Securities and Federal Corporate Law

Robert Greco

Questions Raised on Required Clarity of Disclosures in SEC Filings

By Robert B. Greco |

Two recent decisions of the Delaware Court of Chancery separated by only two weeks took seemingly contradictory positions regarding the extent to which corporate disclosures must be made clear in proxy statements and other SEC filings.

Benyamin Ross, left, and Taylor Hathaway-Zepeda, right, of Gibson, Dunn & Crutcher.

Thicker Than Water: Families, Fiduciary Duties and Controlling Stockholders

By Benyamin S. Ross and Taylor Hathaway-Zepeda |

When is an extended family a control block? The Delaware Court of Chancery acknowledged that while familial relations among a group of stockholders are not per se sufficient to establish a controlling stockholder block, a family that regularly refers to itself as a single unit may constitute a controlling stockholder block.

Preclusion in Derivative Litigation: New Uncertainty

By Joseph M. McLaughlin and Yafit Cohn |

Until the Delaware Supreme Court provides definitive word, managers and stockholders of Delaware corporations must make strategic decisions based on conflicting guidance on whether successive stockholders are barred from seeking to relitigate demand futility allegations.

Albert Manwaring of Morris James

Chancery Recommends Rule to Determine Preclusive Effect of Judgments in Prior Derivative Actions

By Albert H. Manwaring IV |

The predominant approach in most jurisdictions to determine whether the dismissal of a derivative action based on the failure to adequately plead demand futility bars re-litigation of this issue in a subsequent derivative action brought by a different stockholder plaintiff is to apply the traditional legal test for issue preclusion.

Aric Wu

Court: Certificate of Incorporation Doesn't Grant Preferred Stockholders Liquidation Preference

By Aric H. Wu |

A recent Chancery Court decision illustrates that courts are reluctant to imply preferred stockholder rights that are not clearly set forth in the documents containing the preferred stock terms.

Edward M. McNally

How to Open the Door to Chancery

By Edward M. McNally |

Sometimes more is not a good idea. That is the case when a complaint alleges multiple bases to invoke the jurisdiction of the Delaware Court of Chancery, but still fails to sustain that subject matter jurisdiction.

K. Tyler O’Connell

High Court Resolves $2B 'True Up' Dispute Against Acquirer

By K. Tyler O'Connell |

A recent Delaware Supreme Court decision resolved a $2 billion post-closing dispute about the interplay between common features of acquisition agreements.

Brett McCartney

Chancery Holds That Deal Price Is Fair Value in Massive Appraisal Fight

By Brett M. McCartney |

In In re Appraisal of PetSmart, one of Delaware's largest appraisal litigations in history, the Delaware Court of Chancery held that the deal price in PetSmart Inc.'s going-private transaction was the best evidence of fair value.

Mezzanine Debt Versus Preferred Equity

By David Broderick and Brian Donnelly |

Mezzanine Debt versus Preferred Equity: which investment structure is utilized by the subordinate capital provider is often determined by the regulatory and other circumstances and objectives of the senior lender and not the preferences of the subordinate capital provider.

Albert Manwaring of Morris James

Structural Coercion in Stockholder Vote to OK Transaction Negated Cleansing Effect Under 'Corwin'

By Albert H. Manwaring IV |

Under a Delaware Supreme Court's decision, business judgment review applies to cleanse a fiduciary challenge to a noncontrol transaction that was approved by an uncoerced, fully informed, disinterested stockholder vote.

Adam H. Offenhartz, Jefferson E. Bell and Anna Karamigios

When Do Derivative Claims "Survive" Mergers—'Massey II' Adds Clarity

By Adam H. Offenhartz, Jefferson E. Bell and Mark H. Mixon Jr. |

M&A practitioners are regularly faced with the question of whether derivative claims will survive a merger after which the plaintiff will no longer be a stockholder.

Barry M. Klayman and Mark E. Felger

Court Lacks Personal Jurisdiction Over Nonresident Blogger, Website Host

By Barry M. Klayman and Mark E. Felger |

The Delaware Superior Court has ruled on an issue over an allegedly defamatory article that caused injury to a Delaware corporation hosted on a website outside of Delaware.

Rupert M. Barkoff

Franchisees Sitting on My Board? Never!

By Rupert M. Barkoff |

Franchising columnist Rupert M. Barkoff writes: There are many situations today where a group or a constituency wants to make sure that it has a voice at the decision-making table by having a representative on its franchisor's board of directors—a so-called "constituency director." Is this a good or bad idea?

Lewis H. Lazarus

Court of Chancery Dismisses Post-Closing Challenge to Merger Transaction

By Lewis H. Lazarus |

Stockholders who believe that a board breached its fiduciary duties in connection with information provided to stockholders asked to vote for a merger transaction can either seek to enjoin the transaction or seek damages post-closing.

