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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

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Showing 159 posts from 2005.

Federal Court Transfers Venue Under The Jumara v. State Farm Ins. Co. Articulation Of 28 U.S.C. Section 1412 Multifactor Considerations.

Bank of America, N.A. (USA) v. US Airways, Inc., No. Civ. A. 05-793-JJF, 2005 WL 3525680 (D.Del. Dec. 21, 2005). This is an action founded on tort and breach of contract. The Court granted defendants' motion to transfer the action to the Eastern District of Virginia and denied, without ruling, plaintiff's motion for expedited remand to the Delaware Court of Chancery. Defendants include three Delaware entities: US Airways, Inc., US Airways Group, Inc., and America West Airlines, Inc. The first two defendants maintained their principal place of business in Virginia. America West, Inc., maintained its principal place of business in Arizona. Additionally, Juniper Bank intervened as a defendant. More ›

Court of Chancery Substantially Denies Motion to Dismiss Complaint Seeking Release of Escrowed Funds and Other Relief

Bonham v. HBW Holdings, Inc., C.A. No. 820-N, 2005 WL 3589419 (Del. Ch. Dec. 23, 2005). Former stockholders sued acquirer for release of $25 million held in escrow for purpose of indemnification for breach of warranty claims and other relief. The acquirer moved to dismiss the complaint on the grounds that it properly and timely noticed claims for breach of warranty and other issues, Plaintiffs failed to allege that those claims were made in bad faith, and certain of the claims were subject to mandatory arbitration under the terms of the stock purchase agreement. More ›

Court of Chancery Grants Partial Summary Judgment with Respect to Claims that Former Controlling Stockholder Extracted Excess Compensation from Acquirer in Exchange for Supporting Merger

Crescent/Mach I Partnership, L.P. v. Turner, C.A. No. 17455-NC, 2005 WL 3618279 (Del. Ch. Dec. 23, 2005). Former stockholders who were cashed out in connection with merger sued the corporation's former controlling stockholder and the acquirer for breach of fiduciary duty and aiding and abetting breach of fiduciary duty, respectively. Plaintiffs complained of numerous side deals, allegedly negotiated by the controlling stockholder. Plaintiffs also complained that the controlling stockholder breached his fiduciary duty by supplying growth projections that he knew to be unduly pessimistic and inconsistent with management's view. Defendants moved for summary judgment, which the court granted in part and denied in part. More ›

District Court Grants Motion to Dismiss Proceeding for Preliminary Injunction

Bally Total Fitness Holding Corp. v. Liberation Investments, L.P., Liberation Investments, Ltd., Liberation Investment Group, LLC and Emanuel R. Pearlman, 2005 WL 3525679 (D.Del., December 22, 2005). The District Court for the District of Delaware granted Defendants' Motion to Dismiss Plaintiff's Preliminary Injunction application. At issue were SEC mandated disclosures in advance of the annual shareholders' meeting. More ›

District Court Grants Motion to Transfer to Eastern District of Virginia

Posted In Case Summaries
Bank of America, N.A. (USA) v. US Airways, Inc., 2005 WL 3525680, (D.Del., December 21, 2005). The District Court for the District of Delaware granted Defendants' US Airways, Inc., US Airways Group, Inc. and America West Airlines, Inc. Motion to Transfer to the Wastern District of Virginia and declined to rule on Plaintiff's competing Motion for Expedited Remand to Vice Chancellor Strine of the Delaware Chancery Court. More ›

Court Refuses to Dismiss Suit to Invalidate Corporation's Extension of Poison Pill

Unisuper v. News Corp., C.A. No. 1699-N, 2005 WL 3529317 (Del. Ch. Dec. 20, 2005). In the context of converting from an Australian corporation to a Delaware corporation, News Corp.'s board adopted a policy that if a shareholder rights plan was adopted following reincorporation, the plan would have a one-year sunset clause unless shareholder approval was obtained for an extension. The policy also provided that if shareholder approval was not obtained, the company would not adopt a successor shareholder rights plan having substantially the same terms and conditions. Several weeks later, News Corp.'s board adopted a poison pill in response to a specific third-party takeover threat. One year later, the board extended the poison pill without a shareholder vote, in contravention of its prior policy. More ›

Court of Chancery Determines Fair Value Of Stock In Appraisal Action

Henke v. Trilithic Inc., C.A. No. 13155, 2005 WL 2899677 (Del. Ch. Oct. 28, 2005). Plaintiff, who was a stockholder of Trilithic, Inc., brought an appraisal action against Defendant Trilithic under 8 Del. C. §262. More ›

Court Enforces Lease Provision Protecting Supermarket from Competition from Other Shopping Center Tenants

Penn Mart Supermarkets, Inc. v. New Castle Shopping LLC, C.A. No. 20405-NC, 2005 WL 3502054 (Del. Ch. Dec. 15, 2005). Liquor store chain acquired leasehold rights in commercial shopping center under a Bankruptcy Court order that authorized it to operate one of its typical stores. In addition to alcohol products, those chain stores also sold food products and a wide range of products typically sold in supermarkets. Tenant who operated supermarket in same shopping center sued landlord and liquor store to enforce provision in its lease protecting it from competition by other tenants in the operation of a supermarket and in the sale of food or food products intended for off-premises consumption. More ›

Court of Chancery Holds Contractually Granted Advancement Rights Not Abrogated by Subsequent Indemnification Agreement Containing Integration Clause

