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Matthew F. Lintner

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Showing 54 posts by Matthew F. Lintner.

Chancery Lacks Jurisdiction to Grant Injunction While Superior Court Appeal Is Pending


Vama F.Z. Co. v. WS02, Inc., C.A. No. 2020-0141-JRS (Del. Ch. Mar. 29, 2021)
This case illustrates that the Court of Chancery lacks subject matter jurisdiction to issue an injunction pending appeal of another court’s rulings, and where the plaintiff has adequate remedies at law.  More ›

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Chancery Finds SEC’s Filing of an Enforcement Action Did Not Trigger Redemption Right

Tetragon Fin. Grp. Ltd. v. Ripple Labs Inc., C.A. No. 2021-0007-MTZ (Del. Ch. Mar. 19, 2021)

Plaintiff Tetragon Financial Group Limited is a shareholder of Ripple Labs, Inc., a blockchain company that uses a cryptocurrency called XRP. Tetragon had a right under a Stockholders’ Agreement to require Ripple to redeem its shares if the SEC or another government agency “determine[s] on an official basis” that XRP is a security “on a current and going forward basis.” Here, Tetragon sought a declaration that the SEC’s decisions to file an enforcement action in federal District Court, and issue a Wells Notice, each triggered the redemption right. More ›

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Chancery Confirms that the Implied Covenant Imposes a “Good Faith” Component to an Agreement to Negotiate

DG BF, LLC v. Ray, C.A. No. 2020-0459-MTZ (Del. Ch. Mar. 1, 2021)

The Operating Agreement for an LLC involved in the cannabis industry provided for a five-member board of managers, with one Independent Manager appointed by a process of negotiation between two other managers (the plaintiff in the action and one of the defendants). Under the process set forth in the Operating Agreement, either side could present various candidates until there was agreement, which was supposed to happen within a 180-day period. The parties could also mutually agree to extend the deadline. More ›

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Superior Court Finds Securities Lawsuits Do Not Fall within Relatedness Exclusion of Insurance Policy

Northrop Grumman Innovation Systems, Inc. v. Zurich American Insurance Company, C.A. No. N18C-09-210 (Del. Super. Ct. Feb. 2, 2021)

This case arises from an insurance coverage dispute between an insured and multiple insurance providers in a policy tower for defense fees and settlement costs from two securities class action lawsuits. In the Complex Commercial Litigation Division of the Superior Court, the insurers argued that they were not obligated to reimburse losses arising from the two securities lawsuits because of, inter alia, an exclusion regarding the “relatedness” of Wrongful Acts. Under Delaware law, the exception to coverage because of the “relatedness” of Wrongful Acts only applies “where the two underlying claims are fundamentally identical.” The Court held that the exception did not apply in this case simply because the securities lawsuits involved the same wrongdoers and the same transaction, among other things. Instead, the fact that there were variations in the mens rea, motive, burdens of proof, the timing and other factors, suggested that the securities lawsuits did not involve the exact same subject. Accordingly, the Court found that the two claims were not “related” and the relatedness exclusion did not apply.

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Superior Court Applies “Law Most Favorable” Choice of Law Provision and Finds Investment Fund’s Settlement of a Fraudulent Transfer Claim Was an Insurable Loss

Sycamore Partners Management, L.P. v. Endurance American Insurance Company, C.A. No. N18C-09-211 AML CCLD (Del. Super. Feb. 26, 2021)

The bankruptcy estate of Nine West accused investment firm Sycamore Partners of structuring transactions involving Nine West in such a manner as to constitute a fraudulent transfer, with too much debt burdening the entity after Sycamore Partners sold off certain prime assets. Sycamore Partners settled such claims for a payment of $120 million to the bankruptcy estate, and then sought coverage for the settlement from its carriers. More ›

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Chancery Grants Access to Facebook Board Emails in Books and Records Action

Employees’ Retirement System of Rhode Island v. Facebook, Inc., C.A. No. 2020-0085-JRS (Del. Ch. Feb. 10, 2021)

