Justia Business Law Opinion Summaries

In the case before the Court of Chancery of the State of Delaware, plaintiff and counterclaim-defendant Ted D. Kellner sought to challenge certain bylaws adopted by AIM ImmunoTech Inc., defendant and counterclaim-plaintiff, and its board of directors. Kellner, Deutsch, and Chioini sought to nominate themselves as director candidates for AIM's 2023 annual meeting. Kellner claims that AIM's advance notice bylaws, which were amended in 2023, are invalid and inequitable. He also asserts that the Board's rejection of his nomination notice was improper.The court found that four out of six challenged provisions of AIM's amended bylaws were inequitable and therefore invalid. These provisions were found to be overly broad and ambiguous, effectively obstructing the stockholder franchise and providing the Board with undue discretion to reject a nomination. The court also found that Kellner's notice complied with the remaining, valid bylaws and that AIM's rejection of the notice was therefore improper.The court's decision means that Kellner's nominees must be included on the ballot for AIM's 2023 annual meeting. The four invalid provisions of the bylaws have been struck down and are of no force or effect. The remaining provisions of the bylaws, which were not challenged, stand. In essence, the court found that AIM's board of directors overstepped in its efforts to ward off a proxy contest, and in doing so, it infringed on the rights of stockholders. View "Kellner v. AIM Immunotech Inc., et al." on Justia Law

In this case before the Court of Chancery of the State of Delaware, Plaintiff Kevin Brown, a former employee of Court Square Capital Management, L.P., sued the company for withholding his carried interest payments, alleging breach of contract. Court Square Capital Management counterclaimed, alleging that Brown had violated non-compete and confidentiality provisions in the company's LLC agreements. The issues in question were whether Brown's conduct in relation to two investment opportunities, Zodiac and Hayward, violated the non-compete provisions, and whether his conduct concerning certain internal memos breached the confidentiality provisions.The court found that Brown did not violate the non-compete provisions. Although the companies in question could be considered as "investment opportunities" as per the LLC agreement, Brown did not acquire any interest in these companies during the prohibited period, and his salary from his new employer, MSD, did not constitute an acquired interest.The court also found that Brown did not breach the confidentiality provisions. Court Square argued that Brown breached these provisions by requesting and receiving internal memos (HUMs) from his former colleague at Court Square. The court, however, found that the information in the HUMs was not confidential as it was widely circulated among private-equity firms and would have been easily accessible to anyone in Brown's position. Furthermore, Brown used these memos solely for formatting purposes and did not use the information for competitive purposes.The court therefore entered judgment in favor of Brown. View "Brown v. Court Square Capital Management, L.P." on Justia Law

In the case brought before the Court of Chancery of the State of Delaware, Texas Pacific Land Corporation (the "Company") sued Horizon Kinetics LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors, LLC, and SoftVest, L.P. (collectively, the "Investor Group") over a dispute related to a stockholder vote. The Company alleged that the Investor Group breached a contractual obligation under a stockholders agreement to vote their shares in accordance with the board of directors' recommendation. The recommendation was for a charter amendment to increase the Company’s authorized shares. The Investor Group voted against the amendment, arguing they were not bound to follow the board’s recommendation due to exceptions in the agreement. They also claimed the doctrine of unclean hands barred the Company from enforcing the voting commitment, arguing the Company had disclosed inaccurate information when soliciting stockholder approval. The court found the Investor Group breached the voting commitment and their shares should be deemed to have voted in favor of the amendment. Consequently, the amendment was declared to have been approved. The court dismissed the Investor Group's unclean hands argument, citing their own misconduct in violating the agreement. View "Texas Pacific Land Corporation v. Horizon Kinetics LLC, et al." on Justia Law

