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Showing 22 posts from December 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. Share

Senior Lawyers Must Be Involved in Privilege Log Preparation

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. Share

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. Share

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. Share

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. Share

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. Share

Has the Chancery Court Created a New Tort?

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 › Share

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. Share

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. Share

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. Share

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. Share

Derivative Claims Dismissed for Failure to Plead Sufficient Facts

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 › Share

Court Of Chancery Sanctions

Posted In Discovery
James v. National Financial LLC, C.A. 8931-VCL (December 5, 2014) This decision deserves immediate attention by Delaware lawyers for it sets out their responsibilities to see that discovery, particularly discovery of ESI, is done correctly. It also is a good listing of the level of sanction that may be applied for not fulfilling those responsibilities. Share

Allergan Stockholders' Board-Removal Contest Was Not Ripe

Authored By Albert H. Manwaring, IV This article was originally published in the Delaware Business Court Insider December 3, 2014 Delaware courts have consistently recognized that disputes challenging corporate defensive measures are ripe for review when the defensive measures have a substantial deterrent effect on the ability of stockholders to exercise their rights. For example, in Moran v. Household International, 490 A.2d 1059, 1072 (Del. Ch. 1985), a corporation's implementation of a shareholder rights plan, which deterred the ability of stockholders to receive takeover proposals and engage in a proxy fight for control of the corporation, was ripe for review. Similarly, in KLM Royal Dutch Airlines v. Checchi, 698 A.2d 380, 384 (Del. Ch. 1997), a corporation's implementation of a shareholder rights plan or poison pill, which interfered with a stockholder's contractual right to exercise a stock option, was ripe for review. More recently, in Pontiac General Employees Retirement System v. Ballantine, C.A. No. 9789-VCL, at *72-77 (Del. Ch. October 14, 2014) (Transcript Op.) (Laster, V.C.), the board's implementation of a proxy put, which gave noteholders a right to accelerate payment of their debt if stockholders removed and replaced the majority of the corporation's board, had a deterrent effect on the stockholders' ability to conduct a proxy contest, and was thus ripe for review. In each of these cases, the key factor that the challenge was ripe for review was the "deterrent effect" of the defensive measure on the ability of stockholders to exercise their rights. More › Share

Court Of Chancery Explains How To Implicate The M&F Worldwide Decision

Posted In M&A
In Re Zhongpin Inc. Stockholders Litigation, C.A. 7393-VCN (November 26, 2014) To obtain business judgment review for a transaction with a controlling stockholder, the M&F Worldwide decision requires an independent committee and a majority-of-the-minority stockholder vote. This decision holds that those provisions must be part of the deal from the outset and adding a stockholder vote by the minority after the merger deal is signed comes too late to invoke the Worldwide case. The decision is also useful in explaining when even a 17% stockholder may be a controller because of his power over the entity. Share

Court Of Chancery Invalidates Deal Protections

Posted In M&A
In re Comverge Inc. Shareholder Litigation, C.A. 7368-VCP (November 25, 2014) Numerous Delaware decisions have upheld deal protection provisions in merger agreements. But, as this decision shows, it is still possible to go too far. When a combination of a termination fee, an expense reimbursement provision, and a convertible note amount to a 13% fee for ending the deal, that is too much protection and unfairly discourages a competing bid. The decision is also very good at explaining when a buyer may be charged with aiding and abetting liability. Just being a hard negotiator is not enough. Share

Court Of Chancery Explains Remedies Under An Agreement Of Sale

Posted In Business Torts
Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I LLLP, C.A. 7906-VCG (November 26, 2014) This is an interesting decision because it explains the pleading rules for a fraud claim and how such a claim relates to other possible causes of action such as unjust enrichment. Share

Court Of Chancery Invalidates Indemnification Requirement In A Merger

Posted In M&A
Cigna Health And Life Insurance Company v. Audax Health Solutions Inc., C.A. 9405-VCP (November 26, 2014) Escrow provisions are common in merger deals, particularly those involving private equity. Here, however, the parties went a different route and tried to require the selling stockholders to agree to indemnify the buyer for various possible events. The Court stressed that its opinion was limited to invalidating such arrangements when the indemnification was unlimited in time and scope. The opinion also invalidates the use of a clawback provision in a transmittal letter used to obtain the merger consideration when tendering the stock bought in the merger. Share

Court Of Chancery Affirms Arbitration Award

Posted In Arbitration
Roncone v. Phoenix Payment Systems Inc., C.A. 8895-VCN (November 26, 2014) This decision illustrates how hard it is to have the Court set aside an arbitration award. The grounds to do so are very limited and the court is not inclined to extend them Share
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