In this opinion, the Court of Chancery confirms that it will grant access to emails in a books and records action where the corporation’s board minutes and other materials are insufficient for the plaintiff’s purposes. Here, a stockholder of Facebook, Inc. requested books and records to investigate Facebook’s $5 billion settlement with the Federal Trade Commission for the unauthorized sale of customer information to Cambridge Analytica and other data breaches. The plaintiff sought to investigate whether Facebook overpaid in its settlement to shield its chief executive Mark Zuckerberg from personal liability.  More ›

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Chancery Applies Unclean Hands Doctrine to Prevent a Trustee from Rescinding the Decanting of a Trust

In the Matter of: The Niki and Darren Irrevocable Trust and the N and D Delaware Irrevocable Trust, C.A. No. 2019-0302-SG (Del. Ch. Feb. 4, 2021)

Delaware’s decanting statute allows a trustee to “decant” a trust by “pouring” the corpus out into a new modified trust. But, to do so, a trustee must have been able to invade the trust principal under the original trust’s terms, and the second trust’s terms must be substantially the same in its treatment of beneficiaries. More ›

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Delaware Supreme Court Adopts Post-Merger Derivative Standing Framework From In re Primedia, Inc. Shareholders Litigation

Morris v. Spectra Energy Partners (DE) GP, LP, No. 489, 2019 (Del. Jan. 22, 2021)

In Delaware corporate law, “the standing inquiry has assumed special significance,” especially in the post-merger context. The Delaware Supreme Court in Morris v. Spectra Energy holds that a plaintiff has post-merger standing if she brings a claim disputing the fairness of a merger and satisfies the three-part framework set forth in In re Primedia, Inc. Shareholders Litigation, 67 A.3d 455 (Del. Ch. 2013), even if the underlying claim seems unlikely to succeed on the merits. More ›

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Delaware Choice of Law Provision in Stock Purchase Agreement Does Not Eliminate Claim for Fraud under California Securities Act

Swipe Acquisition Corp. v. Krauss, C.A. No. 2019-0509-PAF (Del. Ch. Jan. 28, 2021)

This decision concerned a motion to dismiss a claim for fraud under the California Securities Act, which the defendants argued was waived by a choice of law provision in the parties’ stock purchase agreement (“SPA”) indicating that “all claims or causes of action (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement … shall be governed by, and enforced in accordance with, the internal laws of the State of Delaware, including its statutes of limitations.” More ›

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Chancery Finds That Delaware’s Trade Secrets Statute Preempts Unjust Enrichment Claim for Same Alleged Misconduct

250ok, Inc. v. Message Sys., Inc., C.A. No. 2020-0588-JRS (Del. Ch. Jan. 22, 2021)

This decision clarifies the scope of preemption of common law claims under the Delaware Uniform Trade Secret Act (“DUTSA”). Plaintiff asserted both a claim under the DUTSA and a claim for unjust enrichment, where both claims arose from the same alleged misconduct. The Court of Chancery concluded that a trade secret claim under the DUTSA “occupies the field” and preempts a claim for common law unjust enrichment. Applying Delaware precedent on the issue, the Court explained that preemption applies not just to tort-based claims, but to any “alternative common law claims.” And, as previous decisions have held, preemption applies at the dismissal stage even though the Court may later find that the DUTSA does not protect the information at issue. Accordingly, the Court of Chancery dismissed the unjust enrichment claim.

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Chancery Analogizes to Bylaw Provisions to Conclude that Noteholder was Bound to Forum Selection Clause in Amended Note

Mack v. Rev Worldwide, Inc., C.A. No. 2019-0123-MTZ (Del. Ch. Dec. 30, 2020)

Plaintiff loaned defendant $2.5 million through six secured convertible promissory notes. Each of the notes contained an exclusive forum selection clause requiring any disputes be litigated in Texas. They also contained a “Waiver and Amendment” provision which allowed the notes to be amended or modified upon the consent of the borrower and a majority in interest of the investors in the notes. In 2019, exercising the Waiver and Amendment provision, the defendant borrower, with the consent of the majority of noteholders, consolidated the outstanding notes and amended certain provisions. The new amended note contained the same exclusive forum provision requiring that disputes be litigated in Texas, but the plaintiff noteholder nonetheless asserted default and other claims arising from the notes in the Delaware Court of Chancery. Defendant borrower moved to dismiss, and the plaintiff countered that it had not executed or otherwise consented to the terms of new amended note, including its forum selection provision. More ›

