Showing 14 posts from June 2018.

Does Delaware Insist on “Controller” Accountability?

Once again, the Delaware courts are being accused of improperly favoring management in stockholder litigation.  Those accusations have periodically surfaced over at least the last 45 years, since Professor Cary’s famous (or infamous”) “race to the bottom” article in the Yale Law Journal.  The recent claims of bias might be dismissed as just the rantings of disgruntled plaintiffs’ attorneys.  But, there are better rebuttals to those accusations than the all-too-common name calling that seems so popular lately.

Here is just one reason why the Delaware courts continue to fulfill their role of monitoring the management of Delaware corporations.  In a series of recent decisions, the Court of Chancery has held that even a less-than-50% stockholder may be deemed to control a corporation.  As a result, such a “controller” must prove any self-dealing transaction is entirely fair to the company.  This exacting standard of review by the court involves just the kind of close scrutiny the critics of Delaware argue is appropriate to protect stockholders. More ›

Prescription Monitoring Programs, Patient Privacy & SCOTUS

In a previous post, we discussed how the opiate crisis has been blurring the lines in historic health policy, most recently as it comes to the tenability of taxes and fees on medications. Let’s now put on another pair of glasses and look at health policy through the eyes of law enforcement, particularly as it pertains to the prescription monitoring program, patient privacy, and House Bill 458

House Bill 458 is a short bill. The meat of it is an innocuous strike-through of four words from the prescription monitoring program statute: “by an identified suspect.” Before we jump into exactly why that matters, let’s set a little context.

What’s a prescription monitoring program (PMP, or, in some states, a PDMP – Prescription Drug Monitoring Program)? Simply put, it’s a database of all controlled substances prescribed and dispensed to patients in Delaware. As section 4798 of Title 16 of the Delaware Code states, “It is the intent of the General Assembly that the Delaware Prescription Monitoring Act established pursuant to this section serves as a means to promote public health and welfare and to detect the illegal use of controlled substances. The Delaware Prescription Monitoring Act shall have the dual purpose of reducing misuse and diversion of controlled substances in the State while promoting improved professional practice and patient care.” More ›

Court of Chancery Awards Damages for Breach of a Director’s Duty of Loyalty

When friends go into business, their ties may fray if the business experiences difficulty and the parties have different views of how to proceed and who is responsible. If the principals are directors of a Delaware corporation, however, their duty of loyalty requires them to eschew self-interest and to do what is best for the corporation and its stakeholders. Moreover, when conflict arises, vague promises among friends do not supplant the requirements for binding agreements. More ›

Allyson DiRocco to Talk with First Healthcare Compliance on the Americans with Disabilities Act

Posted In ADA, Health Care

First Healthcare ComplianceTune in July 16th to hear Morris James LLP employment attorney Allyson Britton DiRocco & Catherine Short of First Healthcare Compliance discussing the Americans with Disabilities Act (for employers) on 1st Talk Compliance - a HealthcareNow Radio talk show. Recorded versions will air 7:30 am, 3:30 pm, and 11:30 pm daily M-F for a month.

When Is a Seller's Word His Bond?

Every transaction to some extent is based on trust. At least a buyer trusts that a seller is not actively trying to defraud him. But, when is that trust reasonable? That question is important because a buyer claiming fraud must, among other facts, show that it was reasonable for him to rely upon the representations he claims misled him. The recent decision in Edinburgh Holdings v. Education Affiliates, Del. Ch. C. A. 2017-0500-JRS (June 6, 2018), illustrates the importance of pleading facts that support a claim of reasonable reliance on a seller’s representations. More ›

Marijuana Legalization – Probably Still Not Yet

With the primary senate sponsor of House Bill 110, Sen. Margaret Rose Henry, retiring this year, it remains to be seen if there will be any last-minute legalization of the adult use of cannabis in Delaware. While in the down-revenue budget last year marijuana was touted as a $22 million budget-booster, in the up-revenue budget this year the legislature is seeing green, but it doesn’t seem to be marijuana. However, a June amendment after a series of eight task force meetings makes it clear that the advocates and sponsors are not backing down from their goal.

