This is an interesting decision because it interprets the seldom-used Delaware Savings Statute [10 Del. C. Section 8118]. The court held that a derivative suit dismissed for failure to make a demand on the board is not saved from the expiration of the statute of limitations under the Savings Statute. Hence, a new suit that followed a demand of the board may be time barred.
This decision is a primer on what not to do if you want to add claims to a complaint as the case develops. The lesson is to be sure that your discovery responses are both timely updated and sufficient to put the opposing side on notice and to move as early as possible to amend.
This is an important decision on choice of law. The Court held that the parties’ choice of Delaware law to govern the terms of a noncompete agreement was unenforceable in the face of contrary public policy of California that limited such agreements. This result is arguably at odds with a Third Circuit decision that upheld the choice of Delaware law in a noncompete agreement despite the policy of Louisiana that limits such agreements – Coface Collections North America Inc. v Newton, 430 Fed. Appx. 162 (3rd Circ. June 6, 2011). As the decision points out, limitations on former employees’ right to work for a competitor are subject to a wide variety of state laws. Hence, the drafter of such agreements will now need to carefully consider what law to choose to apply to the agreement and cannot just adopt Delaware as binding in every case.
Determining admitted facts can be one of the more difficult aspects of preparing a pretrial stipulation. Parties often propose factual statements that are advantageous to their position, while resisting facts that may favor their opponents. There is also a tendency to take a cautious approach and require an opponent to prove all facts in support of their case at trial. This approach, however, likely is contrary to counsel’s duty to litigate a matter “efficiently and effectively” and to “cooperate as officers of the court and not waste time on issues not legitimately in dispute,” as in Itron v. Consert, (Del. Ch. Jan. 15, 2015). Continue Reading
There is perhaps no more confusing subject in Delaware non-corporate law than the application of the Delaware borrowing statute to statute of limitations issues. Under Supreme Court case law, the literal application of the borrowing statute is avoided under certain limited circumstances, often involving a plaintiff trying to avoid liability by forum shopping. In any case, this decision explains very well how to apply the borrowing statute.
This is a helpful reminder that the DGCL governs what may be in the certificate of incorporation and what may be in the bylaws. Giving one director extra tie-breaking voting rights must be in the certificate to be valid.
Books-and-records litigation does not typically grab headlines. In fact, few cases litigated under Section 220 of the Delaware General Corporation Law result in written opinions authored by the Delaware Supreme Court. Nevertheless, books-and-records litigation is vibrant in Delaware. Books-and-records requests are the “tools at hand” Delaware courts encourage stockholders to use prior to filing derivative litigation. However, a stockholder’s right to a Delaware company’s books and records is not unfettered. Aside from needing to satisfy the preconditions set forth in Section 220, the Delaware Supreme Court recently apprised the Court of Chancery that it is within the Chancery Court’s authority to restrict the use of certain books and records where equitable. Continue Reading
David J. Soldo will moderate a CLE seminar on Ethics in Litigation sponsored by the Litigation Section and the Small Firms and Solo Practitioners Section of the Delaware State Bar Association. This seminar will cover recent trends in disciplinary matters and will offer tips on how to avoid ethical complaints. Topics include when to retain counsel, self-reporting to ODC, candor to a tribunal, advance fees and fee agreements, declining or terminating representation and safekeeping property. This seminar will feature speakers Patricia Bartley Schwartz, Esq., of the Office of Disciplinary Counsel, and Charles Slanina, Esq., of Finger & Slanina, LLC. Continue Reading
The Court of Chancery has again declined to dismiss a class action without notice to the class that the plaintiff’s attorney is to be paid a so-called “mootness fee.” That is a too-clever attempt to avoid having the court actually look at how much is being paid to the lawyer who files an action attacking a transaction and then gives up the suit after some sort of additional disclosure is made that she argues makes the case “moot.” Instead, the Court wants notice to be given to the stockholders.
What is a material disclosure in one deal is not always material in another transaction, as this decision explains. Context counts. Hence, merely arguing that a past decision held a disclosure was needed may not work in the present case.