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Superior Court CCLD Grants Anti-Suit Injunction

American International Industries v. The Neslemur Company, C.A. No. N19C-04-258 MMJ CCLD (Del. Super. Dec. 10, 2020)

Anti-suit injunctions are an extraordinary form of relief. This decision illustrates the narrow circumstances where one may be warranted. Here, plaintiff American International Industries (“AII”) entered into an Asset Purchase Agreement (“APA”) with The Neslemur Company (“Neslemur”), in which the assets AII acquired later gave rise to third-party product liability claims against AII involving asbestos-contaminated talcum powder across the United States. AII sued Neslemur in the Delaware Superior Court for contractual indemnification under the APA. AII then sought to join Neslemur as a defendant in several pending tort actions in other jurisdictions, including California and New Jersey, seeking statutory and common law indemnification, as well as contribution. In response, Neslemur sought an anti-suit injunction in Delaware against AII to prevent AII from pursuing its indemnification claims in jurisdictions other than Delaware. More ›

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Chancery Finds Company Responsible for Advancing Costs of Defense to Its CEO in a Claim Brought by the Company

International Rail Partners LLC v. American Rail Partners, LLC, C.A. No. 2020-0177-PAF (Del. Ch. Nov. 24, 2020)

The Delaware Limited Liability Company Act (the “LLC Act”) allows a limited liability company (“LLC”) to provide for indemnification as to “any and all claims and demands whatsoever” against an LLC manager or officer, “[s]ubject to such standards and restrictions, if any, as are set forth in [the] limited liability company agreement.” 6 Del. C. § 18-108. The statute prescribes that the LLC agreement may indemnify any person to the fullest extent possible by contract. The only restrictions are those expressly set forth in the relevant LLC contract provisions. An LLC agreement is construed in accordance with Delaware law regarding contract interpretation. More ›

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Chancery Dismisses Action For Plaintiffs’ Failure to Join Indispensable Parties

Germaninvestments AG and Richard Herrling, individually and on behalf of AHMR GmbH v. Allomet Corporation and Yanchep LLC, C.A. No. 2018-0666-JRS (Del. Ch. Nov. 20, 2020)

Under Court of Chancery Rule 12(b)(7), a defendant may move for dismissal because of a failure to join an indispensable party as described in Rule 19. Rule 19 provides that such parties include persons who, “(1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may (i) as a practical matter, impair or impede the person’s ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.” If such a person exists in the controversy, the Court may join the person if feasible. If joinder is not feasible, Rule 19(b) requires the Court to “determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” Rule 19(b) offers a nonexclusive list of factors to consider when determining whether the action can proceed without the absent party’s involvement. Under Rule 12(h)(2), motions to dismiss for failure to join indispensable parties may be raised up to and including trial, and are not automatically waived as a result of not raising the argument in the first instance. More ›

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Chancery Dismisses Defendants From Action Against Their Own Wishes, Describing the Matter as an “Erewhon-like” Inversion of the Parties’ Typical Positions

Stimwave Technologies Inc. v. Laura Tyler Perryman, C.A. No. 2019-1003-SG (Del. Ch. Nov. 17, 2020)

Under Court of Chancery Rule 41(a), a Delaware plaintiff may voluntarily dismiss its own complaint without prejudice, provided that (i) the defendant has not yet filed an answer; (ii) the defendant has not yet filed a motion for summary judgment; and (iii) the defendant has not filed a motion to dismiss which has been answered by the plaintiff. In accordance with the abovementioned standards, where a defendant (1) files a motion to dismiss, and (2) the plaintiff thereafter submits an answering brief in opposition to that motion, the plaintiff may no longer voluntarily dismiss the action while that motion is pending. More ›

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mlintner@morrisjames.com
T 302.888.6828
Matt Lintner has extensive experience litigating complex corporate, commercial, and fiduciary matters. Matt represents corporations, directors and officers, and investors in …
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