Delaware Business Litigation Report

Delaware Business Litigation Report

Category Archives: Case Summaries

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Court Of Chancery Upholds Advance Notice Bylaw

Posted in Stockholders' Meetings
AB Value Partners LP v. Kreisler Manufacturing Corporation, C.A. 10434-VCP (December 16, 2014) 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 … Continue Reading

Court Of Chancery Reiterates Privilege Log Rules

Posted in Discovery
Mechel Bluestone Inc. v. James C. Justice Companies Inc., C.A. 9218-VCL (December 12, 2014) 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 … Continue Reading

Court Of Chancery Sanctions

Posted in Discovery
James v. National Financial LLC, C.A. 8931-VCL (December 5, 2014) This decision deserves immediate attention by Delaware lawyers for it sets out their responsibilities to see that discovery, particularly discovery of ESI, is done correctly. It also is a good listing of the level of sanction that may be applied for not fulfilling those responsibilities… Continue Reading

Court Of Chancery Invalidates Indemnification Requirement In A Merger

Posted in M&A
Cigna Health And Life Insurance Company v. Audax Health Solutions Inc., C.A. 9405-VCP (November 26, 2014) Escrow provisions are common in merger deals, particularly those involving private equity. Here, however, the parties went a different route and tried to require the selling stockholders to agree to indemnify the buyer for various possible events. The Court … Continue Reading

Court Of Chancery Invalidates Deal Protections

Posted in M&A
In re Comverge Inc. Shareholder Litigation, C.A. 7368-VCP (November 25, 2014) Numerous Delaware decisions have upheld deal protection provisions in merger agreements. But, as this decision shows, it is still possible to go too far. When a combination of a termination fee, an expense reimbursement provision, and a convertible note amount to a 13% fee … Continue Reading

Court Of Chancery Explains How To Implicate The M&F Worldwide Decision

Posted in M&A
In Re Zhongpin Inc. Stockholders Litigation, C.A. 7393-VCN (November 26, 2014) To obtain business judgment review for a transaction with a controlling stockholder, the M&F Worldwide decision requires an independent committee and a majority-of-the-minority stockholder vote. This decision holds that those provisions must be part of the deal from the outset and adding a stockholder … Continue Reading

Court Of Chancery Explains The Conspiracy Theory Of Jurisdiction

Posted in Case Summaries, Jurisdiction
Reid v. Siniscalchi, C.A. 2874-VCN (November 20, 2014) Under the conspiracy theory of jurisdiction, a non-resident may still be subject to Delaware court jurisdiction if a co-conspirator commits an act in Delaware in furtherance of the conspiracy. While that is a simplified version of the law, this decision explains the theory in detail… Continue Reading

Court Of Chancery Explains Amendment-By-Merger Doctrine

Posted in LLC Agreements
In re Kinder Morgan Inc. Corporate Reorganization Litigation, C.A. 10093-VCL (November 5, 2014) This decision explains the Amendment-By-Merger Exception that is found in alternative entity agreements. The purpose of the Exception is to be sure that a merger agreement that has the affect of amending the operating agreement gets the same vote, including class votes, … Continue Reading

Court Of Chancery Explains When Entire Fairness Review Applies

Posted in M&A
In re Crimson Exploration Stockholder Litigation, C.A. 8541-VCP (October 24, 2014) This is an important decision for 2 reasons. First, it collects the prior decisions that determine when a less-than-50% owner is considered a controlling stockholder so as to potentially invoke entire fairness review.  Second, it then reviews the prior decisions that hold when a … Continue Reading

Court Of Chancery Explains Effect Of Stockholder Vote In Non-Controlling Stockholder Case

Posted in M&A
In re KKR Financial Holdings LLC Shareholder Litigation, C.A. 9210-CB (October 14, 2014) This important decision addresses two tricky questions of Delaware corporate law. First, it clarifies that the informed vote of a majority of the disinterested stockholders will invoke the business judgment rule when there is no controlling stockholder pushing the transaction. Second, it makes … Continue Reading