Ryan C. Cicoski and Jesse L. Noa

Recent Order Highlights Push for Trial Experience for New Attorneys

By Ryan C. Cicoski and Jesse L. Noa |

A 2017 standing order from U.S. Magistrate Judge Christopher Burke of the District of Delaware is part of an uptick in federal judges encouraging the participation of newer attorneys at trial.

Patricia A. Winston and Edward McNally, of Morris James

Where Is Delaware Corporate Litigation Going?

By Edward M. McNally and Patricia A. Winston |

There are always risks involved in buying a company. Until you are actually inside a company's operations, you can never be sure you know everything about it.

Jennifer H. Rearden, Jefferson E. Bell and Michael Marron

Del. Supreme Court Clarifies, Applies Choice of Law to Multistate Disputes

By Jennifer H. Rearden, Jefferson E. Bell and Michael Marron |

In a recent decision, the Delaware Supreme Court considered the "fundamental question" of whether "Delaware courts are required to treat insurance contracts that are part of a broad insurance program as legal documents with meaning that varies substantially based on where each claim happens to arise."

What to Consider When a US Public Company Acquires a Non-US Company

By By Jennifer V. Audeh and Corey R. Brown |

When it's time to sell a company, there are many financial and legal steps a target should consider regarding a merger or acquisition

Clockwise, starting from top, Christopher B. Chuff, Joanna J. Cline, Douglass D. Herrmann, and James H.S. Levine

Boards Should Consider Adopting 'Director-Specific' Limits in Compensation Plans

By Christopher B. Chuff, Joanna J. Cline, Douglass D. Herrmann and James H.S. Levine |

A recent decision by the Delaware Court of Chancery serves as a reminder that boards of directors of Delaware corporations should consider amending their company's director compensation plans to include specific limits on the amount of compensation that a director may be awarded in a given year.

Brett McCartney

Stockholders' Complaint Survives Chancery's 'Corwin' Analysis

By Brett M. McCartney |

After a series of successful applications of the Corwin doctrine in Delaware's Court of Chancery, a plaintiff has finally survived a motion to dismiss where Corwin was applied.

Albert Manwaring of Morris James

Stockholder Vote Enjoined Over Banker's Financial Interest in Merger

By Albert H. Manwaring IV |

Investment bankers play a central role in the exploration, evaluation, selection and implementation of strategic alternatives for Delaware companies.

Francis G.X. Pileggi

Removal of Director, Members of Nonstock Corporation Invalid

By Francis G.X. Pileggi, Justin M. Forcier and Alexandra Rogin |

The Delaware Court of Chancery recently held that a pro se defendant was not effectively removed as a director, officer or member of a Delaware nonstock corporation, Rainbow Mountain Inc.

Lewis H. Lazarus

Court Gives Great Weight to Pre-Merger Negotiations

By Lewis H. Lazarus |

Contract interpretation is a staple of litigation in the Delaware Court of Chancery. Disputes over the meaning of commercial contracts, foundational documents such as certificates of incorporation or bylaws or agreements governing alternative entities such as limited liability companies or limited partnerships require the court to interpret language in contracts. So too do merger, stock purchase or sale of asset agreements. With the expansion of jurisdiction under Section 111(a)(2) of the Delaware General Corporation Law (DGCL) in 2016, disputes over the interpretation of agreements arising out of stock purchase and asset sale agreements may be expected to increase the number of cases requiring the court to interpret parties' agreements. The recent case of Shareholder Representative Services v. Gilead Sciences, C. A. No. 10537-CB (March 15), illustrates the methodology the court uses to interpret a contract and provides a primer for litigants seeking guidance on how the Court of Chancery resolves contract disputes.

Barry M. Klayman and Mark E. Felger

Delaware's Anti-SLAPP Statute Limited to Land Use Disputes

By Barry M. Klayman and Mark E. Felger |

In a rare case involving resort to a Delaware statute's legislative history, Vice Chancellor J. Travis Laster held that Delaware's anti-SLAPP statute is to be construed narrowly so as to be applicable only to public petition and participation in land use proceedings, and is not a broad legal protection against defamation claims.

P. Clarkson Collins Jr.

Del. Justices Award Attorney Fees Under Promissory Note Fee-Shifting Provisions

By P. Clarkson Collins Jr. |

Persuaded by the arguments of the appellant noteholders, the Delaware Supreme Court ruled that two fee-shifting provisions in the promissory notes entitled them to recover attorney fees the noteholders incurred filing suit to secure warrants issuable under the notes.