Posts tagged News

Court of Chancery Approves Settlement in Countrywide Financial Case

Vice Chancellor Noble has approved a settlement in the class action arising from the merger of Countrywide Financial Corporation and Bank of America.  The opinion approving the settlement can be viewed here.

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Laster Nominated for Vice Chancellor

J. Travis Laster, a highly-regarded Delaware corporate litigator and founding partner of the firm Abrams & Laster, has been nominated by Governor Jack Markell to fill Vice Chancellor Lamb's seat on the Court of Chancery.  An article from the Delaware News Journal announcing the nomination can be viewed here.

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Three Nominated for Vice Chancellor

Delaware's Judicial Nominating Commission, a panel tasked with screening candidates for judgeships in Delaware, has forwarded three candidates to Governor Jack Markell for his consideration as potential replacements for Vice Chancellor Lamb on the Court of Chancery.  The three are:

• Mary Johnston, a former partner at Morris James and a Superior Court Judge since 2003;
• Richard Forsten, a partner at Saul Ewing;
• Travis Laster, a partner at Abrams & Laster.

Governor Markell is expected to forward one of these three names to the Delaware Senate for a confirmation vote that is expected to occur in September.

 

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Delaware State Bar Association Submits Comments on SEC Proxy Access Proposal

In what may be the first time that the Delaware State Bar Association (DSBA) has ever submitted comments upon a proposed SEC rule, the DSBA has recently submitted comments upon proposed Rule 14a-11, the SEC's proposed proxy access rule.  The DSBA comment letter can be viewed here, and the SEC's proposed proxy access rule can be viewed here.  The DSBA argues that SEC should decline to implement the proposed rule: 

It should instead allow proxy access systems to develop under the framework of private ordering and shareholder choice created by state law.  The one-sided inflexibility of proposed Rule 14a-11 impairs that scope of choice, and with it, significant substantive rights under state corporate law.

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ABA Corporate Governance Committee Issues Report on Corporate Roles and Responsibilities

In response to the ongoing financial crisis, the Corporate Governance Committee of the ABA Section of Business Law formed a Task Force on the Delineation of Governance Roles and Responsibilities in the summer of 2008.  The Task Force included Lawrence Hammermesh, the Ruby Vale Professor of Corporate and Business Law at Widener University here in Delaware.  The Task Force has issued its report, which aims to "provide a context for policymakers, participants in the corporate governance process and the public in considering responses to the current crisis."  The report can be viewed here.

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Summary of Amendments to Delaware Alternative Entity Statutes

The Harvard Law School Forum on Corporate Governance and Financial Regulation has posted a useful summary of the recent amendments to Delaware's alternative entity statutes, drafted by Delaware practitioner Louis G. Hering.  The post can be viewed here.

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The 21st Tulane Corporate Law Institute Begins Tomorrow

Here is the brochure for the program, which takes place April 2-3.  The panelists are among the most respected and knowledgeable legal minds and financial experts involved in corporate law and M&A, including Chief Justice Myron T. Steele and Justice Jack B. Jacobs of the Delaware Supreme Court and Vice Chancellors Leo E. Strine, Jr., Stephen P. Lamb, and Donald F. Parsons, Jr., of the Delaware Court of Chancery.      

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Special Committee Releases Report on Delaware Superior Court Toxic Tort Litigation

A Special Committee appointed by the Delaware Superior Court has released its report and recommendations on Superior Court toxic tort litigation. The report (copy available here) followed the Special Committee’s investigation into concerns expressed by the Delaware State Chamber of Commerce that an increasingly large number of asbestos cases was adversely impacting the ability of the Delaware Superior Court to effectively and fairly adjudicate civil cases.

The Special Committee

• solicited input from all the parties involved in toxic tort litigation in Delaware
• held a public hearing where numerous persons spoke (including practicing attorneys, law professors and Chamber representatives) and
• met separately with representative groups of defendants’ and plaintiffs’ counsel. 

Almost entirely, the focus of all these groups was on asbestos litigation.  After studying all this information for over five months, the Committee concluded “that the Delaware asbestos litigation is fairly conducted for both defendants and plaintiffs and is effectively resolving claims ... very well.”

The Special Committee particularly noted the willingness of the Superior Court judges to meet with the litigants’ counsel to structure unique procedures that fit their needs in this high-volume litigation. Recently, those procedures were amended to address concerns over plaintiffs’ disclosures and other matters. Hence, the Special Committee recommended that the parties to Delaware's asbestos litigation continue to address amongst themselves how to solve any remaining concerns over how that litigation is conducted.

While it is too early to know if the Special Committee’s report will be fully accepted by all concerned, initial reactions have been positive. In particular, the willingness of the Delaware courts to address litigants’ concerns in a positive manner has served to further support Delaware’s reputation for a fair court system. 

Edward M. McNally, a Partner and Chair of the Litigation Practice of Morris James LLP, was a member of the Special Committee.  If you have specific questions about the report, he can be contacted here.

