Delaware Business Litigation Report: Litigation

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Litigation

Delaware Business Litigation Report

Provides business-related litigation information which has been summarized by attorneys currently practicing in Delaware's courts. Searchable Case Summary Database contains summaries of court opinions released since January 2005. Provides links to other resources such as the Delaware Code and administrative rules.
By Morris James LLP

Post Frequency: 5/day

Last Entry: March 29, 2011 at 12:53:19

Court of Chancery Acts to Resolve Inspection Suit

Posted on July 30, 2009
Bosse v. WorldWebDex Corp. C.A. 4443-CC (July 30, 2009). The Court of Chancery frequently acts to promptly resolve actions seeking inspection rights even faster than the parties might expect or ask. This is an example of the Court reviewing the complaint and response and deciding to grant judgment on the pleadings when there does not seem to be any valid defense.

Court of Chancery Applies Corporate Law to Books and Records of LLC

Posted on July 28, 2009
Mickman v. American International Processing LLC, C.A. 3869-VCP (July 28, 2009). This decision applies corporate case law to a demand for the records of an LLC. The Court held that a right to review "all books and records" under the LLC agreement means just that, all the pertinent records...

Court of Chancery Explains Role of Special Committee

Posted on July 28, 2009
Louisiana Municipal Police Employees' Retirement System v. Fertitta, C.A. 4339-VCL (July 28, 2009). This is a major decision with implications for all special committees. The Court denied a motion to dismiss, because the special committee did not stand up to the controlling stockholder...

Court of Chancery Clarifies Directors Duties in Common/Preferred Stock Conflict

Posted on July 24, 2009
In re Trados Incorporated Shareholder Litigation, C.A. 1512-CC (July 24, 2009). Directors sometimes face a conflict between what is best for the common stockholders compared to what is best for the preferred stockholders. While it is generally recognized that preferred stockholder rights are largely contractual and not based on fiduciary duties, that does not resolve all conflicts with common stockholders...

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Court of Chancery Clarifies Duties Under Stockholder Agreements

Posted on July 24, 2009
Latesco, L.P. v. Wayport, Inc., C.A. 4167-VCL (July 24, 2009). The question sometimes arises over what are the disclosure duties of the buyer under a stockholder agreement that compels a stockholder to sell her stock upon some triggering event, such as retirement...

Delaware eDiscovery Report

Posted on July 15, 2009
Delaware eDiscovery Report

Court of Chancery Interprets Confusing Indemnification Provision

Posted on July 14, 2009
David A. Stockman v. Heartland Industrial Partners, LP, C.A. 4227-VCS (July 14, 2009) This is possibly the best decision to read to understand how to interpret the often confusing advancement and indemnification rights contained in limited partnership agreements...

Supreme Court Established New Remedy For Disclosure Violation

Posted on July 07, 2009
Berger v. Pubco Corporation, Del Supr. C.A. 509, 2008 (July 9, 2009) In this precedent setting decision, the Supreme Court holds that stockholders who are cashed out in a short-form merger may bring a class action for damages when there are violations of the duty of disclosure in the materials sent to them notifying them of the merger...

Supreme Court Establishes New Remedy For Disclosure Violation

Lead Plaintiff and Counsel Appointed

Posted on July 01, 2009
City of Roseville Employees' Ret. Sys., v. Horizon Lines Inc., C.A. No. 08-969 (D. Del. June 18, 2009) In this putative class action, the plaintiffs allege that Horizon, a container shipping and logistics company, fraudulently inflated the value of its securities by entering into illegal price-fixing agreements with its competitors in order to manipulate prices in certain markets...

Court of Chancery Awards Fees of 27.5%

Posted on June 25, 2009
In re TD Banknorth Shareholders Litigation, C.A. 2557-VCL (June 25, 2009) In this order, the Court awarded 27.5% of the class recovery of $964,086 to class counsel. This illustrates that sometimes, the smaller the pie, the larger the slice for class counsel...

Court of Chancery Extends Claim Filing Deadline

Posted on June 25, 2009
CME Group Inc.v. Chicago Board Options Exchange Inc., C.A. 2369-VCN (June 25, 2009) Class action settlements often have a claim procedure that is complicated. Class members miss the deadlines and mess up their filings. However, as this decision illustrates, the Court is liberal in extending deadlines and forgiving filing mistakes.

Rales Test Applied to Allegation of Board Inaction

Posted on June 23, 2009
In re Intel Corp. Derivative Litig., C.A. No. 08-93-JJF (D. Del. June 4, 2009) This opinion discusses when a court will apply the Rales test rather than the Aronson test in deciding whether a derivative plaintiff has pled particularized facts establishing demand futility...

Explicit Promise of Favorable Financing Not An Implied Obligation

Posted on June 23, 2009
Southern Track & Pump Inc. v. Terex Corp., C.A. No. 08-543-JJF (D. Del. June 9, 2009) By granting, in part, the defendant's motion to dismiss its claim for breach of the implied covenant of good faith and fair dealing, the district court found that financing promises may not be regarded as an implied contractual obligation when there is no explicit reference in the agreement...

Court of Chancery Upholds In Pari Dilecto Defense

Posted on June 17, 2009
American International Group Inc. Consolidated Derivative Litigation, C.A. 769-VCS (June 17, 2009) This is the latest decision in the continuing saga of the AIG litigation. In this case, the Court declined to permit a derivative stockholder of AIG to sue the co-conspirators of AIG in the various frauds alleged to have hurt AIG and its stockholders...

