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Showing 9 posts from October 2017.

Superior Court Explains Coverage Analysis Rules

Catlin Specialty Insurance Company v. CBL & Associates Properties Inc., No. N16C-07-166 PRW CCLD (October 17, 2017)

This is an interesting decision for two reasons. First, it settles the choice of law in a coverage case for a nationwide set of claims. The principal place of business for the insured is the law to apply. More ›

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Superior Court Sets Out Rules For Class Certification

Posted In Class Actions

Wilmington Pain & Rehabilitation Center P.A. v. USAA General Indemnity Insurance Co., No. N15C-06-218 JRJ CCLD (October 17, 2017)

This is an important decision became it sets out the most recent rules for determining when a class may be certified. Briefly, the class members claims must be capable of resolution on a class-based basis and not by looking at each class member’s circumstance. While easy to say, that is harder to actually do and this decision explains the reasoning that should be used.

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Petition Denied to Remove Wilmington Trust as the Trustee of du Pont Family Trusts

Wilmington Trust serves as the sole trustee for certain du Pont Family Trusts established in the 1940s and 1950s. For many years, Wilmington Trust was closely associated with the du Pont family, and was managed in part by family members. Following the near collapse of its business in the 2008 financial crisis, Wilmington Trust was acquired by M&T Bank. Today, Wilmington Trust is a wholly-owned subsidiary of M&T Bank, and no member of the du Pont family serves on Wilmington Trust’s board. In 2013, at the prompting of the current trusts’ beneficiary, Douglas du Pont, Wilmington Trust agreed to modify the trusts to authorize Mr. du Pont to serve as the “Investment Direction Advisor” for the trusts’ assets, which limited Wilmington Trust to a principally ministerial role in the trusts’ on-going administration. In October 2016, alleged tensions between Mr. du Pont and Wilmington Trust led Mr. du Pont to petition the Court of Chancery to seek to remove Wilmington Trust as the trustee altogether, and to appoint a successor trustee. More ›

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Court Of Chancery Explains Long-Arm Jurisdiction Based On Creating A Subsidiary

Posted In Jurisdiction

The Dow Chemical Company v. Organik Kimya Holding A.S., C.A. No. 12090-VCG (Oct. 19, 2017)

Under the Papendick v. Bosch decision, incorporating an entity in Delaware may give rise to long-arm jurisdiction over the entity’s parent, even a foreign one with no other contacts with the State of Delaware. The act of incorporating in Delaware, however, must be an “integral component” of the alleged wrongdoing. This decision explains how to meet that test, which is heightened slightly after the plaintiff conducts jurisdictional discovery. The test was satisfied in this case based on allegations that the defendant, desiring to enter the U.S. market, misappropriated the plaintiff’s trade secrets and incorporated a Delaware entity to profit from the misappropriation.

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Court Of Chancery Interprets Credit Agreement And Declines To Consider Alleged Oral Modification

Pine River Master Fund Ltd. V. Amur Finance Co., Inc., C.A. No. 2017-0145-JRS (Oct. 12, 2017)

This decision interpreting a credit agreement’s terms is another reminder that an alleged oral modification to a written contract will not vary the contract’s terms when it has an integration clause and otherwise speaks to the subject of the modification.

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Court Of Chancery Decides It Will Determine Stock Validity In A Section 225 Case

Posted In Directors

Southpaw Credit Opportunity Master Fund L.P. v. Roma Restaurant Holdings Inc., C.A. No. 2017-0059-TMR (Oct. 13, 2017)

In a contest over who has been elected to a board of directors under Section 225 of the DGCL, it is sometimes critical to decide if certain stock was validly issued and thus can be voted. This decision sets out a circumstance when that issue may be determined in Section 225 case even when the holders of the contested stock are not parties to the litigation.

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Chancery Declines Confidential Treatment to Nonparty’s Claimed Sensitive Business Info

American courts have long recognized that the public enjoys a First Amendment right of access to judicial proceedings and records.  While forceful, the right is only presumptive, and the public’s interest in access may be overcome with an adequate showing of need. More ›

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Court of Chancery Imposes Incorporation By Reference Condition On Books and Records Production

The City Of Cambridge Retirement System v. Universal Health Services Inc., C.A. No. 2017-0322-SG (Oct. 12, 2017)

A stockholder may inspect a corporation’s records for any recognized proper purpose, including investigating alleged mismanagement. If that stockholder later files a complaint based on the records produced, must the stockholder agree that any reviewing court may consider all those records in ruling on a motion to dismiss rather than being limited to the complaint’s allegations? Under this decision, and a similar decision in the Yahoo! litigation, yes, potentially. While this decision notes that such a condition is within the Court’s discretion, the language of the opinion suggests that condition will be granted as a matter of course.

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Court Of Chancery Explains Demand Excusal Based On Knowing Violations Of Law

Kandell v. NIV, C.A. No. 11812-VCG (Sept. 29, 2017)

Derivative plaintiffs alleging that directors allowed the corporation they serve to violate the law typically face dismissal for failure to make pre-suit demand on the board unless they allege a bad faith breach of the fiduciary duty of loyalty. To survive dismissal, plaintiffs need to sufficiently allege the directors knowingly cause the violation or knowingly failed to act—a very high bar. This decision explains that a knowing violation may be found, as it was here (at the motion to dismiss stage), when the law in question is clear and the illegal corporate practice in question is well known to the board.

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