April 04, 2017 | Delaware Business Court Insider
Court Gives Great Weight to Pre-Merger NegotiationsContract interpretation is a staple of litigation in the Delaware Court of Chancery. Disputes over the meaning of commercial contracts, foundational documents such as certificates of incorporation or bylaws or agreements governing alternative entities such as limited liability companies or limited partnerships require the court to interpret language in contracts. So too do merger, stock purchase or sale of asset agreements. With the expansion of jurisdiction under Section 111(a)(2) of the Delaware General Corporation Law (DGCL) in 2016, disputes over the interpretation of agreements arising out of stock purchase and asset sale agreements may be expected to increase the number of cases requiring the court to interpret parties' agreements. The recent case of Shareholder Representative Services v. Gilead Sciences, C. A. No. 10537-CB (March 15), illustrates the methodology the court uses to interpret a contract and provides a primer for litigants seeking guidance on how the Court of Chancery resolves contract disputes.
By Lewis H. Lazarus
10 minute read
February 01, 2017 | Delaware Business Court Insider
Court Dismisses Derivative Action in Stockholder's Litigation DemandThe Delaware courts have been critical of litigants who bring derivative claims without first seeking books and records.
By Lewis H. Lazarus
11 minute read
November 30, 2016 | Delaware Business Court Insider
Court Dismisses Derivative Claim for Alleged Breach of Oversight DutyThe Delaware courts encourage plaintiffs who bring derivative claims in Delaware without making demand on the board of directors to seek books and records under Section 220 of the Delaware General Corporation Law so as to be able to plead facts sufficient to demonstrate that demand is excused. Many claims have been dismissed under Delaware Court of Chancery Rule 23.1 because a plaintiff failed to utilize the "tools at hand" to obtain relevant books and records. When a plaintiff grounds its claim on directors' alleged failure to exercise oversight, however, even receipt of books and records may not enable a plaintiff to plead facts sufficient to demonstrate that the directors knowingly ignored their duties so as to have acted in bad faith. That high standard as articulated by the Delaware Supreme Court in Stone v. Ritter makes a Caremark claim for breach of directors' oversight duties as among the most difficult in corporate law. The Court of Chancery's recent decision in Reiter v. Fairbank, C.A. No. 11693-CB (Del. Ch. Oct. 18), demonstrates that, regardless of the injury allegedly sustained by the subject company, a pleading based on books and records obtained from the company that at best reflects awareness of "yellow flags" is not sufficient to call into question the directors' good faith and hence to excuse demand, thus requiring dismissal of the plaintiff's derivative claim.
By Lewis H. Lazarus
12 minute read
October 12, 2016 | Delaware Business Court Insider
Court Applies 'Corwin' and Upholds Board's Adoption of Dissolution PlanThe Delaware Court of Chancery's well-reasoned decision in The Huff Energy Fund v. Gershen, C.A. No. 11116-VCS (Del. Ch. Sept. 29), illustrates the care by which a Delaware court will examine the potential contractual and fiduciary duties at issue when a board adopts a plan of dissolution following a sale of a significant portion of its assets.
By Lewis H. Lazarus
13 minute read
August 24, 2016 | Delaware Business Court Insider
Court: Derivative Claims Allowed to Be Asserted as Part of Merger AttackIt is well-settled under Delaware law that in a merger a stockholder loses standing to assert a purely derivative claim.
By Lewis H. Lazarus
12 minute read
July 06, 2016 | Delaware Business Court Insider
Chancery Declines to Require Buyer to Complete Merger TransactionParties who at the signing of a merger agreement are eager to close may have a change of heart if intervening adverse market conditions reduce or eliminate the economic benefits.
By Lewis H. Lazarus
19 minute read
May 18, 2016 | Delaware Business Court Insider
Court Upholds Allegedly Unfair Master Limited Partnership TransactionWhen alternative entities first came into prominence, questions arose concerning the applicability to them and their stakeholders of corporate law fiduciary duty jurisprudence.
By Lewis H. Lazarus
12 minute read
April 06, 2016 | Delaware Business Court Insider
Court Upholds but Limits Claims Arising From Merger AgreementThe Delaware courts regularly address contract claims arising out of merger agreements. Among other recurring issues are whether and how the parties limited claims based on alleged misrepresentations or omissions, whether a party can state a claim for breach of the implied covenant of good faith and fair dealing, and the nature of the remedies available in the event of breach.
By Lewis H. Lazarus
12 minute read
February 10, 2016 | Delaware Business Court Insider
Derivative Settlement With Benefit Personal to Plaintiff RejectedIn 1850, Abraham Lincoln prepared notes for a law lecture. He emphasized the importance of compromise because after litigation, "the nominal winner is often a real loser—in fees, expenses, and waste of time."
By Lewis H. Lazarus
4 minute read
December 23, 2015 | Delaware Business Court Insider
Preservation of Option to Pursue Claim Not Threatened ActionBuyers and sellers and their counsel allocate risk in stock purchase or merger agreements.
By Lewis H. Lazarus
5 minute read
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