The amendment is long and winding. It makes adjustments from the task force meetings through sales tracking, dollars to law enforcement, clarifications of implications for employment, and banning of candy to curtail concerns about children’s use. It’s a loud amendment, getting more press attention than nearly all filed bills short of gun control. More ›

Opiates – The Power to Tax

Posted In Health Care

The multi-year effort to address the addiction crisis, specifically opiates in recent years, continues in earnest. Some policies do seem to be working: as reported by Delaware officials in April, opiate prescriptions are down 14%. The larger addiction public health crisis continues, however, with the News Journal estimating that one person a day still dies from overdose in Delaware. The legislature, the Behavioral Health Consortium led by Lt. Governor Bethany Hall-Long, and Attorney General Matt Denn have not let up in their efforts. This year, a new tactic is coming to the forefront: taxes and fees. More ›

Guns, Guns, and Guns – Tarasoff 3.0?

Gun Control

No topic has been hotter in the Delaware legislature this year than gun control. Some view gun violence as a public health crisis and several industry groups have taken positions on the various gun bills. While we’ll briefly touch on some of the broader subjects being discussed, we’re going to hone in on how legislation this session has the potential to change the Delaware healthcare landscape in terms of healthcare professionals’ reporting requirements. Right now our general overall summary of the session from a tangle of proposals (with a few weeks to go) can be summed up as: yes red flag laws, maybe with many caveats on gun accessories, and no to weapon bans. Our major recommendation so far to the Delaware healthcare industry is that mental health professionals seek legal guidance in revamping their policies and procedures for dealing with patients who may be a danger to themselves.

The total number of filings on bump stocks, magazine sizes, purchase age, bans, and protection orders has already reached the double digits. While most of these bills that make it to the agenda clear the Democratic supermajority House, they seem to be stalling in the Senate – a la SB 163 the assault weapon ban that failed to even get out of committee – or get “ping ponged” back to the House with new wrinkles and amendments. Perhaps a reminder that the Senate is a one-vote Democratic majority and that Delaware is in many ways a purple state.  One bill emerged as a clear exception to all the rules. House Bill 302, the “Beau Biden Gun Violence Prevention Act” sponsored by Representative David Bentz, mustered unanimous votes and was signed into law in April. Known as a “red flag” law, it is the successor to House Bill 88 of 2013 which was proposed out of then-Attorney General Beau Biden’s office. House Bill 88 passed the House unanimously, but failed in the Senate. More ›

Meghan A. Adams - Certified Mediator by the DSBA and the Superior Court of Delaware

Morris James is pleased to announce Meghan A. Adams has completed the Delaware State Bar Association’s Advanced Mediation Training and is now a Certified Mediator by the DSBA and the Superior Court of Delaware.  

Meghan A. Adams is a member of the firm's Business Litigation group and focuses her practice on Corporate and Commercial Litigation. She represents clients in a wide variety of matters in the Delaware Court of Chancery, Delaware Superior Court, Supreme Court of Delaware and the District of Delaware, including in the areas of corporate governance, complex commercial litigation, stockholder litigation, fiduciary duties, limited liability company and limited partnership disputes, officer and director indemnity and breach of contract.  More ›

Jeffrey R. Waxman, Counsel to the Alleged Victims of Harvey Weinstein, was Quoted in Law360, Bloomberg and Variety Magazine

During the hearing in Wilmington, Delaware, the Weinstein Co. lost its fight to keep Harvey Weinstein’s employment contract secret. That document shows that Harvey Weinstein's actions were facilitated by the company, Jeffrey Waxman, a Morris James partner and bankruptcy lawyer for the alleged victims, said in court. Click on the links below for the full articles.

Variety Magazine - Judge Orders Release of Harvey Weinstein’s Employment Contract

Law360Weinstein Co. Must Face Sexual Assault Victims' NY Suit

BloombergWeinstein Co. Must Face Sexual Harassment Suit, Judge Rules

Brett Fallon and Brenna Dolphin Author Article on Sanctions Published by the American Bankruptcy Institute

Posted In Bankruptcy

Let’s Ask for Sanctions! (But What Kind?)
Originally published by the American Bankruptcy Institute 2018.

