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Delaware Business Court Insider

Disregard of Speculative Financial Projections Was Not Bad Faith

In a stockholder challenge to a sale of the company, a plaintiff may rebut the business judgment rule by pleading facts that support a reasonable inference that at least half of the directors, who approved the sale, were not disinterested or independent in breach of their fiduciary duty of loyalty. While the prohibition against self-interested transactions by the board is the most fundamental obligation under the duty of loyalty, the good-faith corollary to the duty of loyalty under In re The Walt Disney Derivative Litigation, 907 A.2d 693, 754-55 (Del. Ch. 2005), is "something of a catch-all," providing a "fiduciary out from the business judgment rule." Good faith under the duty of loyalty prohibits "intentional dereliction of duty, [or] inaction in the face of a duty to act," which allegations support a claim for bad faith. In a bad-faith claim, the board's intentional action, or inaction in the face of a known duty to act, cannot be explained "as in the corporate interest: res ipsa loquitor." The Delaware Court of Chancery has emphasized that pleading facts to support a bad-faith claim is the "most difficult path to overcome dismissal" and that such facts are a "rara avis."
14 minute read

New York Law Journal

Dingee v. Wayfair Inc.

Failure to List Competitor in IPO Registration Statement, SEC Filings Not a Material Omission
3 minute read

New York Law Journal

Francisco v. Abengoa, S.A.

Actions Consolidated, Lead Plaintiff Appointed In Fraud Case Against Clean Technology Firm
3 minute read

Law.com

Bonus Compensation Clawbacks Are New Norm

Top executives are forced to give back money even when the SEC doesn't allege personal misconduct.
14 minute read

National Law Journal

The SEC: Challenges, Clawbacks, and the Constitution

Litigators who focus on securities enforcement and appellate law take the pulse of the courts this week on significant trends involving the U.S. Securities and Exchange Commission.
2 minute read

National Law Journal

SEC In-House Forum Is Constitutionally Uncertain

Federal trial courts, confronting challenges to the agency's administrative law judges, appear divided.
6 minute read

Litigation Daily

Litigators of the Week: Kannon Shanmugam of Williams & Connolly and Joshua Rosenkranz of Orrick

The pair knocked out a billion-dollar judgment against Bank of America that had stood out as a bright spot for prosecutors in the wake of the financial crisis.
4 minute read

International Edition

Freshfields Under Scrutiny as Alibaba Deal Falls Foul of Hong Kong Securities Regulator

Legal advisers' role referenced as Alibaba's $171 million acquisition of healthcare company is criticized for breaking takeover rules.
9 minute read

The Recorder

Chu v. U.S. Commodity Futures Trading Commission

4 minute read

Delaware Business Court Insider

Chancery Court Decision Provides Guidance on Multiforum Litigation

InIn re Wal-Mart Stores Delaware Derivative Litigation, , the Delaware Court of Chancery held that an order of the U.S. District Court for the Western District of Arkansas dismissing an Arkansas complaint precluded Delaware plaintiffs from litigating demand futility in a Delaware derivative action challenging the same underlying conduct.
18 minute read

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