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

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Showing 169 posts from 2014.

Delaware Super Lawyers® 2014 Business Edition Names Six Morris James Partners

Posted In News

Delaware Super Lawyers® Business Edition has recognized six 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. Morris James’ 2014 selections include: P. Clarkson Collins, Jr. – Litigation Richard K. Herrmann – Intellectual Property Peter B. Ladig – Litigation Lewis H. Lazarus – Litigation Edward M. McNally – Litigation James W. Semple – Litigation

Court Of Chancery Awards Fees To A "Bad Guy"

Holley v. Nipro Diagnostics Inc., C.A. 9679-VCP (December 23, 2014) It is often thought that if a former director is convicted of wrongdoing there is no need to indemnify her for defense fees. That simplistic view overlooks what may be a reimbursement right the company's bylaws adopted when all were friendly. But as this decision points out, there may be a right to fees incurred in a partially successful defense and, even worse, a right to fees for fees incurred to establish that right. Ignoring that just makes bad situation worse.

Senior Lawyers Must Be Involved in Privilege Log Preparation

Posted In Articles

This article was originally published in the  In Mechel Bluestone v. James C. Justice Cos., C.A. No. 9218-VCL (Del. Ch. Dec. 12, 2014), the Delaware Court of Chancery decided a motion to compel the production of documents and a request for sanctions related to purportedly deficient privilege logs. The defendants claimed that the plaintiffs' original privilege log, and four subsequent amendments to that log, were "so flawed" that the plaintiffs should be ordered to produce all of the documents listed on the log. The court did not impose this harsh sanction, but it did hold that the plaintiffs waived the privilege with respect to documents that were not adequately described on the privilege logs. In so finding, the court reiterated that "preparing a privilege log with integrity requires the involvement and oversight of senior lawyers who know the applicable standards, understand the roles of the individuals involved in the communications, and can make textured judgment calls on a principled basis." More ›

Supreme Court Confirms Chancery May Restrict Use Of Company Records

United Technologies Corp. v. Treppel, No. 127, 2014 (December 23, 2014) This decision holds that in granting inspection of a company's records, the Court of Chancery may limit the use of those records to litigation in Delaware. The factors that guide the Court's discretion are spelled out in a non-exclusive way.

Benchmark Litigation Recognizes Seven Morris James Attorneys as Top Litigators in Delaware

Posted In News

Morris James LLP is pleased to announce that seven of its partners have been recognized as top local litigation attorneys in Delaware by Benchmark Litigation 2015: the definitive guide to America’s leading litigation firms and attorneys. The attorneys recognized are: P. Clarkson Collins, Jr. – Local Litigation Star Richard Galperin – Local Litigation Star Richard K. Herrmann – Local Litigation Star Peter B. Ladig – Local Litigation Star, Plaintiff Lewis H. Lazarus – Local Litigation Star Edward M. McNally – Local Litigation Star Benchmark Litigation culminates their results from a six-month long extensive research period where they interview leading litigators and law firms. Along with peer-review testimony, recent casework is also reviewed. Firms cannot pay to be recommended for the guide; instead, they must be recommended by the nation’s leading private practice lawyers and in-house counsel.

Court Of Chancery Upholds Jurisdiction Over Non-resident Manager

Posted In Jurisdiction
2009 Caiola Family Trust v. PWA LLC, C.A. 8028-VCP (December 18, 2014) This decision is interesting because it upholds the Court of Chancery's jurisdiction over a non-resident who, through a non-Delaware entity, manages a Delaware LLC.  Thus, simply putting a non-resident entity between you and the Delaware entity will not always shield you from Delaware's jurisdiction.

Supreme Court Clarifies Revlon Requirements

Posted In M&A
C & J Energy Services Inc. v. City of Miami General Employees' And Sanitation Employees' Retirement Trust, Nos. 655 /657, 2014 (December 19, 2014) In this important decision, the Delaware Supreme Court clarifies that: (1) Revlon does not require an auction before a company is sold, (2) a reasonable sale process is all that is required, not a perfect one, and (3) the standard to enjoin a merger is particularly high when a mandatory injunction is sought that affects third party rights. In a sense, this decision is a companion to the MFW decision that applied a business judgment standard of review to a merger approved by a fully informed and independent SLC and a majority of the disinterested stockholders. Delaware M&A law is rapidly evolving with these decisions.

