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Unclaimed Property Reform Bill Set for Panel Hearing

By Tom McParland |

A Senate panel is set to consider Wednesday a bill to overhaul Delaware's system for collecting unclaimed property, a significant source of state revenue that has recently come under attack.

Sergey Aleynikov, left, exits Manhattan federal court with his attorney, Kevin Marino, in February 2012.

Justices Appear Skeptical of Ex-Goldman Sachs Coder's Entitlement to Advancement of Legal Fees

By Tom McParland |

The Delaware Supreme Court seemed skeptical Wednesday that a former Goldman Sachs computer programmer was entitled to more than $2 million in fees and costs for successfully defending himself against charges that he had stolen the investment bank's source code.

Delaware Supreme Court Building

On Appeal, Williams Cos. Argues Breaches in Foiled Merger

By Tom McParland |

An attorney for the Williams Cos. on Wednesday asked the Delaware Supreme Court to rule that Energy Transfer Equity breached its obligations to secure from counsel a tax opinion, which would have allowed the companies' planned $37.5 billion merger to proceed.

An Abstract of One Hundred Dollar Bills with Narrow Depth of Field.

Third Circuit Vacates $1.1M Attorney Fees Award

By Tom McParland |

The U.S. Court of Appeals for the Third Circuit on Jan. 6 wiped out a $1.1 million award of attorney fees to Cross & Simon, finding the amount was not supported by a lower court's analysis.

patent

Permanent Injunction Granted Against Foiled Amgen Patent Challengers

By Tom McParland |

Citing irreparable harm and inadequacy of money damages, a Delaware federal judge on Thursday permanently enjoined Sanofi SA and Regeneron Pharmaceuticals from selling a product that infringed on the patents of a rival drugmaker.

J. Travis Laster.

Laster Denies Indemnification for Former Quiznos Executives

By Tom McParland |

The Delaware Court of Chancery on Monday ruled that an assignment agreement did not obligate three units of Quiznos to indemnify or pay the legal fees of former executives, who had to defend fraud claims stemming from the company's out-of-court restructuring in 2012.

Alan Dershowitz.

Tempers Fray as Dershowitz Argues Forced Sale of TransPerfect Is Unconstitutional Taking

By Tom McParland |

In a dramatic proceeding before the Delaware Supreme Court en banc, attorneys for Philip Shawe on Wednesday challenged the constitutionality of a Delaware statute the Delaware Court of Chancery used to order the sale of TransPerfect Global Inc., an argument that was met with skepticism and even derision from the state's highest judicial officer.

Edward M. McNally and Patricia A. Winston

When Is a Manager Not Really a Manager?

By Edward M. McNally and Patricia A. Winston |

Under the Delaware Limited Liability Company Act, a non-Delaware resident may be deemed to have consented to being sued in Delaware if she is a “manager” of the LLC. But who, exactly, is such a manager?

Demand Requirement Under Exchange Act §14(a)

By Joseph M. McLaughlin and Yafit Cohn |

In their Corporate Litigation column, Joseph M. McLaughlin and Yafit Cohn, of Simpson Thacher & Bartlett, examine 'In re The Home Depot, Inc. Shareholder Derivative Litigation', which weighed in on a recurring question regarding the demand requirement on which courts have differed: whether pre-suit demand is required for claims alleging a violation of Section 14(a) of the Securities Exchange Act of 1934. 'Home Depot' is the latest in a series of shareholder derivative actions arising from high-profile data breaches to be dismissed in recent years, with the court holding that Delaware's demand requirement applies equally to Section 14(a) claims.

Del. Bankruptcy Cases Pushed Boundaries, Caught Eye of U.S. Supreme Court

By Tom McParland |

Delaware bankruptcy cases included several of national prominence in 2016, as the U.S. Supreme Court and another federal appeals court looked at cases that could chart new territory; and parties to a prolonged Chapter 11 proceeding finally reached a high-profile settlement that closed the book on one of the most expensive—and messiest&mdashbankruptcies in recent years.

