About This Blog

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

Morris James Blogs

Links

Photo of Delaware Business Litigation Report Kathleen A. Murphy
Attorney
kmurphy@morrisjames.com
302.888.6847
View Bio
Kathleen A. Murphy is an attorney in the Corporate and Commercial Litigation Group.  She focuses her practice on corporate, fiduciary, and commercial litigation. Prior to joining …

Showing 3 posts by Kathleen A. Murphy.

Chancery Adopts Narrow Interpretation of the Computer Fraud and Abuse Act

AlixPartners LLP v. Benichou, C.A. No. 2018-0600-KSJM (Del. Ch. May 10, 2019).

The federal Computer Fraud and Abuse Act (“CFAA”) carries both civil and criminal penalties for unauthorized access to protected computers.  The Court of Chancery recently decided an issue of first impression in Delaware regarding the CFAA’s scope in connection with a suit by AlixPartners against a former partner for allegedly misusing the company’s confidential information and trade secrets. 

Plaintiffs were two entities making up AlixPartners, a global restructuring firm, and the defendant was managing partner of the Paris office before joining a competitor.  Defendant allegedly downloaded confidential client information onto his personal data device, both before and after his discharge, and later provided it to his new employer.  Litigation ensued and the defendant sought dismissal of the plaintiffs’ claim under the CFAA.  Dismissal of that claim turned on whether the defendant was potentially liable under the CFAA for: (i) misusing information obtained from a computer he was authorized to access (the “Broad Approach”); or (ii) unauthorized access to the plaintiffs’ computers (the “Narrow Approach”). More ›

Chancery Awards Advancement to LLC Member Applying Corporate Law Precedent

Freeman Family LLC v. Park Avenue Landing LLC, C.A. No. 2018-0683-TMR (Del. Ch. Apr. 30, 2019).

Delaware law, under 8 Del. C. § 145, allows for a corporation to agree in corporate documents or contracts to advance legal fees and expenses arising out of one’s service to the company.  Aiming to bolster quality leadership, Delaware’s policy is to construe advancement provisions broadly in favor of advancement.  Parties also utilize advancement provisions in the LLC context.  Different from the corporate context, the foundational principle underlying an LLC relationship is the freedom of contract—the idea that parties are free to arrange their dealings as they choose.  Overlaying this important principle is the notion developed under Delaware case law that, while the contract is paramount in the LLC context, structural choices might result in a court importing ideas from an analogous body of law, like corporate law.  This recent Court of Chancery opinion recognizes and illustrates that notion when dealing with claimed advancement rights, explaining “parties are free to contract into corporate case law (or not) when they create LLCs, and courts will respect that choice.”  More ›

Chancery Imposes Rule 15(aaa)’s Requirement – Amend or Risk Dismissal with Prejudice – on Cases Transferred from the Superior Court

Otto Candies, LLC v. KPMG, LLP, C.A. No. 2018-0435-MTZ (Del. Ch. Apr. 25, 2019)

Rule 15(aaa), a rule unique to the Court of Chancery, requires plaintiffs faced with a motion to dismiss for failure to state a claim to either:  (i) amend their complaint; or (ii) stand on their pleading and risk dismissal with prejudice.  In this case, the plaintiffs initially brought suit in the Superior Court of Delaware, which does not have a corollary to Rule 15(aaa).  Before the Superior Court, defendants moved to dismiss the plaintiffs’ complaint on personal and subject matter jurisdictional grounds, as well as for failure to state a claim.  More ›