Court Of Chancery Applies Revlon

Posted In M&A
In Re Family Dollar Stockholder Litigation, C.A. 9985-CB (December 19, 2014) On the same day that the Delaware Supreme Court clarified what Revlon requires, the Court of Chancery's new Chancellor also applied the same standard to deny an injunction under the Revlon principles. This illustrates the respect the Court gives to disinterested Board decisions, even under a heightened scrutiny test.

Court Of Chancery Upholds Advance Notice Bylaw

AB Value Partners LP v. Kreisler Manufacturing Corporation, C.A. 10434-VCP (December 16, 2014) Advance notice bylaws are valid under Delaware law. However, their application may be enjoined in rare circumstances when the Board of Directors has "radically" changed the playing field after the time to give notice of a competing slate. This decision gives examples of when that has occurred and more often, when it has not occurred. The burden to get relief a is high one and is not met by just a change in circumstances not caused by the incumbent Board.

Has the Chancery Court Created a New Tort?

Posted In Articles
Authored By Edward M. McNally This article was originally published in the Delaware Business Court Insider December 17, 2014 A recent decision by the Delaware Court of Chancery may have plowed fresh ground by establishing a new tort claim against corporate directors. Lee v. Pincus, C.A. No. 8458-CB (Del. Ch. Nov. 14, 2014), held that directors who released themselves from a lockup agreement gained a benefit that was not shared with stockholders and may be liable to those stockholders as a result. This "improper benefit" claim is at least novel, if not entirely unprecedented. Corporate directors need to understand the implication of this decision. More ›

Court Of Chancery Reiterates Privilege Log Rules

Posted In Discovery
Mechel Bluestone Inc. v. James C. Justice Companies Inc., C.A. 9218-VCL (December 12, 2014) When documents are withheld under a claim they are privileged, it is necessary to say why there is a privilege. A "privilege log" does just that, however, there are specific requirements for what must be on that log, or its cousin the redaction log. Failure to meet those requirement may result in a waiver of any privilege. This decision explains all the rules and how to meet them. Of particular interest to Delaware lawyers, the decision twice points out that compliance with these requirements is a responsibility of the "senior Delaware lawyers" involved in the matter. My father said that someone was a "senior" if they were 10 years older than he was. He said that when he was 80. I doubt the Court of Chancery will agree with him.

Court Of Chancery Reviews Attorney Charging Liens

Zutrau v. Jansing, C.A. 7457-VCP (December 8, 2014) This may well be the definitive decision on when and for how much an attorney may have a so-called charging lien on a client's recovery in order to get paid.

Court Of Chancery Examines Trust Exculpation Limits

Posted In Fiduciary Duty
Mennen v. Wilmington Trust Co., C.A. 8432-ML (December 8, 2014) Trust documents frequently provide that the trustee is not liable for any mistakes made in good faith. This decision examines how far that exculpation goes with respect to some very bad investment decisions. Not far enough in this case. It also shows that untruthful testimony, besides being just plain wrong, also has a way of really hurting that witness's case.

Court Of Chancery Explains Discovery In Appraisal Case

Posted In Appraisal
In Re Appraisal Of Dole Food Company, Inc., C.A. 9079-VCL (December 9, 2014) Appraisal actions are often described as a battle of experts. However, as this decision illustrates, that does not mean that a plaintiff is not subject to discovery, particularly over what he thinks is the value of the company. This is becoming more common as parties buy stock after a merger is announced in an attempt to arbitrage appraisal rights. The liberal rules of discovery apply to all, even the plaintiff who knew nothing until he decided to buy stock.

Derivative Claims Dismissed for Failure to Plead Sufficient Facts

Posted In Articles
Authored By Lewis Lazarus This article was originally published in the Delaware Business Court Insider December 10, 2014 Claims for breach of fiduciary duty against directors for injury to a Delaware corporation caused by director misconduct are assets of the corporation. In deference to the director-centric model of corporate decision-making embodied in Delaware law, a stockholder may not obtain control over that corporate asset without first making a demand on the board to bring an action or pleading that demand is excused. When a stockholder plaintiff believes that demand is excused but fails first under Section 220 of the Delaware General Corporation Law to seek books and records related to alleged misconduct in a transaction, that plaintiff will need to allege with particularity, and without discovery or pertinent books and records, either that a majority of the board was not disinterested or independent or that the decision to enter into the transaction was not otherwise the product of a valid exercise of business judgment. More ›