Court of Chancery Explains Limits on Offensive Advancement

Posted on June 16, 2009
Duthie v. CorSolutions Medical Inc., C.A. 3048-VCN (June 16, 2009) It is well known that directors with advancement rights may call on those rights even when acting as a plaintiff. This decision explains the limits on that doctrine. In general, when there is no need to bring suit as a defensive maneuver to protect the director, then the right to have expenses advanced ends for a plaintiff.

Court of Chacnery Examines IP Claims

Posted on June 16, 2009
Sinomab Bioscience Limited v. Immunomedics, Inc., C.A. 2471-VCS (June 16, 2009) In this rare case for the Court of Chancery, the Court determines the scope of noncompetition employment agreements. What is particularly interesting is the way the Court analyzed the testimony of the key witness to determine if he was telling the truth...

Court of Chancery Examines IP Claims

Court of Chancery Signals Concern Over Fees to be Paid by the Benefited Company

Posted on June 12, 2009
Gatz v. Ponsoldt, C.A. 174-CC (June 12, 2009) This decision raises an interesting question over whether attorneys fees should be paid when the fees in a way that does not benefit the company for whom the suit was filed. briefly, the facts were that the defendant directors were found to be entitled to have the settlement of the claims against them paid by their company under their rights to be indemnified...

Court of Chancery Rejects Claim of Financial Support for Merger

Posted on June 11, 2009
James Cable LLC v. Millennium Digital Media Systems LLC, C.A. 3637-VCL (June 11, 2009) When a party to a merger agreement must rely on the financial support of a third party to complete the deal, that must be spelled out in written agreement. Absent that written commitment, the deal is then just an option to close held by the party without assets who is then fee to back out...

Licensor's Action to Recover Royalties Overcomes Motion to Dismiss in Superior Court

Posted on June 02, 2009
Boyce Thompson Institute For Plant Research v. MedImmune, Inc., C.A. No. 07C-11-217 JRS (Del. Super. May 19, 2009) (applying New York law per choice of law provision) This opinion discusses some interesting contractual interpretation and jurisdictional issues arising out of a licensing agreement...

Superior Court: Action May Proceed Against Licensor Despite First-Filed Actions

Posted on June 02, 2009
STMicroelectronics N.V. v. Agere Sys., Inc., C.A. No. 08C-09-099 MMJ (Del. Super. May 19, 2009) (applying New York law per choice of law provision) This case illustrates the series of events that may arise when a subsidiary is party to a licensing agreement, but its parent is not...

Claim of Material Misstatement Regarding Gray Marketing Survives Motion for Summary Judgment

Posted on June 01, 2009
In re Adams Golf, Inc., Secs. Litig., C.A. No. 99-371-GMS (D. Del. May 26, 2009) Chief District Judge Gregory M. Sleet rejected the defendants' motion for summary judgment finding remaining issues of material fact concerning disclosures of gray marketing (marketing that legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer)...

Allegations of Accounting Schemes and Material Misstatements Survive Motion to Dismiss

Posted on June 01, 2009
Collins & Aikman Corp. v. Stockman, Civ. No. 07-265-SLR-LPS (D. Del. May 20, 2009) Magistrate Judge Leonard P. Stark considered the plaintiffs' state law claims of breach of fiduciary duty and denied the defendants' motion to dismiss these claims against certain individual defendants...

Court of Chancery Sanctions Electronic Discovery Abuse

Posted on May 29, 2009
Beard Research Inc. v. Kates, C.A. 1316-VCP (May 29, 2009) The Court of Chancery has become increasingly unhappy with litigants who fail to preserve electronic "documents" such as email. In this latest expression of the concern, the Court sets out in detail the duties of client and counsel and explains when sanctions will be imposed for the failure to preserve evidence...

Court of Chancery Resolves Unclaimed Settlement Proceeds

Posted on May 29, 2009
Oliver v. Boston University, C.A. 16570-VCN (May 29, 2009) What to do about unclaimed funds from a class action settlement is often a problem. While the funds should not go back to the defendants, thereby rewarding them, the funds otherwise might be escheated to the State or sent to a charity...

"Handshake Agreement" Overcomes Motion to Dismiss in Superior Court

Posted on May 22, 2009
Sunstar Ventures, LLC v. Tigani, C.A. No. 08C-04-042 JAP (Del. Super. April 30, 2009) This case illustrates the exception to the statute of frauds of "substantial part performance." The seller of a $5MM home, and other items, brought a breach of contract action, because the buyer backed away...

Court of Chancery Resolves Fee Dispute Among Plainitffs Counsel

Posted on May 22, 2009
In Re Cablevision/Rainbow Media Group, C.A. 19819-VCN (May 22, 2009) In the good old days, the multiple counsel for plaintiffs class or derivative litigation always seemed to be able to agree on how to split the fee awarded by the Court. Well, the good old days are over...

Court of Chancery Defines When a "Controlling Stockholder" Exists

Posted on May 22, 2009
Dubroff v. Wren Holdings LLC, C.A. 3940-VCN (May 22, 2009) A claim that stockholders were wrongly diluted by the issuance of additional stock is generally consider a derivative claim that must meet tough pleading standards. However, when the dilution is caused by a controlling stockholder, the claim is also a direct claim that may be filed without meeting the rules for derivative suits...

Court of Chancery Delineates Employee Duties in Case of First Impression

Posted on May 18, 2009
Triton Construction Company Inc v. Eastern Shore Electrical Services Inc., C.A. 32390-VCP (May 18, 2009) While it is well known that directors and officers have fiduciary duties, what about employees who are neither a director nor an officer? This decision addresses that issue...

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