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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Morris James Blogs
Section 102(b)(7) of the Delaware General Corporation Law permits a provision in a company's certificate of incorporation that exculpates directors from monetary liability for breaches of the fiduciary duty of care. By immunizing directors from money damages for breaches of the duty of care, Section 102(b)(7) provisions serve an important purpose in Delaware corporate law to encourage well-qualified people, who may be risk averse, to serve as directors without fear of monetary liability for a duty-of-care mistake. Section 102(b)(7) does not, however, protect officers from duty-of-care violations. Nor does Section 102(b)(7) immunize an aider and abettor from monetary liability for a board's breach of the duty of care—that is even when the board itself is exculpated from such liability. The Court of Chancery recently had the opportunity to address whether a financial adviser may still be liable for aiding and abetting after a board's breach of the duty of care was dismissed under a Section 102(b)(7) exculpation provision in the company's charter. More ›
Peter B. Ladig will be a panelist for an American Bar Association webinar titled "50 Ways to Leave Your Lover, err...Business Partner: The Essentials of Business Divorce in Privately Held Entities," to be held on December 10, 2015. This panel is a follow up to one of the most well-attended CLE programs at the 2015 ABA Business Law Section Spring Meeting. More ›
The 2015 Super Lawyers® Business Edition has recognized four Morris James partners as top business attorneys in Delaware. Those who were included in this special edition of Super Lawyers® excelled in the business-related practice areas of Business and Transactions; Construction, Real Estate and Environmental; Employment; Intellectual Property; and Litigation. The Super Lawyers® Business Edition is an annual go-to guide for general counsel and executives. More ›
In determining the proper scope of the general release, the court analyzed both the express contract language and the parties' negotiations. Regarding the express contract language, the court found that the general release was ambiguous, i.e., both parties offered reasonable interpretations. The plaintiffs argued that the general release broadly applied to any "obligation" entered into "in connection with the purchase agreement," which included the noncompete agreement. Under another provision, the plaintiffs argued that the general release relieved them of all future obligations, which would also include obligations under the noncompete agreement. In response, the defendants argued that the only obligations "in connection with the purchase agreement" were the obligations under the purchase agreement. The defendants also argued that the general release applied, by its express terms, to obligations as of the date of the general release. The obligations under the noncompete agreement extended beyond the date of the general release and, therefore, were not extinguished. More ›
A Delaware court will not stay its hand in favor of litigation elsewhere in an advancement or indemnification case absent “exceptional circumstances.” More ›
The statute of limitations for a breach of a "continuous contract” does not accrue until the contract is at an end. But what is a ”continuous contract?” This decision attempts to explain that concept that largely turns on what the parties intended.
This decision does an excellent job of setting out the elements of a claim for interference with prospective business relationships. Even better, it is a comprehensive summary of the elements of a claim for breach of the duty to act fairly and in good faith.
U.S. News - Best Lawyers Ranks Eighteen Morris James Practice Areas among 2016 “Best Law Firms” in Delaware
Eighteen Morris James practice areas were recognized in the 2016 “Best Law Firms” rankings by U.S. News – Best Lawyers®. These rankings complement the twenty-one Morris James attorneys who were selected by their peers for inclusion in the “The Best Lawyers in America” 2016 edition.
The practice areas recognized include: More ›
This is an interesting decision because it articulates what claims a receiver may make against former officers and when those claims are barred by laches.
The practice of a hedge fund buying shares in a Delaware corporation upon the announcement of a cash-out merger to then exercise appraisal rights, sometimes referred to as “appraisal arbitrage,” has generated controversy. Some argue that this practice is inconsistent with the appraisal remedy that should be available only to allow long-term shareholders who disagree with the cash-out price to have the Delaware Court of Chancery determine the fair value of their shares. Others argue, and the Delaware courts have agreed, that the appraisal statute permits the appraisal remedy to those who hold the shares on the merger date, even if, like the petitioners in this case, they (1) became owners only after the announcement of a merger solely to exercise appraisal rights and (2) could not demonstrate that the shares they purchased had not been voted in favor of the merger. More ›
This interesting decision upholds a claim based on the alleged duty to negotiate a contract in good faith. This confirms the need to be careful in wording letters of intent or you may be obligated for more than you were willing to give.
When is a waiver of a jury trial effective? This is not always an easy question as some claims may be outside the scope of the waiver. This decision provides good guidance on how to decide how far the waiver reaches.
This is an interesting decision for its discussion on what must be pled to obtain Chancery jurisdiction in a claim seeking to pierce the corporate veil. It is not enough to just allege the entity was used to defraud. Rather, the complaint must meet the more exacting standards set out in this opinion.
How long should competition in violation of an agreement be enjoined? Normally, that would depend on what the agreement says. But when that is not set out by the parties’ contract, this decision explains how to determine the time during which the unfair competition will be enjoined.
This is an important decision that reverses a prior opinion in the same case. The Court did so because after it issued its prior opinion, the Delaware Supreme Court issued its Corwin decision holding that when a merger is approved by a disinterested Board and a majority of the fully informed stockholders, the business judgment standard of review applies. This Court concluded that under that standard, the Board’s actions were not grossly negligent.