Recent Delaware Corporate Law Updates
In recent months, Delaware courts have addressed a number of issues important to Delaware corporations and their advisors.
Boilermakers Local 154 Retirement Fund, et al. v. Chevron Corp., et al. and IClub Inv. P’ship v. FedEx Corp., et al.: Appeal of Forum Selection Bylaw Decision Voluntarily Dismissed
In June 2013, the Court of Chancery held in Boilermakers Local 154 Retirement Fund, et al. v. Chevron Corp., et al., and IClub Inv. P’ship v. FedEx Corp., et al., 73 A.3d 934 (Del. Ch. 2013), that a board of directors, if granted authority by the certificate of incorporation to adopt bylaws, has the power under…
In re BioClinica: Court of Chancery Dismisses Claims that Well-Shopped Transaction Supported by Allegedly “Weak” Fairness Opinion Constituted Breach of Fiduciary Duty
In In re BioClinica, Inc. Shareholder Litigation, Vice Chancellor Glasscock of the Delaware Court of Chancery held that plaintiffs’ amended complaint failed to state a claim against the directors of BioClinica, Inc. for breaches of fiduciary duty, and against JLL Partners, Inc., BioCore Holdings, Inc. and BC Acquisition Corp. for aiding and abetting.
Viacom International, Inc. v. Winshall: Delaware Supreme Court Reaffirms Judicial Deference to Arbitrator’s Decisions on Procedural Arbitrability
In Viacom International, Inc. v. Winshall, the Delaware Supreme Court affirmed the Court of Chancery’s decision to uphold an arbitration determination resolving a dispute between Viacom International, Inc. and the stockholders of Harmonix Music Systems, Inc.
In re Morton’s Restaurant Group, Inc. S’holders Litig.: Alleged Controlling Stockholder Fits Within Safe Harbor by Sharing Control Premium Pro Rata With Minority Stockholders in Third-Party Deal
In In re Morton’s Restaurant Group, Inc. Shareholders Litigation, the Court of Chancery granted the director defendants’ motion to dismiss, reasoning that the plaintiffs’ complaint was “devoid of . . . well-pled facts compromising the independence of a supermajority of the board, challenging the adequacy of the board’s market check, or suggesting that any bidder received favoritism,” and also failed to “plead any facts supporting a rational inference of a conflict of interest” on the part of Morton’s largest stockholder or any director.
Klaassen v. Allegro Development Corp.: Court of Chancery Upholds Removal of CEO and Determines Composition of Board of Directors
In Klaassen v. Allegro Development Corporation, Eldon Klaassen, the former CEO of Allegro Development Corporation, brought an action under Section 225 of the Delaware General Corporation Law, requesting that the Court of Chancery declare that he: (1) was still the CEO of Allegro, (2) had validly removed two of Allegro’s directors and appointed their replacements, and (3) had validly filled a preexisting director vacancy.
Delaware Coalition for Open Government, Inc. v. Strine, et al.: Third Circuit Holds Court of Chancery’s Confidential Arbitration Program Unconstitutional
In Delaware Coalition for Open Government v. Strine, et al., the United States Court of Appeals for the Third Circuit considered whether the District Court for the District of Delaware correctly ruled that confidential arbitration proceedings conducted by members of the Delaware Court of Chancery under 10 Del. C. § 349 must be open to the public under the First Amendment to the Constitution of the United States.
Activision Blizzard, Inc. v. Hayes: Delaware Supreme Court Holds that Corporation’s Purchase of its Own Stock Is Not a “Business Combination” Requiring Stockholder Approval Under Certificate of Incorporation
In Activision Blizzard, Inc. v. Hayes, the Delaware Supreme Court addressed the question of whether the purchase by Activision Blizzard, Inc. of shares of its own stock, as well as net operating loss carryforwards, from Vivendi, S.A. constituted a "merger, business combination or similar transaction" under Activision amended certificate of incorporation.
In What State Is the Harm Felt When a Derivative Suit Is Pursued By Creditors?
Can a trustee of a litigation trust created under a plan sue in a U.S. bankruptcy court the directors and officers of a non-debtor Canadian parent, when many of the defendant D&Os had rarely set foot in the forum state? According to a recent Tenth Circuit opinion, the answer is yes. Newsome v. Gallacher, 722 F.3d…
Third Circuit Holds that Claims May Be Disallowed under 11 U.S.C. 502(d) Despite Transfer to a Third-Party Purchaser
The Third Circuit Court of Appeals holds that a bankruptcy claim transferred to a third-party purchaser can be disallowed under 11 U.S.C. § 502(d) if the original claimant received property that is avoidable or recoverable by the bankruptcy estate.