Posted In Case Summaries
Brady v. i2 Technologies Inc., C.A. No. 1543-N, 2005 WL 3691286 (Del. Ch. Dec. 14, 2005). A former executive and director sought advancement of his expenses in connection with the defense of certain proceedings based on a standard corporate advancement provision in a 1996 indemnification agreement. Defendant corporation argued that an integration clause in a subsequent 2002 severance agreement, which stated that the 2002 agreement expressed the entire agreement between the parties "with respect to the subject matter hereof," abrogated the advancement obligation imposed by 1996 agreement. More ›

Court Grants Significantly Smaller Fee Award Than That Sought by Plaintiffs' Counsel in Connection with Settlement of Derivative Action

Posted In Case Summaries
In re Instinet Group, Inc. Shareholders Litig., C.A. No. 1289-N, 2005 WL 3501708 (Del. Ch. Dec. 14, 2005). Following the court's approval of settlement of derivative claims, Plaintiffs' counsel applied for an allowance of $1,450,000 in contingency fees and $173,031.07 in costs. Defendants agreed that Plaintiffs' attorneys were entitled to some award of fees and expenses, but objected to counsel's request as excessive under the circumstances on the grounds that (1) the litigation benefits achieved were modest, (2) the case settled at an early stage, and (3) Plaintiffs' counsel litigated the case ineffectively. More ›

Court Dismisses Claim That Board Breached Fiduciary Duty by Failing to Seek Recovery of Bonus that Turned Out to Be Unjustified After Accounting Restatement

Laties v. Wise, C.A. No. 1280-N, 2005 WL 3501709 (Del. Ch. Dec. 14, 2005). In 2001, Defendant corporate executive received bonuses and other compensation near $9 million as CEO, due in some part to the corporation's reported profits that year. Several years later, after that executive's departure, the corporation restated its 2001 performance from a $93 million profit to a $447 million loss. Plaintiff brought a derivative claim against executive for unjust enrichment, and against the present directors of the corporation for breach of fiduciary duty and waste. Defendants moved to dismiss under Court of Chancery Rule 23.1. More ›

Court Denies Motion to Dismiss Claims for Tortious Interference and Civil Conspiracy in Connection with Telecommunications Merger

UbiquiTel v. Sprint Corporation, C.A. No. 1489-N, 2005 WL 3533697 (Del. Ch. Dec. 14, 2005, rev'd Dec. 19, 2005). UbiquiTel was the exclusive operator of Sprint's wireless network in several states pursuant to a management agreement. In December 2004, Sprint announced that it intended to merge with Nextel and that Nextel or its successor entity would be taking over much of the work that had previously been performed by UbiquiTel. In response, UbiquiTel sued Sprint and Nextel alleging a number of claims, including tortious interference and civil conspiracy against Nextel. Nextel moved to dismiss for failure to state a claim. More ›

Court of Chancery Denies Motion to Stay Books and Records Action in Favor of Separate Derivative Action Involving Substantially Similar Matters

Kaufman v. Computer Associates International, Inc., C.A. No. 699-N, 2005 WL 3470589 (Del. Ch. Dec. 13, 2005). A beneficial stockholder filed a books-and-records action pursuant to 8 Del.C. §220 seeking documents relating to the corporation's decision to settle certain derivative and federal class action litigation in a manner that allegedly benefited the individual wrongdoers at the corporation's expense. A special litigation committee acting on behalf of the corporation moved to stay this action until it completed its investigation on this issue, which had become the subject of new derivative litigation in New York brought by different plaintiffs. More ›

Court Declines to Award Fees on Fees in Advancement Proceeding Where Not Required under Indemnification Agreement and Plaintiff Failed to Achieve Cognizable Success in Prosecuting Claim

Posted In Case Summaries
Kaung v. Cole National Corporation, C.A. No. 163-N, 2005 WL 3462250 (Del. Ch. Dec. 13, 2005). On remand in an advancement action, Plaintiff filed a motion requesting an award of his attorneys' fees and costs incurred in prosecuting his claim. In the previous proceeding, the Court of Chancery had held that Plaintiff was not entitled to advancement and ordered Defendant to repay fees that had already been advanced to him. On appeal, however, the Delaware Supreme Court held that the Court of Chancery erred in reaching the recoupment issue prematurely, rather than leaving it for a later proceeding in which Plaintiff's ultimate right to indemnification could be decided. More ›

Federal Court Permits Reconsideration of Fees and Costs Award, and Imposes Them Entirely on Other Defendant for Bad-Faith Conduct

Posted In Case Summaries
Money Centers Of America, Inc. v. Regen, No. Civ. A. No. 04-1516-KAJ, 2005 WL 3309610 (D.Del. Dec. 6, 2005). This Memorandum Order ruled on three motions related to the Court's Order of October 17, 2005 ("October Order"): (1) reconsideration or, in the alternative, alter or amend judgment; (2) Protective Order related to depositions; and (3) stay, pending appeal. The October Order granted relief to plaintiffs Money Centers of America, Inc., and Available Money Inc., to reopen the Order to allow the settlement agreement between the parties to be entered on the record and permitted defendant Available Money to take additional discovery. The Court ruled that: (1) defendant Coast ATM and Mrs. Regen would not be liable to the extent of the attorney fees and costs incurred with regard to the October motion to reopen the judgment; (2) that Coast ATM's motion for reconsideration was appropriate; (3) denied the relief requested as moot with respect to the relief sought from earlier Delaware-based depositions; and (4) denied Defendant Mr. Regen's motion to the extent that it would have relieved him from bearing all attorney fees and costs related to the October Order. More ›