Although the statute of limitations does not automatically bar an equitable claim in the Delaware Court of Chancery, the court will apply the relevant statute of limitations by analogy. Equitable tolling will toll the three-year statute of limitations for wrongful self-dealing claims if a plaintiff reasonably relies on the competence and good faith of a fiduciary. In the recent decision in In re Primedia Shareholders Litigation, Consol. C.A. No. 6511-VCL (Del. Ch. Dec. 20, 2013), the court addressed the doctrine of equitable tolling in the context of insider-trading claims.

The plaintiffs were stockholders of defendant Primedia Inc., which was acquired by TPG Capital L.P. in a reverse triangular merger. Defendant Kohlberg Kravis Roberts & Co. was the controlling stockholder of Primedia from its inception until the merger and had several directors on the Primedia board. During the 1990s, Primedia raised capital by issuing preferred stock. Following the bursting of the technology bubble, the stock price of Primedia’s common and preferred stock dropped dramatically. The Primedia board authorized the company to use common stock to repurchase up to $100 million of preferred stock in December 2001. The exchanges began in March 2002. On May 16, 2002, the board authorized exchanges for another $100 million. Five days after this authorization, on May 21, 2002, two of the Primedia directors designated by KKR prepared a memorandum for KKR’s investment and portfolio committees. The May 21 memo contained positive, nonpublic information about Primedia’s performance for the second quarter of 2002 and the year as a whole. The memo recommended that KKR purchase Primedia preferred stock before the market became aware of Primedia’s improving performance.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]