News & Analysis as of

Duty of Loyalty

Activists at the Gate: Court of Chancery Weighs In on Claims Involving Activist Stockholders

Several recent decisions applying Delaware law offer helpful insight about the impact that activist investor involvement has on board decision-making leading to a transaction and how those decisions will be reviewed by the...more

No TKO: California Judge Refuses to Disqualify Counsel from Patent Litigation

Last week, a federal judge in California denied the plaintiff’s motions to disqualify the defendant’s counsel, finding that the firm’s former representation of the plaintiff was not sufficiently recent, substantial, or...more

Court Of Chancery Explains Demand Excusal Based On Knowing Violations Of Law

by Morris James LLP on

Kandell v. NIV, C.A. No. 11812-VCG (Sept. 29, 2017) - Derivative plaintiffs alleging that directors allowed the corporation they serve to violate the law typically face dismissal for failure to make pre-suit demand on the...more

Still More On Suing The CEO For Social Activism

by Allen Matkins on

Last week, I devoted several posts to the question of suing the CEO for social activism. The catalyst for the discussion was an August 17, 2017 Op-Ed piece by Jon L. Pritchett and Ed Tiryakian in The Wall Street Journal. ...more

Excess Cargo? Shipping Common Law Claims Out of a Trade Secret Complaint

AFS, a company specializing in streamlining shipping costs and logistics, had its eight count amended complaint streamlined to only one—its Tennessee Uniform Trade Secrets Act (“TUSTA”) claim—primarily due to preemption and...more

Court Of Chancery Upholds Duty Of Care and Loyalty Claims

by Morris James LLP on

H&N Management Group Inc. v Couch, C.A. No. 12847-VCMR (Del. Ch. Aug. 1, 2017) - This is a rare case involving apparent lack of care in approving a conflicted transaction and a failure to employ almost any safeguards to...more

Court Addresses Formation of Accidental Partnerships in Long-Awaited Enterprise v. Energy Transfer Appeal

by Locke Lord LLP on

The Dallas Court of Appeals yesterday issued its opinion in Enterprise Products Partners, L.P. v. Energy Transfer Partners, L.P. , in which the court reversed a judgment of more than $500,000,000 rendered after a jury...more

Delaware Court Of Chancery Identifies Fiduciary Duty Constraints On Preferred Equity

by Cole Schotz on

A recent decision of the Delaware Court of Chancery (the “Court”) places certain fiduciary constraints on a company’s ability to satisfy its obligations to its preferred equity holders. While investors often seek to acquire...more

Inside the Courts – An Update From Skadden Securities - June 2017

This quarter’s issue includes summaries and associated court opinions of selected cases principally decided between February 2017 and April 2017. The cases address developing trends in class actions, ERISA, fiduciary duties,...more

Department of Labor’s New Fiduciary Rule Will Go Into Effect June 9th

The Department of Labor has announced that the new fiduciary conflict of interest rule and related exemptions will begin taking effect on June 9, 2017, ending speculation of further delay. At the same time, the Department...more

Delaware Chancery Court Holds That Well-Pled Unocal Claim Does Not Automatically Excuse Pre-Suit Demand

by Shearman & Sterling LLP on

On May 15, 2017, Vice Chancellor Sam Glasscock III of the Delaware Chancery Court dismissed a shareholder derivative action asserting that the directors of The Williams Companies, Inc. (“Williams”) breached their duty of...more

Fiduciary Duties After Pennsylvania’s Act 170

by Fox Rothschild LLP on

As was alluded to in a prior blog post, one of the major changes that has been enacted through Pennsylvania’s Act 170 is the ability, through the operating agreement, to contractually vary fiduciary duties of members and...more

Court Of Chancery Declines To Hold Unocal Claim Automatically Excuses Demand

by Morris James LLP on

A derivative plaintiff who fails to make a pre-suit demand on the board must show why demand is excused using particularized facts. Here, the plaintiff argued that demand was automatically excused by sufficiently pleading a...more

Home Depot Agrees to Settle Data Breach Shareholders’ Suit

In a surprise move late last week, Home Depot has agreed to settle a shareholders derivative suit filed against current and former members of the Board of Directors and the Chief Executive Officer and Chief Information...more

The Delaware Chancery Court’s Columbia Pipeline and Saba Software Decisions: Lessons beyond Corwin

Two recent decisions from the Delaware Court of Chancery faithfully apply the Delaware Supreme Court’s holding in Corwin v. KKR Financial Holdings LLC. No surprise there. Corwin held that when “a transaction not subject to...more

Appellate Court Notes

by Pullman & Comley, LLC on

Supreme Court Advance Release Opinions: SC19734 - Wall Systems, Inc. v. Pompa - Plaintiff - construction company - discovered one of its supervisors who was paid ~$200k/year was working for a competitor at the same...more

A “Fair and Balanced” Look at a Salary Claw-Back Against an Alleged Serial Sexual Harasser

One of underlying themes of the now defunct “O’Reilly Factor” was that the liberal elites have brought about the “wussification” of America. In Mr. O’Reilly’s world, personal responsibility has given way to excuses and...more

Is Disloyalty Its Own Reward?

May a disloyal employee keep the compensation his employer paid him, even while he was betraying his employer’s trust? In a recent case, the Connecticut Supreme Court said “yes, at least in some circumstances.” Here’s the...more

Art Advisors and Duty of Loyalty in Focus Again Over Sale of Basquiat

by Sullivan & Worcester on

We reviewed in December an important decision that addressed the duties of loyalty that art advisors may, or may not, owe to their clients in dealing in the art market. That question—of to what extent advisors and...more

A Rare Look Into An Employee’s Duty of Loyalty to the Employer

by Shipman & Goodwin LLP on

After nine-plus years of writing about employment law in Connecticut, it’s getting to be pretty rare to find a topic that I haven’t at least touched upon, but here’s one: The Duty of Loyalty. Indeed, a new Connecticut...more

Connecticut Supreme Court Explains Remedies Available to Employers Winning Breach of Duty of Loyalty Claims against Employees

by Robinson & Cole LLP on

In Wall Systems, Inc. v. Pompa, No. SC19734 (Mar. 7, 2017), the Connecticut Supreme Court explained the legal and equitable remedies available to employers that win breach of duty of loyalty claims against their current or...more

When Does Preparing to Compete Cross the Line?

by Butler Snow LLP on

An employee or former employee who starts preparing to compete with his employer or former may get tripped up in one of two scenarios: (1) breaching a fiduciary duty of loyalty; or (2) running afoul of a noncompete...more

5 Key Takeaways: Survive (and Thrive) a Technology Merger

Kilpatrick Townsend partner Kandace Watson and Ron Zollman, co-chairs of San Diego’s Association of Corporate Counsel (ACC) Technology & Licensing Roundtable, shared advice on pre- and post-merger challenges during their...more

Delaware Court of Chancery Rejects Bylaw That Required Supermajority Stockholder Vote to Remove Directors in Violation of 8 Del....

In Frechter v. Zier, C.A. No. 12038-VCG, 2017 WL 345142 (Del. Ch. Jan. 24, 2017) (Glasscock, V.C.), the Delaware Court of Chancery granted plaintiff’s motion for summary judgment on a declaratory relief claim and held that 8...more

Yahoo! Data Breach Results in Another Lawsuit Against Corporate Directors and Officers

by Snell & Wilmer on

A number of claims have been made against companies’ directors and officers alleging a breach of fiduciary duty for failing to adequately oversee data security programs. To date, the defendants’ oversight of the programs and...more

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