On the same day that the Delaware Supreme Court clarified what Revlon requires, the Court of Chancery’s new Chancellor also applied the same standard to deny an injunction under the Revlon principles. This illustrates the respect the Court gives to disinterested Board decisions, even under a heightened scrutiny test.
In this important decision, the Delaware Supreme Court clarifies that: (1) Revlon does not require an auction before a company is sold, (2) a reasonable sale process is all that is required, not a perfect one, and (3) the standard to enjoin a merger is particularly high when a mandatory injunction is sought that affects third party rights.
In a sense, this decision is a companion to the MFW decision that applied a business judgment standard of review to a merger approved by a fully informed and independent SLC and a majority of the disinterested stockholders. Delaware M&A law is rapidly evolving with these decisions.
This decision is interesting because it upholds the Court of Chancery’s jurisdiction over a non-resident who, through a non-Delaware entity, manages a Delaware LLC. Thus, simply putting a non-resident entity between you and the Delaware entity will not always shield you from Delaware’s jurisdiction.
Morris James LLP is pleased to announce that seven of its partners have been recognized as top local litigation attorneys in Delaware by Benchmark Litigation 2015: the definitive guide to America’s leading litigation firms and attorneys.
The attorneys recognized are:
P. Clarkson Collins, Jr. – Local Litigation Star
Richard Galperin – Local Litigation Star
Thomas E. Hanson, Jr. – Future Star
Richard K. Herrmann – Local Litigation Star
Peter B. Ladig – Local Litigation Star, Plaintiff
Lewis H. Lazarus – Local Litigation Star
Edward M. McNally – Local Litigation Star
Benchmark Litigation culminates their results from a six-month long extensive research period where they interview leading litigators and law firms. Along with peer-review testimony, recent casework is also reviewed. Firms cannot pay to be recommended for the guide; instead, they must be recommended by the nation’s leading private practice lawyers and in-house counsel.
A recent decision by the Delaware Court of Chancery may have plowed fresh ground by establishing a new tort claim against corporate directors. Lee v. Pincus, C.A. No. 8458-CB (Del. Ch. Nov. 14, 2014), held that directors who released themselves from a lockup agreement gained a benefit that was not shared with stockholders and may be liable to those stockholders as a result. This “improper benefit” claim is at least novel, if not entirely unprecedented. Corporate directors need to understand the implication of this decision. Continue Reading
Advance notice bylaws are valid under Delaware law. However, their application may be enjoined in rare circumstances when the Board of Directors has “radically” changed the playing field after the time to give notice of a competing slate. This decision gives examples of when that has occurred and more often, when it has not occurred. The burden to get relief a is high one and is not met by just a change in circumstances not caused by the incumbent Board.
When documents are withheld under a claim they are privileged, it is necessary to say why there is a privilege. A “privilege log” does just that, however, there are specific requirements for what must be on that log, or its cousin the redaction log. Failure to meet those requirement may result in a waiver of any privilege. This decision explains all the rules and how to meet them.
Of particular interest to Delaware lawyers, the decision twice points out that compliance with these requirements is a responsibility of the “senior Delaware lawyers” involved in the matter. My father said that someone was a “senior” if they were 10 years older than he was. He said that when he was 80. I doubt the Court of Chancery will agree with him.
Trust documents frequently provide that the trustee is not liable for any mistakes made in good faith. This decision examines how far that exculpation goes with respect to some very bad investment decisions. Not far enough in this case. It also shows that untruthful testimony, besides being just plain wrong, also has a way of really hurting that witness’s case.
This may well be the definitive decision on when and for how much an attorney may have a so-called charging lien on a client’s recovery in order to get paid.
Claims for breach of fiduciary duty against directors for injury to a Delaware corporation caused by director misconduct are assets of the corporation. In deference to the director-centric model of corporate decision-making embodied in Delaware law, a stockholder may not obtain control over that corporate asset without first making a demand on the board to bring an action or pleading that demand is excused. When a stockholder plaintiff believes that demand is excused but fails first under Section 220 of the Delaware General Corporation Law to seek books and records related to alleged misconduct in a transaction, that plaintiff will need to allege with particularity, and without discovery or pertinent books and records, either that a majority of the board was not disinterested or independent or that the decision to enter into the transaction was not otherwise the product of a valid exercise of business judgment. Continue Reading