller In Connection With Allegedly Conflicted...

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On May 12, 2023, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery ruled in favor of defendant, the founder and largest shareholder (the “Founder”) of a technology company (the “Company”), on derivative...more

A&O Shearman

Delaware Court Of Chancery Holds That Corwin Cleansing Does Not Apply To Claims For Injunctive Relief Related To Alleged Defensive...

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On May 1, 2023, Vice Chancellor Morgan T. Zurn of the Delaware Court of Chancery denied a motion to dismiss a putative stockholder class action asserting a breach of fiduciary duty claim against the directors of a...more

A&O Shearman

Pair Of Delaware Chancery Court Decisions Deny Motions To Dismiss SPAC Shareholder’s Fiduciary Breach Claims, Following MultiPlan

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On January 4, 2023, and again on March 1, 2023, Vice Chancellor Lori Will of the Delaware Court of Chancery denied motions to dismiss claims against directors and controlling shareholders of GigCapital-affiliated special...more

DarrowEverett LLP

Life May Not Be Fair, But Interested Party Transactions Should Be

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When a court reviews contested business transactions of a Delaware corporation, they typically rely on one of two standards of review: the “business judgment rule” or the “entire fairness standard.” The business judgment rule...more

A&O Shearman

Delaware Court Of Chancery Declines To Dismiss Claims Related To Direct Offering At The Outset Of The Pandemic

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On June 30, 2022, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery denied a motion to dismiss stockholder derivative claims for alleged breaches of fiduciary duty against the CEO/Chairman of an...more

A&O Shearman

Delaware Court Of Chancery Denies Motion To Dismiss Breach Of Fiduciary Duty And Unjust Enrichment Claims Related To Compensation...

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On April 27, 2022, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery denied, in part, a motion to dismiss a derivative complaint against directors for breaches of fiduciary duties brought by stockholders of...more

A&O Shearman

Delaware Court Of Chancery Holds That Company And Its Directors Did Not Breach Bylaws Or Fiduciary Duties In Rejecting Director...

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On February 14, 2022, Vice Chancellor Lori W. Will of the Delaware Court of Chancery entered judgment in favor of Lee Enterprises, Inc. (the “Company”) and its directors following an expedited trial on claims for breach of...more

Latham & Watkins LLP

Delaware Court Applies Entire Fairness Standard to MultiPlan de-SPAC

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The decision adopts enhanced scrutiny of director fiduciary duties for de-SPAC transactions, but suggests dismissal may be appropriate when stockholders exercise redemption rights on a fully informed basis. On January 3,...more

A&O Shearman

Delaware Court Of Chancery Sustains Class Action Claims For Breaches Of Fiduciary Duties And Aiding And Abetting Arising From...

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On January 3, 2022, Vice Chancellor Lori W. Will of the Delaware Court of Chancery largely denied a motion to dismiss a putative class action brought by the stockholders of Churchill Capital Corp. III, a special purpose...more

Goodwin

SCOTUS Grants Certiorari to Decide Whether Automatic Discovery Stay Applies to Securities Act Cases in State Court

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SCOTUS Grants Certiorari to Decide Whether Automatic Discovery Stay Applies to Securities Act Cases in State Court; Delaware Court of Chancery Dismisses Stockholder Suit Against FedEx for Failure to Make Pre-Litigation...more

Jones Day

Delaware Chancery Court Strikes 5% Poison Pill With "Extreme" Features

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The Background: The Delaware Chancery Court held that a board of directors breached its fiduciary duties in adopting a shareholder rights plan, or "poison pill," with an unprecedented combination of "extreme" features,...more

A&O Shearman

Delaware Court Of Chancery Dismisses Derivative Claims For Failure To Plead Demand Futility Notwithstanding Unocal Enhanced...

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On November 20, 2020, Vice Chancellor Morgan T. Zurn of the Delaware Court of Chancery dismissed stockholder derivative claims against the directors of Christopher & Banks Corporation.  Gottlieb v. Duskin, C.A. No....more

Troutman Pepper Locke

Fraud on the Board: Material Conflicts Must Be Disclosed to the Board to Warrant Business Judgment Review

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A recent decision by the Delaware Supreme Court emphasizes the importance of fully disclosing material director and officer conflicts of interest in connection with proposed M&A transactions. Indeed, as the Court’s ruling...more

A&O Shearman

Delaware Supreme Court Reverses Dismissal Of Merger-Related Breach Of Fiduciary Duty Claims Regarding Allegedly Undisclosed...

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On June 30, 2020, in an en banc opinion authored by Justice Karen L. Valihura, the Supreme Court of Delaware reversed the Delaware Court of Chancery’s dismissal of a stockholder lawsuit arising out of the merger between...more

White and Williams LLP

Delaware Chancery Court Holds That a Transaction Involving a Conflicted Board Majority Can Be Cleansed If Appropriate Safeguards...

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In a legal challenge to a corporate transaction, the applicable standard of review is often outcome determinative. The deferential business judgment rule applies where the board is not majority conflicted. The burden is on...more

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