Justia Business Law Opinion Summaries

The Company, a developmental biopharmaceutical company, which has researched and developed a drug called NORTHERA, filed a class action alleging breaches of fiduciary duty against defendants in connection with the sale of Chelsea to Lundbeck through a tender offer and short-form merger (the Transaction). Plaintiffs contend that the Board acted in bad faith by instructing its financial advisors to ignore one set of projections in opining on the fairness of the Transaction, and by choosing to disregard a second set of projections before recommending the Transaction to Chelsea’s stockholders. The court granted defendants' motion to dismiss for failure to state a claim under Court of Chancery Rule 12(b)(6). The Board, after deliberation and in consideration of the sale of the Company, instructed its advisors not to consider projections that its assets would increase in value, years in the future, on speculation that the FDA would approve one of its products for currently-prohibited uses, or would remove a competing drug from the market altogether. Both sets of projections involved contingencies over which the Company had no control, and which might never come to pass. Such actions do not, on their face, plead a conceivable breach of the Directors loyalty-based duty to act in good faith. No other grounds conceivably leading to a finding of bad faith are pled. Accordingly, the court affirmed the judgment. View "In re Chelsea Therapeutics Int'l Ltd. Stockholders Litig." on Justia Law

Before the events giving rise to this litigation, the eight members of the Board were aligned to varying degrees with either plaintiff Lewis C. Pell or defendant Robert C. Kill. Through a Board Reduction Plan, the Defendant Directors sought to preserve the legacy-Uroplasty directors' control over the Board and neutralize the threat of Pell's proxy contest. Although the point is contested, the court assumed for purposes of analysis that the Defendant Directors sought to preserve their control not to extract personal benefits, but rather for the selfless purpose of overseeing a thorough and deliberative process after the Annual Meeting to re-constitute the Board with independent directors that they would identify, vet, and select. The court held that, when facing an electoral contest, incumbent directors are not entitled to determine the outcome for the stockholders. Stockholders elect directors, not the other way around. Even assuming that the Defendant Directors acted for an unselfish purpose, they still acted inequitably. Therefore, the court issued a preliminary injunction enjoining the Company from implementing the portion of the Board Reduction Plan that otherwise would become effective at the Annual Meeting. View "Pell v. Kill" on Justia Law

Dell Inc. completed a merger that gave rise to appraisal rights. Fourteen appraisal petitioners were mutual funds sponsored by T. Rowe Price & Associates, Inc. (T. Rowe) or institutions that relied on T. Rowe to direct the voting of their shares (collectively, Petitioners). Petitioners held their shares through a custodial bank, which was a participant member in a trust company, which held Petitioners’ shares in the name of Cede & Co., which, for purposes of Delaware law, was the holder of record. Cede was constrained to vote Petitioners’ shares as T. Rowe directed and fulfilled its obligation through a chain of authorizations. Although T. Rowe opposed the merger, its voting system generated instructions to vote Petitioners’ shares in favor of it. Ultimately, Cede voted Petitioners’ shares in favor of the merger. Petitioners sought appraisal in favor of the merger. The Court of Chancery held (1) because the holder of record did not dissent as to the shares for which Petitioners sought appraisal, the dissenter requirement was not met of these shares; and (2) therefore, Petitioners’ shares did not qualify for appraisal, and Petitioners remained entitled to the merger consideration without an award of interest. View "In re Appraisal of Dell Inc." on Justia Law

This matter involved a master limited partnership (MLP) created with interested transactions involving the general partner as part of its business model. Plaintiff was a limited unitholder in an MLP, Defendant TC Pipelines, LP (TCP). Plaintiff filed this action challenging a conflicted transaction in which the parent of TCP’s general partner, TC Pipelines GP, Inc. (TCP-GP), sold a pipeline asset to TCP. Defendants filed a motion to dismiss, arguing that the sale was approved by a special committee, which created a conclusive presumption that the transaction was fair and reasonable to TCP. The Court of Chancery granted the motion, holding that, under the circumstances, the committee’s approval precluded judicial scrutiny of the substance of the transaction. View "Employees Ret. Sys. of City of St. Louis v. TC Pipelines GP, Inc." on Justia Law