Benyamin S. Ross, Jefferson E. Bell, and Lauren Kole

Claims Involving a Limited Partnership Deal Are Derivative Under 'Tooley' Test

By Benyamin S. Ross, Jefferson E. Bell and Lauren Kole |

The Delaware Supreme Court has reaffirmed the continued applicability of Tooley v. Donaldson, Lufkin & Jenrette, in determining whether a claim is direct or derivative in nature, even when the claim involves a breach of contractual duty owed to a limited partnership.

Corporate Law Appeals Set to Dominate Agenda for First Quarter 2017

By Tom McParland |

The Delaware Chancery Court tackled areas of particular concern to corporate attorneys in 2016 and hinted at how the court would handle the important issues in the year ahead.

Barry M. Klayman and Mark E. Felger

Post-Confirmation Examinations Pursuant to Bankruptcy Rule 2004

By Barry M. Klayman and Mark E. Felger |

Bankruptcy Judge Laurie Selber Silverstein has granted the post-confirmation motion of a trustee of trusts created pursuant to the debtors’ plan of reorganization to examine third parties regarding the cause of the debtors’ financial collapse under Federal Rule of Bankruptcy Procedure 2004.

Barry M. Klayman and Mark E. Felger

Turnover Order Cannot Trump Prohibition on Disclosure of ESI by Email Service Provider

By Barry M. Klayman and Mark E. Felger |

In a decision with implications that extend beyond bankruptcy, Bankruptcy Judge Christopher S. Sontchi refused to order an email service provider to turn over the contents of a private email account after the owner of the account evaded service and failed to comply with several discovery orders.

Justice Karen Valihura, Delaware Supreme Court.

Finding Claims Derivative, Del. Supreme Court Reverses $171M Ruling in 'El Paso' Case

By Tom McParland |

The Delaware Supreme Court has dismissed a shareholder lawsuit that left the energy company Kinder Morgan liable for the bulk of a $171 million damages award related to its acquisition of El Paso Corp. and its affiliates, finding that the claims involved were derivative and thus transferred to the buyer.

'Trulia's' Curb on Disclosure-Only Settlements May Resonate in Federal Courts, Observers Say

By Tom McParland |

Among this year's high-impact Delaware Court of Chancery decisions, Chancellor Andre G. Bouchard's landmark opinion curbing disclosure-only settlements stood out for its resonance in Delaware and beyond.

U.S. District Judge Sue Robinson of Delaware

Clement, Joseffer to Battle Over Biologic Drug Injunction

By Scott Graham |

Sanofi and Amgen Inc. are turning to heavyweight appellate talent as they prepare to duke it out over an injunction that orders Sanofi's Praluent cholesterol medicine off the market.

Philip R. Shawe is an owner and the innovation behind the largest translation company TransPerfect. (wikimedia)

In Novel Gambit, Losing Litigant Launches Law School Challenge—And Says Dershowitz Will Be the Judge

By Tom McParland |

Philip Shawe, a co-owner and founder of TransPerfect Inc., has made no secret of his disdain for Chancellor Andre G. Bouchard's decision to force the sale of the profitable translation services company, publicly criticizing the chancellor throughout the now two-year-old case and aggressively talking up his effort to have the ruling reversed.

Zubsolv.

Orexo Launches Appeal in Bid to Reinstate Patent for Opioid Treatment Drug

By Tom McParland |

Orexo AB on Thursday said it is appealing part of a Delaware district court decision that found a patent for its opioid-treatment drug Zubsolv was invalid.

Merck headquarters in Whitehouse Station, N.J.

Massive Jury Award Could Grow for Merck in Patent Infringement Case

By Tom McParland |

Already the largest patent infringement verdict in U.S. history, the $2.5 billion in damages awarded to Merck's Idenix unit could grow by as much as three times the amount assessed by a federal jury in Wilmington on Thursday.

Thad A. Davis and Vivek Gopalan

Delaware Supreme Court Affirms Guidance in Advancement Disputes

By Thad A. Davis and Vivek Gopalan |

Companies considering agreements to advance legal costs to directors and officers (commonly known as "advancement provisions") should take note of a recent Delaware Supreme Court decision.

