In a lightning-fast response to the recent ruling in West Palm Beach Firefighters’ Pension Fund v. Moelis & Co., the Delaware State Bar Association’s Council of the Corporate Law Section has proposed an amendment to the Delaware General Corporation Law that would bring it in line with common corporate practices. Jonathan Dolgin and Emily J. Yukich examine the bar association’s proposed amendment in a new client alert, “Back to the Drawing Board: Delaware Bar Proposes Legislation Limiting Effects of Moelis Ruling on Stockholders Agreements.” Read more here ..read more

The Delaware Court of Chancery is striking back against “new wave” stockholder agreements, which feature stockholder preapproval rights and board restrictions, rather than covenants among stockholders regarding traditional stockholder rights. Emily J. Yukich and Jonathan Dolgin examined the ruling in a new client alert, “No More Board Games: Delaware Court of Chancery Strikes Down Provisions in Stockholder Agreement that Restrict Board’s Statutory Authority.” Read more here ..read more

The Court of Chancery recently dismissed claims for breach of fiduciary duty, breach of the duty of oversight, and waste against the board of directors of McDonald’s Corporation. In In re McDonald’s Corp. Stockholder Derivative Litigation, C.A. No. 2021-0324-JTL, stockholders of McDonald’s filed a derivative action against the Company’s board of directors, former CEO, and former Global Chief People Officer emanating from the Company’s upsurge in sexual harassment.  The claims against the former CEO were dismissed earlier in the proceedings, and on January 26, 2023, the Court issued a monu ..read more

The Court of Chancery recently warned that knowingly filing claims that lack subject matter jurisdiction violates Rule 11 and risks referral to the Office of Disciplinary Counsel.  In Fintech Consulting LLC v. TSR, Inc., et al., C.A. No. 2023-0030-MTZ (Del. Ch. Jan. 18, 2023), the plaintiff filed a verified complaint and motion to expedite, asserting claims for common law fraud and violations of the Securities Exchange Act.  The plaintiff filed its claims in Chancery because of the underlying share purchase agreement’s forum selection clause.  Less than an hour later, the plaint ..read more

The Court of Chancery recently stated the appropriate test for a permanent injunction.  In In re Covid-Related Restrictions on Religious Services, C.A. No. 2021-1036-JTL (Del. Ch. Nov. 22, 2022), religious leaders claimed that restrictions imposed during the COVID-19 pandemic violated their constitutional rights.  The plaintiffs sought declaratory relief, damages, and a permanent injunction prohibiting the Governor from implementing similar restrictions in the future. The Governor moved to dismiss the case on several grounds, including for lack of subject matter jurisdiction, arguing ..read more

A recent Court of Chancery case discusses the difference between pleading the knowledge element in complaints asserting claims for tortious interference with contract and aiding and abetting breach of fiduciary duty. In Atlantic NWI, LLC v. The Carlyle Group Inc., et al., C.A. No. 2021-0944-SG (Del. Ch. Oct. 28, 2022), Plaintiff and another entity, “REDCO,” formed a joint venture to identify and develop commercial real estate investments.  The joint venture agreement imposed exclusivity, confidentiality, and fiduciary obligations on REDCO.  Plaintiff later sued REDCO after learning t ..read more

The Court of Chancery recently considered the scope of its limited jurisdiction related to claims of equitable fraud.  In Trust Robin, Inc. v. Tissue Analytics, Inc., et al., C.A. No. 2021-0806-SG (Del. Ch. Sept. 29, 2022), the Plaintiff asserted various causes of action sounding in contract and fraud arising out of a services agreement between the parties.  Defendants moved to dismiss the Complaint for failure to state a claim.  At argument on Defendants’ motion to dismiss, the Court raised the issue of equitable subject matter jurisdiction and directed the parties to submit su ..read more

The Delaware Supreme Court recently articulated an important principle related to the use of hearsay to support a proper purpose in Section 220 books and records demands. In NVIDIA Corporation v. City of Westland Police and Fire Retirement System, et al., C.A. No. 2020-0075 (Del. July 19, 2022), the Company’s executives were suspected of making false and misleading statements during earnings calls to artificially inflate the Company’s stock price.  A federal securities class action followed.  Included in the securities action complaint were hearsay statements about the Company.  ..read more

The Court of Chancery recently concluded that a member of a Delaware LLC could reach an implied contractual agreement to withdraw as a member of the LLC, even if the LLC does not have a written operating agreement. In 5high LLC v. Howard Feiler, et al., C.A. No. 2022-0108-LWW (Del. Ch. Aug. 5, 2022), the two 50-50 members of an LLC disagreed on how to address the company’s significant cash flow issues. They initially decided to each contribute additional capital to keep the company afloat; however, following a disagreement, one member (AHJ&R Business Development LLC, owned and controlled b ..read more

The Court of Chancery recently issued a decision providing guidance to practitioners submitting petitions in corporate dissolution proceedings.  A copy of the Court’s decision can be found here: In the Matter of Global Safety Labs, Inc. Section 280 of the DGCL establishes an optional, court-supervised process that a corporation can follow to wind up its affairs, including obligations to post security for claims.  The Court noted that Section 280 proceedings are often ex parte and the petitions generally contain bare-bones conclusory averments.  In his decision, Vice Chancellor L ..read more