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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 3 posts in Directors and Officers.
Chancery Finds Lack of Personal Jurisdiction Over Delaware Corporate Officers Based on Due Process Considerations
In re Bam International, LLC v. The MSBA Group Inc., C.A. No. 2021-0181-SG (Del. Ch. Dec. 14, 2021)
Two officers of a Delaware corporation were sued for alleged tortious interference with an escrow agreement between the Delaware corporation employing the officers and the plaintiff (another Delaware corporation). The plaintiff also brought a breach of contract claims against the Delaware corporation and other entity defendants. The two officers moved to dismiss for lack of personal jurisdiction arguing that, other than their status as officers of a Delaware corporation, they had no relationship with Delaware. The officers further noted that they were not signatories to the contract at issue, which, in any event, was only connected to Delaware by choice of law and forum clauses. Plaintiff contended that the officer defendants, as fiduciaries of a Delaware entity, had implicitly consented to jurisdiction pursuant to 10 Del. C. § 3114(b). More ›
Chancery Addresses Authority of Executives to Remove Managers of Affiliate Entities
Roccia v. Mugica, C.A. No. 2020-0641-MTZ (Del. Ch. Dec. 29, 2020)
The inherent authority of officers of Delaware companies generally extends to powers in the usual and ordinary course of the relevant company’s business. Officers otherwise gain authority through either express grants from the company’s governing body or implied grants based on past practice. In the LLC context, sources of an officer’s actual authority may include the LLC’s operating agreement and any employment agreement. In this decision, the Court of Chancery held that the plain language of a Delaware LLC’s operating agreement and the relevant employment agreement did not grant the President and CEO of a parent-entity the authority to act on the parent’s behalf to remove a member of the board of managers of a sub-entity. More ›
Chancery Holds That Management Does Not Have Unilateral Authority to Preclude a Director From Obtaining the Company’s Privileged Information
In Re WeWork Litig., Consol. C.A. No. 2020-0258-AGB (Del. Ch. Aug. 21, 2020)
In October 2019, The We Company’s (the “Company”) board of directors established a special committee (the “Special Committee”) to evaluate a potential transaction wherein SoftBank, the controlling shareholder, would acquire majority economic ownership and voting control of the Company. When SoftBank terminated the transaction, the Special Committee filed this action on behalf of the Company alleging that they had breached their contractual obligations to use reasonable best efforts to purchase $3 billion of the Company’s stock in a tender offer. More ›
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