Plaintiff, a stockholder of The ADT Corporation (ADT), challenged a series of decisions by ADT’s board of directors (the Board) for the alleged purpose of appeasing an activist investor and avoiding a proxy contest. Prior to the filing of Plaintiff’s complaint, another ADT stockholder, in Ryan v. Gursahaney, filed a complaint challenging the Board’s decisions. The Court of Chancery dismissed the complaint under Court of Chancery Rule 23.1. Plaintiff’s complaint in this case largely mirrored the operative complaint in Ryan. The Court of Chancery dismissed Plaintiff’s complaint under Rule 23.1, holding that Plaintiff failed to distinguish his complaint from the Court’s decision in Ryan sufficiently to avoid dismissal. View "Binning v. Gursahaney" on Justia Law

RayTrans Holdings, Inc., through the Chapter 7 Trustee for the bankruptcy estate of RayTrans Holdings, cross-claimed against RayTrans Distribution Services, Inc., Echo Global Logistics, Inc., and Echo/RT Holdings, LLC (collectively, Defendants) seeking avoidance of certain transfers among Defendants, an accounting, and injunction prohibiting any further transfers of RayTrans assets by Defendants until all creditors of RayTrans Holdings were paid in full. The Court of Chancery granted Defendants’ motion to dismiss the cross-claims, holding (1) the Trustee does not have standing to sue for fraudulent transfer on behalf of RayTrans Distribution; (2) RayTrans Distribution’s transfer of assets was not fraudulent; and (3) the Trustee’s request for leave to amend the cross-claims is denied. View "Spring Real Estate, LLC v. Echo/RT Holdings, LLC" on Justia Law

The underlying action in this case took place in a California court and resulted in a jury award of compensatory damages of $22.3 million in favor of Sierra Railroad Company and against Patriot Rail Company LLC. The jury also awarded punitive damages and exemplary damages in favor of Sierra. Sierra moved to amend the California judgment to add Gary Marino, the former Chairman, President and CEO of Patriot Rail, as a judgment debtor. Marino subsequently commenced this action seeking advancements of attorneys’ fees and expenses for the claims asserted against him in the post-judgment motion. The Court of Chancery granted summary judgment in favor of Marino, holding that Marino was entitled to some, but not all, of the fees and expenses that he has and will incur defending against the post-judgment motion. View "Marino v. Patriot Rail Co. LLC" on Justia Law

In 2012, a private equity firm purchased a trucking company now owned by Buyer through a merger transaction. Plaintiff initiated this action as the representative of the selling securityholders (Securityholders) to recover a preclosing tax refund. Buyer, in response, asserted several counterclaims. Securityholders sought to dismiss Buyer’s counterclaims. The Court of Chancery (1) denied Securityholders’ motion to dismiss Buyer’s common law fraud claim insofar as that claim asserted fraud based on extra-contractual statements made to Buyer before it entered the merger agreement, as Buyer was not prevented from asserting a claim for fraud based on representations outside the four corners of the merger agreement; (2) granted Securityholders’ motion to dismiss Buyer’s claim under the Delaware Securities Act and Buyer’s claim of unilateral mistake, as these claims failed to state a claim for relief; and (3) granted Plaintiff’s motion for summary judgment concerning the tax refund claim, as Buyer had no defense to Plaintiff’s motion. View "FdG Logistics LLC v. A&R Logistics Holdings, Inc." on Justia Law

RED Capital Investment L.P. and George Polk (together, Plaintiffs) filed this suit claiming that RED Parent LLC (the Company) violated their rights to inspect certain Company books and records pursuant to the Company’s amended and restated operating agreement and 6 Del. C. 18-305(a)-(b). The request was made by Polk, a member of the Company’s board of managers. The Court of Chancery agreed with Plaintiffs and ordered the Company to allow Plaintiffs to inspect the requested books and records, holding (1) Polk’s request was made in his representative capacity on behalf of RED Capital as a member and in his individual capacity as manager; and (2) Polk was entitled to the requested books and records. View "RED Capital Inv. L.P. v. RED Parent LLC" on Justia Law

Amalgamated Bank requested to inspect the books and records of Yahoo! Inc., stating that its purpose was to investigate the hiring and subsequent firing of Yahoo’s chief operating officer. Yahoo produced some, but not all, of the requested documents. Amalgamated subsequently filed this action pursuant to section 220 of the Delaware General Corporation Law demanding to inspect the books and records. This post-trial decision ordered a production of some of the documents identified in the demand subject to an Incorporation Condition setting forth that the resulting documents will be deemed incorporated by reference in any derivative complaint that Amalgamated may file relating to the subject matter of the demand. View "Amalgamated Bank v. Yahoo! Inc." on Justia Law