Strine, in Opinion Reviving Suit Against Zynga, Calls for Caution in Presuming Director Independence

By Tom McParland |

In a decision calling for caution in adhering to the presumption that corporate directors are independent disinterested actors, the Delaware Supreme Court voted Monday 4-1 to revive a derivative suit against the directors of social gaming company Zynga Inc.

P. Clarkson Collins Jr.

Del. Supreme Court Finds Demand Excused and Revives 'Zynga' Derivative Claim

By P. Clarkson Collins Jr. |

The derivative complaint alleged that Zynga's CEO, Chairman and controlling stockholder Mark Pincus, along with certain other top managers and directors were given an exception from the company's standing rule preventing insider sales until three days after an earnings announcement.

Billion-Dollar Ponzi Scheme Case Returned to Chancery Court

By Tom McParland |

A Delaware federal judge has sent back to the Delaware Court of Chancery a proposed class and derivative action over an alleged $1 billion "Ponzi-like scheme" at Texas-based limited partnership United Development Funding III, finding that claims for fiduciary breaches, waste and unjust enrichment called for state, and not federal, review.

Brett McCartney

Claims That Controlling Stockholder Received Unique Benefits Dismissed

By Brett M. McCartney |

In GAMCO Asset Management v. iHeartMedia, Delaware's Court of Chancery considered claims that a controlling stockholder's liquidity needs created conflicts in otherwise arm's-length transactions with third parties.

Thomas E. Hanson, Jr.

Use of Agreed-Upon Search Terms Not Proxy for Gathering All Responsive Info

By Thomas E. Hanson Jr. |

Parties typically seek to narrow the scope of potentially responsive documents by meeting and conferring and reaching agreement on appropriate search terms. The parties next run those search terms against the data collected from the relevant custodians and review the resulting information for responsiveness.

Squeezed-Out Stockholder Has Standing to Sue GE, Glasscock Says

By Tom McParland |

The Delaware Court of Chancery has ruled that a pension fund squeezed out of its stake in General Electric's financial services unit has standing to sue on behalf of itself and similarly situated stockholders, who claim they were shortchanged in a merger.

James G. McMillan III

Bouchard Rejects Merger Consideration as an Indicator of Value

By James G. McMillan III |

In several recent statutory appraisal actions, the Delaware Court of Chancery has concluded that the fair value of the corporation was equal to the agreed-upon deal price. However, in one recent appraisal action, Chancellor Andre G. Bouchard rejected the defendant corporation's argument that the merger consideration could be "relied upon by the court to set the appraisal value."

Abbott Laboratories global headquarters in Abbott Park, Illinois

Abbott Labs Files Suit to Escape Troubled Merger With Alere

By Tom McParland |

Just weeks after Alere Inc. agreed to produce documents related to three government probes of its business, Abbott Laboratories said it has filed suit in the Delaware Court of Chancery seeking to terminate its $5.8 billion purchase of the health care diagnostics company.

John Mark Zeberkiewicz and Stephanie Norman

Opinion Underscores Importance of Careful Drafting of Integration Clauses

By Stephanie Norman |

The Delaware Supreme Court has affirmed a Court of Chancery holding that a term sheet setting forth the general parameters of the parties' ongoing relationship was not superseded by an operating agreement later entered into by the parties, despite the inclusion of an integration clause in the operating agreement.

Bouchard Throws Out Fee-Shifting Bylaw as Invalid

By Tom McParland |

The Delaware Court of Chancery has ruled that a company bylaw allowing fee-shifting for unsuccessful stockholder suits filed outside of Delaware was invalid in light of 2015 amendments to the Delaware General Corporation Law.

patent stamp

Patent Infringement Suits and Where to Bring Them a Focus for U.S. Supreme Court

By Tom McParland |

Already home to the nation’s second-busiest docket for patent infringement litigation, Delaware could see its influence grow in 2017.

Grant & Eisenhofer Named Lead Counsel in Appraisal of Rouse Properties

By Tom McParland |

Vice Chancellor Joseph R. Slights III of the Delaware Court of Chancery has appointed Grant & Eisenhofer as lead counsel in the appraisal of Rouse Properties Inc., turning away a bid from Ashby & Geddes to head a parallel proceeding that Slights said "smacks of free riding."

