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In re TD Banknorth Shareholders Litigation, C.A. 2557-VCL (June 25, 2009)

In this order, the Court awarded 27.5% of the class recovery of $964,086 to class counsel. This illustrates that sometimes, the smaller the pie, the larger the slice for class counsel. Even when the recovery is not large, the work involved is often the same as in a larger case.

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CME Group Inc.v. Chicago Board Options Exchange Inc., C.A. 2369-VCN (June 25, 2009)

Class action settlements often have a claim procedure that is complicated. Class members miss the deadlines and mess up their filings. However, as this decision illustrates, the Court is liberal in extending deadlines and forgiving filing mistakes.

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In re Intel Corp. Derivative Litig., C.A. No. 08-93-JJF (D. Del. June 4, 2009)

This opinion discusses when a court will apply the Rales test rather than the Aronson test in deciding whether a derivative plaintiff has pled particularized facts establishing demand futility.  Here, the district court applied the Rales test requiring that allegations establish a reason to doubt that the board could have properly exercised its independent and disinterested business judgment in responding to a demand.  The complaint alleged that the directors made a decision not to act which was not made in good faith and was contrary to the best interests of the company.  Despite plaintiff’s contention that Aronson should apply, the district court noted that Delaware courts have found that they cannot address the business judgment of an action not taken and, therefore, should apply what is now known as the Rales test.

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Southern Track & Pump Inc. v. Terex Corp., C.A. No. 08-543-JJF (D. Del. June 9, 2009)

By granting, in part, the defendant’s motion to dismiss its claim for breach of the implied covenant of good faith and fair dealing, the district court found that financing promises may not be regarded as an implied contractual obligation when there is no explicit reference in the agreement.

This dispute arose out of a distributing agreement, whereby the plaintiff agreed to distribute the defendant’s products. By the plaintiff’s account, the defendant represented that it had a relationship with a financier and could leverage this relationship to secure favorable financing. The plaintiff obtained financing and, thereafter, defaulted on its obligation. When the defendant refused to intervene on the plaintiff’s behalf, the plaintiff brought suit for an implied breach. The district court dismissed the plaintiff’s claim to the extent it was based on the alleged explicit promise regarding financing.

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Duthie v. CorSolutions Medical Inc., C.A. 3048-VCN (June 16, 2009)

It is well known that directors with advancement rights may call on those rights even when acting as a plaintiff. This decision explains the limits on that doctrine. In general, when there is no need to bring suit as a defensive maneuver to protect the director, then the right to have expenses advanced ends for a plaintiff.

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Gatz v. Ponsoldt, C.A. 174-CC (June 12, 2009)

This decision raises an interesting question over whether attorneys fees should be paid when the fees in a way that does not benefit the company for whom the suit was filed. Briefly, the facts were that the defendant directors were found to be entitled to have the settlement of the claims against them paid by their company under their rights to be indemnified. The settlement balance was to go to the stockholder class. The Court's concern was that this meant the company's stockholders were not really benefiting if they, in effect, were funding the settlement by their company.

This issue was resolved when it turned out that under the odd circumstances of this case that the stockholders who were receiving the benefit of the settlement were largely different from those who now owned the company. Had that not been the case, however, the result may not have been the same. This means that there is a potential issue when defendant directors are indemnified for the damages. Whether the amount of fees will be affected in those circumstances remains to be seen.

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James Cable LLC v. Millennium Digital Media Systems LLC, C.A. 3637-VCL (June 11, 2009)

When a party to a merger agreement must rely on the financial support of a third party to complete the deal, that must be spelled out in written agreement.  Absent that written commitment, the deal is then just an option to close held by the party without assets who is then fee to back out.

This decision rejects some clever attempts to make up for the lack of an agreement to fund the deal.  The Court held that the "affiliate privilege" bars a claim that a parent entity wrongly caused its subsidiary to back out of the transaction by refusing funding.  Other theories of recovery such as a contract claim were also dismissed for want of facts to support them.

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Boyce Thompson Institute For Plant Research v. MedImmune, Inc., C.A. No. 07C-11-217 JRS (Del. Super. May 19, 2009) (applying New York law per choice of law provision)

This opinion discusses some interesting contractual interpretation and jurisdictional issues arising out of a licensing agreement.  The dispute arose because the licensees denied any obligation to pay royalties to the licensor for products they are manufacturing in a country where, they claim, the licensor does not hold a patent.

The Superior Court found that the contract was ambiguous on whether “covered” products included those that were protected by the licensor anywhere or only those that were protected by a patent in the locations where they were manufactured.  In any case, the Court denied the licensees’ motion to dismiss on the basis that there was no evidence presented to rule out the possibility that the licensees are, in fact, infringing on the patent by their acts in this other country.

The Court also raised the issue of whether it had subject matter jurisdiction to decide the case.  While the Court deferred resolution of the issue, it noted that, if the contract claim requires the Court to determine whether the patent was infringed, then it would likely follow that patent law is a “necessary element” of the breach of contract claim and the federal courts have exclusive subject matter jurisdiction.

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STMicroelectronics N.V. v. Agere Sys., Inc., C.A. No. 08C-09-099 MMJ (Del. Super. May 19, 2009) (applying New York law per choice of law provision)

This case illustrates the series of events that may arise when a subsidiary is party to a licensing agreement, but its parent is not.

Here, the licensor sued the parent company for patent infringement in the Eastern District of Texas and before the International Trade Commission.  In response, the parent and subsidiary brought this action in Delaware, claiming that the filing of the patent infringement actions, though only naming the non-signatory parent, violated the licensing agreement’s covenant not to sue.

The Superior Court permitted the claim to move forward, denying the defendant-licensors’ McWane motion on the basis that the Delaware action did not present the same legal and factual issues as the first-filed proceedings.  Further, the Court denied the defendants’ motion to dismiss for failure to state a claim and for lack of standing on the basis that additional discovery was necessary to resolve those issues.

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