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Superior Court Alters ADR Rules, Substitutes Mediation as Default Format

Effective March 1, 2008, the Superior Court amended Civil Rule 16 and repealed Civil Rule 16.1 to alter the compulsory alternative dispute resolution ("ADR") process mandated under Court rules.  The amendments substitute mediation for arbitration as the Court's default format for ADR in the event the parties cannot agree.  The amendments also require parties to make a good faith effort to agree on an ADR Practitioner, or face possible Court-imposed sanctions.

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Ebay Brings Stockholder Action In Court of Chancery Against Craigslist And Its Directors For Diluting Its Minority Stake

Yesterday eBay Domestic Holdings Inc. brought an action in the Court of Chancery, C.A. 3705-CC, against Craigslist and certain of its directors, challenging recent transactions implemented by the Craigslist board. eBay acquired a minority ownership interest in Craigslist (28.4%) back in 2004.  It now alleges that Craigslist's directors have taken unilateral action in violation of their fiduciary duties and have disadvantaged eBay and its investment. 

The complaint was filed under seal.  The matter has been retained by Chancellor Chandler.   

The WSJ Law Blog has coverage here.  And, The NY Times reports here.   

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Delaware Retains Top Ranking for Fairness of Litigation Climate

For the seventh year in a row, Delaware received the highest score in a nationwide survey of state liability systems undertaken by the U.S. Chamber Institute for Legal Reform.  Delaware ranked at the top of eight of the twelve categories ranked, including judicial competence, judicial impartiality, timeliness of summary judgment or dismissal, treatment of class action suits, and overall treatment of tort and contract litigation.  The survey did record a slight decline from last year in Delaware's rankings of jury predictability and jury fairness.  The report can be viewed at www.instituteforlegalreform.com. Share

Preeminence of Delaware Courts for Business Litigation Highlighted

In the most recent edition of the ABA's Business Law Today publication, Vice Chancellor Donald F. Parsons, Jr., of the Delaware Court of Chancery, and Judge Joseph R. Slights, III, of the Delaware Superior Court review the history and development of the Delaware courts as the leading business courts in the country. The article titled, "The History of Delaware's Business Courts - Their Rise to Preeminence,"(available here) details some of the many features of both the Court of Chancery and the Superior Court that have made Delaware the forum of choice for complex corporate and commercial litigation. 

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SEC General Counsel Brian G. Cartwright Addresses the Role of Foreign and Domestic States in Securities Regulation and General Corporation Law

SEC General Counsel Brian Cartwright discussed the emergence of transnational businesses and the global securities market in a speech at Widener University School of Law on March 28, 2008. The speech, titled "The Role of the States (Foreign and Domestic)" (available here), focused on the implications the global securities market and the spread of free market economies around the world creates for federal securities regulation and states' regulation of internal corporate affairs. Mr. Cartwright noted that as transnational businesses with global stockholder bases continue to flourish, both the SEC and Delaware may need to evaluate and adjust to the impact this will have on the regulation of these businesses.

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Update To Bear Stearns/Morgan Chase Litigation In Delaware

Vice Chancellor Parsons of the Delaware Court of Chancery heard arguments this afternoon in connection with Defendants motion to dismiss or alternatively to stay the Delaware TRO action in favor of the first-filed New York action. The core of Defendants argument was centered on the McWane and forum non conveniens doctrines.

The arguments raise several interesting questions: (1) to what extent would Delaware courts defer to New York courts when matters involve Delaware corporate law; and (2) how would the Delaware court handle, among several other issues, the issue of comity urged by the defendants. 

Several collateral arguments were also raised with respect to obtainment of compulsory process with respect to witnesses located in New York, particularly federal witnesses and the intersection of New York Stock Exchange Rules with Delaware law. 

Plaintiffs argued that unique and novel issues of Delaware law are involved and that the McWane and forum non conveniens doctrines do not require deference to New York courts under relevant Delaware precedent. 

Plaintiffs requested an expedited preliminary injunction hearing before May 8, 2008. The New York court has scheduled arguments related to the first-filed New York preliminary injunction application on that date.

Vice Chancellor Parsons noted the urgency in the matter and took it under advisement. He concluded that a ruling will issue in a few days.

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Class Action Filed Against Bear Stearns in Delaware Seeking to Enjoin Acquisition by JPMorgan

See latest developments on 03/31/08 above: Last Thursday, a class action complaint was filed against Bear Stearns and its directors in the Court of Chancery.  The complaint alleges that the company has failed to maximize shareholder value by agreeing to be purchased by JPMorgan Chase for $2 per share.  The complaint further alleges that, by agreeing to the deal, the company has favored numerous constituencies over the shareholders. 

 

Update: The New York Times reports  that JPMorgan Chase raised its offer to $10 per share.  Professor Ribstein has commented , along with Pileggi. 

 

Further Update: An additional class action was filed against Bear Stearns on Monday by the Wayne County Employees' Retirement System .  And, yesterday a TRO was filed on behalf of the plaintiffs in both actions, seeking to enjoin the sale, which is set to close on April 8.  Both actions, and the accompanying TRO, have been assigned to Vice Chancellor Parsons. 

 

 

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