Lewis H. Lazarus

Court Dismisses Derivative Claim for Alleged Breach of Oversight Duty

By Lewis H. Lazarus |

The Delaware courts encourage plaintiffs who bring derivative claims in Delaware without making demand on the board of directors to seek books and records under Section 220 of the Delaware General Corporation Law so as to be able to plead facts sufficient to demonstrate that demand is excused. Many claims have been dismissed under Delaware Court of Chancery Rule 23.1 because a plaintiff failed to utilize the "tools at hand" to obtain relevant books and records. When a plaintiff grounds its claim on directors' alleged failure to exercise oversight, however, even receipt of books and records may not enable a plaintiff to plead facts sufficient to demonstrate that the directors knowingly ignored their duties so as to have acted in bad faith. That high standard as articulated by the Delaware Supreme Court in Stone v. Ritter makes a Caremark claim for breach of directors' oversight duties as among the most difficult in corporate law. The Court of Chancery's recent decision in Reiter v. Fairbank, C.A. No. 11693-CB (Del. Ch. Oct. 18), demonstrates that, regardless of the injury allegedly sustained by the subject company, a pleading based on books and records obtained from the company that at best reflects awareness of "yellow flags" is not sufficient to call into question the directors' good faith and hence to excuse demand, thus requiring dismissal of the plaintiff's derivative claim.

Huawei Notches Win Over Samsung in Patent Skirmish

By Scott Graham |

Huawei Technologies Co. has won an early skirmish in its smartphone patent war with Samsung Electronics Co.

Del. Supreme Court Rejects Company's Bid to Block Executive's Advancement

By Tom McParland |

The Delaware Supreme Court on Monday held that a company cannot use a summary proceeding to try to deny advancement to an executive who gained contractual rights by allegedly lying to his employer.

gavel

Chancery Court Tosses Derivative Suit Against iHeartMedia

By Tom McParland |

The Delaware Court of Chancery last week dismissed a derivative suit against iHeartMedia Inc., saying allegations that the radio-station operator improperly used a subsidiary as a revenue stream essentially rehashed earlier claims that were settled in 2013.

Gary Lipkin

Delaware Chancery Court Strikes Down Fee-Shifting Bylaw

By Gary W. Lipkin, Alexandra Rogin and Justin M. Forcier |

The Delaware Court of Chancery has held that a corporate bylaw ran afoul of 8 Del. C. Section 109(b), where it purported to shift attorney fees and expenses to an unsuccessful stockholder that filed an internal corporate claim outside of the state of Delaware.

Bank of New York Mellon headquarters.

Glasscock Tosses Derivative Suits Faulting Bank of NY Board

By Tom McParland |

The Delaware Court of Chancery on Wednesday dismissed two derivative suits filed on behalf of the Bank of New York Mellon, which was hit with $1 billion in liability for foreign exchange practices that allegedly duped customers into overpaying for trades.

Andre Bouchard, Chancellor of the Chancery Court of Delaware.

Bouchard Rejects Fraud Claim in Suit Over Investopedia Sale

By Tom McParland |

The Delaware Court of Chancery on Wednesday dismissed a fraud claim stemming from a company's 2014 purchase of Investopedia, saying the allegation was based on statements it did not contractually rely on when entering the $90 million deal.

Vice Chancellor Sam Glasscock III.

Glasscock Sends Challenge to European Banks' Deal Out of Delaware

By Tom McParland |

Vice Chancellor Sam Glasscock III has dismissed a suit related to Allied Irish Bank's 2008 purchase of Bulgarian-American Credit Bank, finding that a previous decision by an Illinois state court in a similar case allowed the Delaware Court of Chancery to abandon its usual deference to a plaintiff's choice of forum.

Andre Bouchard, Chancellor of the Chancery Court of Delaware.

'Trulia's' Curb on Disclosure-Only Settlements May Resonate in Federal Courts, Observers Say

By Tom McParland |

Among this year's high-impact Delaware Court of Chancery decisions, Chancellor Andre G. Bouchard's landmark opinion curbing disclosure-only settlements stood out for its resonance in Delaware and beyond.