This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year 2018.
The cases selected either meaningfully changed Delaware law or provided clarity or guidance on issues relevant to corporate and commercial litigation in Delaware.
Among cases selected, in City of North Miami Beach General Employees’ Retirement Plan v. Dr. Pepper Snapple Group Inc., 189 A.3d 188 (Del. Ch. June 1, 2018) (Bouchard, Chancellor), the decision arose out of a merger involving the Dr. Pepper and Keurig companies.
In a reverse triangular merger, the parent company uses a subsidiary to acquire a target, with the target absorbing that subsidiary. The result was Dr. Pepper stockholders getting cash but retaining their stock, and Keurig’s stockholders getting a controlling interest in Dr. Pepper.
Certain Dr. Pepper stockholders sued in the Court of Chancery, asserting that they had appraisal rights to a judicially determined fair value in connection with the deal under Section 262 of the Delaware General Corporation Law (DGCL), which were being violated. The statute makes appraisal rights available to stockholders of a “constituent corporation.”
As this decision holds, that term means an entity actually being merged or combined, and not the parent of such an entity. Since Dr. Pepper itself did not merge or combine, its stockholders had no appraisal rights. Key Takeaway: Under Dr. Pepper, stockholders of a parent in a reverse triangular merger lack appraisal rights.
Other cases reviewed include:
CBS Corp. v. National Amusements, Inc., 2018 WL 2263385 (Del. Ch. May 17, 2018) (Bouchard, Chancellor). This decision, both front-page newsworthy and legally significant, arose out of the highly publicized dispute over a proposed transaction involving CBS and Viacom, each controlled by members of the Redstone family.
In re Tesla Motors Inc. Stockholder Litigation, 2018 WL 1560293 (Del. Ch. Mar. 28, 2018) (Slights, Vice Chancellor). This action involved the highly publicized automotive and energy company Tesla and the very public face of its organization, Elon Musk.
Akorn Inc. v. Fresenius Kabi AG, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), (Laster, Vice Chancellor), aff’d 2018 WL 6427137 (Table), which demonstrated that “MAEs under Delaware law are no longer mythical creatures, but they remain difficult to prove.”
Presented in no particular order, the list does not include every significant decision but provides litigants and litigators with an array of decisions on varied issues likely to affect business dealings or business litigation.