Delaware Business Litigation Report

Delaware Business Litigation Report

Category Archives: Case Summaries

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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

Court Of Chancery Claim Of Oral Agreement

Posted in Breach of Contract
Black Horse Capital LP v. Xstelos Holdings, Inc., C.A. 8642-VCP (September 30, 2014) This decision is yet another example of the difficulty in recovering under almost any legal theory, except breach of contract, when there is a detailed contract that was designed to exclude other oral agreements. Not only will claims of a side oral … Continue Reading

Court Of Chancery Explains Inspection Rights For Subsidiary Wrongdoing

Posted in Books and Records
Oklahoma Firefighters Pension & Retirement System v. Citigroup Inc., C.A. 9587-ML (September 30, 2014) This decision explains when wrongful conduct at a subsidiary is sufficient to warrant inspection of the parent’s records to determine if the parent has violated any Caremark duties.  At least when there is some basis to infer that the parent had oversight … Continue Reading

Court Of Chancery Explains Pleading Standard For Claims Against Disinterested Directors

Posted in Case Summaries, Directors
In Re Cornerstone Therapeutics Inc. Stockholder Litigation, C.A. 8922-VCG (September 10, 2014)  This is a great decision to read to understand the pleading standard that applies to a complaint that alleges a controlling stockholder transaction. Even in such a transaction, the disinterested directors are not liable absent proof of a breach of a non-exculpated breach … Continue Reading

Court Of Chancery Explains How To Form An Oral Partnership

Posted in Business Torts
Grunstein v. Silva, C.A. 3932-VCN (September 5, 2014) When parties enter into a business realtionship but fail to document their agreement, a mess is sure to follow. This detailed opinion explains what evidence is needed to prove an oral partnership agreement or to prevail on the related liability theories of unjust enrichment, equitable estoppel and … Continue Reading

Court Of Chancery Explains How To Be An Unintended Fiduciary

Posted in Fiduciary Duty
Bennett v. Lally, C.A. 9545-VCN (September 5, 2014) Your duties to another person may change significantly if you become a fiduciary to him. That fiduciary relationship may be formed inadvertently as this decision explains.  Thus, giving advice to another,  intending to act [as in this case] as a third-party contractor may get you involved in a … Continue Reading

Court Of Chancery Explains When Control Makes Dilution Claim Direct

Posted in Fiduciary Duty
In Re Nine Systems Corporation Shareholders Litigation, C.A. 3940-VCN (September 4, 2014) Whether a plaintiff’s claim is direct or derivative is often a critical issue. It has now been established that when a controlling stockholder issues equity to himself at an unfair price, the resultant dilution claim is a direct one. This decision explains how … Continue Reading