News & Analysis as of

Shareholder Litigation

Guidance Provided to Evaluate the Implied Covenant of Good Faith and Fair Dealing

by Morris James LLP on

The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements. While the act permits parties to eliminate fiduciary duties that members...more

New York Trial Court Does Its Best To Shore Up Standard for Approving Disclosure-Only Class Action Settlements

Takeaway: Strike suits against corporate mergers are often resolved in worthless “disclosure-only” settlements. Derided as a “peppercorn and a fee,” a disclosure-only settlement provides no monetary relief to the...more

Declining To Find Enhanced Scrutiny Inapplicable To Post-Closing Damages Actions, Delaware Court Of Chancery Denies Motion For...

by Shearman & Sterling LLP on

On February 6, 2018, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery denied a summary judgment motion by defendant Potomac Capital Partners II, LP (“Potomac”) in an action by stockholders challenging the...more

Delaware Corporate and Commercial Case Law Year In Review – 2017

by Morris James LLP on

This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year. Our criteria for selection are that the decision either changed the law in a...more

New York Court Denies Approval Of Disclosure-Only Settlement, Finding Supplemental Disclosures "Useless"

by Shearman & Sterling LLP on

On February 8, 2018, Justice Shirley Werner Kornreich of the New York Supreme Court denied a motion for final approval of a disclosure-only settlement in a class action suit brought by shareholders of Martin Marietta...more

The Next Big Thing: Data Breach Securities Class Action Litigation

Shareholders may have found a new hook for data security lawsuits. Over the past year, plaintiffs have filed nine federal class action securities fraud lawsuits against public companies after data security incidents,...more

Court Of Chancery Applies The Covenant Of Good Faith And Fair Dealing To Fill A Gap

by Morris James LLP on

In re Oxbow Carbon LLC Unitholder Litigation, C.A. 12447-VCL (February 12, 2018) - This may be the definitive decision on when and how to apply the covenant in every LLC agreement to act in good faith and deal fairly. Here...more

Court Of Chancery Resolves Allocation Issues In Advancement Case

by Morris James LLP on

Weil v. Vereit Operating Partnership LP, C.A. 2017-0613-JTL (February 13, 2018) - This decision clearly sets out how to allocate fees for claims subject to advancement of attorney fees from those that are not covered by an...more

Dismissal of Shareholder Derivative Action on Rule 23.1 Grounds Precludes Relitigation of Different Del. Plaintiffs

by Morris James LLP on

The Delaware Supreme Court recently issued an important corporate law decision addressing issue preclusion in the context of multiple shareholder derivative actions. The court ruled in California State Teachers’ Retirement...more

Watch the Calendar When Considering Claims in Connection With a Family-Owned Business

by Murtha Cullina on

Shareholders of family-owned businesses sometimes assert claims of misconduct against their co-owner relatives. These claims can take the form of oral complaints or written claim letters. ...more

Delaware Court Of Chancery Holds That Addition Of MFW Protections Following Initial Controller Proposal But Before Negotiations...

by Shearman & Sterling LLP on

On February 2, 2018, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery dismissed a stockholder challenge to the buyout of Synutra International Inc. (“Synutra”) in a squeeze-out merger by a controlling...more

Contracting Party Beware: The Implied Covenant Will Not Save You From Your Agreement If You Negotiated Away Your Rights

On February 1, 2018, the Delaware Court of Chancery granted defendants’ motion to dismiss an action brought by minority unitholders of Trumpet Search, LLC (“Trumpet” or the “Company”). The defendants were other unitholders...more

Dorsey Anti-Corruption Digest - February 2018

by Dorsey & Whitney LLP on

Joo Hyun Bahn, real-estate broker and nephew of former U.N. Secretary-General Ban Ki-moon, pleaded guilty to Foreign Corrupt Practices Act (FCPA) charges relating to his role in a scheme attempting to bribe a Qatari official...more

New considerations for director compensation awards in light of Delaware Supreme Court's recent decision in In re Investors...

by Hogan Lovells on

The subject of director compensation awards has been moving up the corporate governance agenda of many public companies since December 2017. ...more

Court Of Chancery Holds Stock Issuance Void

by Morris James LLP on

Southpaw Credit Opportunity Master Fund LP v. Roma Restaurant Holdings Inc., C.A. 2017-0059-TMR (February 1, 2018) - When stock is issued in violation of a stockholder agreement, the issuance is “void.” This has great...more

Sorry, Arbitration Agreements Are Not For The Courts' Benefit

The Supreme Court of Nebraska gave an unpleasant surprise to its trial court judges last week: they cannot enforce arbitration agreements sua sponte. Boyd v. Cook, 298 Neb. 819 (Feb. 2, 2018)....more

Delaware Court Of Chancery Invalidates Written Consent Of The Majority Of Common Stockholders Purporting To Remove And Replace CEO...

by Shearman & Sterling LLP on

On January 10, 2018, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery granted a motion for judgment on the pleadings to plaintiffs, the CEO and another director of TradingScreen Inc., invalidating a written...more

Shareholder Pay – Need it Always be Equal When Ownership is Equal?

When you and your business partner started your company, being 50/50 partners sounded like the only fair way to go. After all, you were both putting in the same amount of money. You were both supposed to work equal hours,...more

Delaware Supreme Court Affirms Dismissal Of Stockholder Derivative Claims On Issue Preclusion Grounds Based On A Demand-Futility...

by Shearman & Sterling LLP on

On January 25, 2018, the Supreme Court of Delaware ruled that the Court of Chancery’s dismissal on issue preclusion grounds of the derivative claims of stockholder plaintiffs against the directors of Wal-Mart Stores, Inc....more

Delaware Supreme Court Issues Opinion Affirming the Preclusive Effect of a Prior Dismissal of Derivative Claims on Demand-Futility...

The Delaware Supreme Court recently unanimously affirmed the Delaware Court of Chancery's dismissal of a stockholder derivative claim against directors of Wal-Mart, holding that these claims were precluded because a federal...more

Delaware Supreme Court Confirms Preclusive Effect of Dismissal of Derivative Actions Based on Lack of Demand Futility

by Proskauer Rose LLP on

The Delaware Supreme Court held yesterday that the dismissal of a shareholder derivative action for lack of demand futility can preclude other derivative actions as long as the plaintiff in the dismissed case adequately...more

Delaware Supreme Court Gives Preclusive Affect To Prior Dismissal In Wal-Mart Derivative Litigation

by Morris James LLP on

California State Teachers Retirement System v. Alvarez, No. 295, 2016 (Del. Jan. 25, 2018) - This is an important decision clarifying the rules regarding the preclusive effect a dismissal of a derivative suit may have on a...more

2017 Delaware Corporate Law and Litigation Year In Review

In 2017, the Delaware courts once again issued many substantive corporate law decisions covering a wide range of issues critical to boards, stockholders, and officers. In addition, decisions from recent years continued to...more

Judge Kaplan Declines to Apply Business Judgment Rule Where Corporate Board’s Decision Lacked Rational Support

Key Takeaway: Where there were “serious questions” about the independence of a board and the good faith of its decision not to pursue a derivative suit against a former director, Judge Kaplan refused to apply the...more

Chancery Greenlights Use of Books and Records Demands to Buttress Post-'Corwin' M&A Challenges

by Morris James LLP on

Stockholder M&A challenges in the Delaware Court of Chancery have declined in the wake of the well-known Trulia (and its federal corollary Walgreens) and Corwin decisions, which respectively reduced incentives for pre-closing...more

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