Courts might issue sanctions pursuant to statute,rule of procedure or inherent power, but keep in mind the American Rule: Each party bears its own attorneys’ fees and litigation expenses, and attorneys’ fees are not ordinarily among the costs that a prevailing party might recover. Courts employ narrow exceptions when imposing sanctions, which might properly have a punitive aspect
and compensatory effect. This article will review 28 U.S.C. § 1927, Rule 9011 of the Federal Rules of Bankruptcy Procedure, the inherent-power doctrine and 11 U.S.C. § 105.  Read more.

Primary Care on the Brink

Posted In Health Care

Continuing the Morris James’ government relations team’s seven days of updates on the 149th Legislative session with today’s topic: where is Delaware when it comes to foundational health policy? 

Under the Markell administration Delaware received a $35 million State Innovation Model (SIM) grant from the federal government to transform its delivery system. A lot of work went into strategies surrounding healthy neighborhoods, healthcare IT, workforce, practice transformation, and the shift away from fee for service using tools like common scorecards for quality metrics. Some dollars were committed to actual implementation, but the SIM grant’s strongest value to the state was in planning and sharing stakeholder vision. 

When Governor Carney entered office in 2016 his focus moved away from the SIM conversation and into his own vision of the healthcare benchmark (more on this when the administration’s report comes out at the end of the month). It started a related, but new conversation about how to put downward pressure on the overall healthcare cost inflation rate.  More ›

Let’s Talk Healthcare Law June 30th – The 149th Delaware General Assembly Deadline

Posted In Legislation, News

Over the course of the next few weeks Morris James is going to tell you everything you need to know about healthcare bills that should be on your radar as we close out this legislative session. Guns, mental health, opiates, primary care reform, marijuana, and “the Benchmark” are all on the radar screen. If the world was created in seven days, we can give you that many days of posts to set the healthcare law table on the 149th on each of these topics.  Of course, there are always a few “June Surprises” as well that we’ll stay on top of for you.

First, to understand these bills, let’s place them in the right historic context; nothing does that like the budget. In the words of Delaware’s own Vice President Joe Biden, “Don't tell me what you value, show me your budget, and I'll tell you what you value.”  So this first post will be about the 2018 Budget and “one time investments.”  After the 2017 “shared sacrifice” budget battle and cuts that led to the first late budget in nearly fifty years, it is hard now to reconcile that the state has nearly $430 million in “surplus” revenue as we enter the final month of the 149th Session. For many legislators, this is the first session in their careers that is not predicated on finding cuts and generating revenue. In that context, Governor Carney has been strongly urging caution.  “One-time revenues for one-time investments” is the mantra from the executive branch. Governor Carney consistently urges that the fundamental budget still has long-term structural flaws and that putting budget dollars into continued programming may lead to the legislature having to cut that very same programming in the near future.  More ›

Chancery Court Declines Stockholder Invitations to Expand Transactions Subject to Appraisal Rights

Appraisal rights have been the subject of increased focus in the current, post-Corwinenvironment, in which a fully-informed noncoerced stockholder vote suffices to dispose of most M&A challenges. In two recent decisions, the Delaware Court of Chancery considered attempts by stockholder-plaintiffs to expand the scope of transactions subject to appraisal rights.  In both cases, the court reinforced that appraisal rights are not available in transactions that do not satisfy 8 Del. C. Section 262’s express criteria. In doing so, the court rejected stockholder-plaintiffs’ arguments that appraisal rights should be available in the circumstances.

Akile v. Rite Aid, C.A. No. 2018-0305-AGB (Del. Ch. May 9, 2018) (Transcript).

In early May, the Court of Chancery declined to expedite an M&A challenge premised upon Rite Aid Corp.’s (Rite Aid) alleged failure to disclose that its proposed acquisition by Albertsons Companies, Inc. (Albertsons) triggered appraisal rights.

The acquisition at issue is to be effected by a merger between Rite Aid and a wholly owned subsidiary of Albertsons. Under the merger agreement, each share of Rite Aid stock will be exchanged for a partial share of Albertsons common stock, plus (either an additional fractional share of Albertsons stock or cash, at the election of each stockholder. More ›