Delaware Court of Chancery Chancellor Andre G. Bouchard recently eliminated any doubt that properly pleading all elements of a cause of action remains a fundamental aspect of stating a claim under Delaware law, reiterating that a party must plead all elements to survive a motion to dismiss even under Delaware’s comparatively lenient reasonable-conceivability standard.
In Fortis Advisors v. Dialog Semiconductor, No. 9522-CB (Del. Ch. Jan. 30, 2015), the plaintiff equity-holder representative alleged that the defendant acquirer failed to maximize potential earnouts for the selling equity holders of iWatt, a provider of digital power management circuits. Pursuant to a merger agreement, Dialog agreed to use its commercially reasonable best efforts to achieve and pay one or more earnouts based on revenues generated by Dialog’s power conversion business group, where iWatt’s business resided following its acquisition. The merger agreement contemplated several scenarios under which an earnout may be payable, and Dialog claimed that none of the earnouts had been or would be achieved.
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