In this action to compel the issuance of a replacement stock certificate the Court of Chancery ordered PDV Holding, Inc. (PDVH), a Delaware corporation, to issue a replacement stock certificate conditioned upon Venezuela's state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA), posting an unsecured bond in the amount of $10,000, holding that the relief sought is granted.In the main dispute, non-party Crystallex International Corporation sought to collect on an arbitration award by executing on PDVSA's U.S.-based assets, and the federal district court ordered a sale of PDVH's stock. PDVSA, the registered owner of all shares of PDVH's stock, filed this action seeking to compel the issuance of a replacement stock certificate representing all 1,000 shares of PDVH that PDVSA owned. The Court of Chancery ordered PDVH to issue a replacement stock certificate conditioned upon PDVSA posting an unsecured bond, holding that PDVH failed to demonstrate good cause for the Court to decline to issue a replacement stock certificate to PDVSA, and PDVSA's entitlement to a replacement stock certificate was conditioned upon its posting of an unsecured bond of $10,000 within seven business days. View "Petroleos de Venezuela, S.A. v. PDV Holding, Inc." on Justia Law

The Court of Chancery denied Sunder Pros LLC's application for a preliminary injunction against Tyler Jackson because Sunder could not establish a reasonable likelihood of success on the merits and further denied Sunder's application for a preliminary injunction against the remaining defendants for lack of an underlying breach of contract.Jackson, the former head of Sunder's sales who lived in Texas, joined Solar Pros, LLC and resigned from Sunder. Sunder, whose headquarters were in Utah but was a Delaware LLC, brought this suit arguing that Jackson was bound by restrictive covenants (the covenants). The Court of Chancery denied relief, holding (1) the covenants, which were facially unreasonable in their own right, were part of an agreement that could not be enforced against Jackson because the agreement originated in an egregious breach of fiduciary duty; and (2) as to the remaining Defendants, there was no underlying breach of contract, and Defendants did not engage in conduct that could support a claim for tortiously interfering with the covenants as required by Utah law. View "Sunder Energy, LLC v. Jackson" on Justia Law

In this case surrounding the acquisition of Twitter Inc., the Court of Chancery denied Plaintiff's motion for mootness fees, holding that Plaintiff's claim was without merit.Defendants Elon R. Musk, X Holdings I, Inc., and X Holdings II, Inc. agreed to acquire Twitter Inc. pursuant to an agreement and plan of merger (merger agreement). After Defendants' counsel sent a letter to Twitter claiming to terminate the merger agreement Twitter filed a complaint seeking specific enforcement. Thereafter, the deal closed on the original terms of the merger agreement. Plaintiff, who held 5,500 shares of Twitter common stock, brought suit seeking specific performance and damages, claiming that Elon Musk breached his fiduciary duties as a controller of Twitter and that Defendants breached the merger agreement. This Court issued a memorandum opinion dismissing most of Plaintiff's complaint, leaving open the possibility that the damages provision in the merger agreement conveyed third-party beneficiary status to stockholders claiming damages for breach of the agreement. Months later, Plaintiff claimed partial credit for the consummation of the deal and petitioned for mootness fees in the amount of $3 million. The Court of Chancery denied Plaintiff's motion for mootness fees, holding that Plaintiff's claim was not meritorious when filed. View "Crispo v. Musk" on Justia Law

The Court of Chancery granted summary judgment in favor of Defendants in this action challenging two provisions in a certificate of incorporation of Bumble, Inc., holding that the challenged provisions were valid.The provisions at issue stated that each share will carry one vote, unless the share is owned by a "Principal Stockholder," defined as the parties to a publicly-disclosed stockholders agreement, in which case it will carry ten votes. At the time of this action there were two principal stockholders, including Bumble's founder and its financial sponsor. Plaintiff brought this action seeking a declaration that the provisions were invalid as violating sections 212(a) and 151(a) of the Delaware General Corporation Law (DGCL). The Court of Chancery granted summary judgment for Defendants, holding that the challenged provisions complied with Delaware law. View "Colon v. Bumble, Inc." on Justia Law

The Court of Chancery declined to approve a settlement agreement negotiated between Plaintiffs and Defendants on behalf of a class of common stockholders Plaintiffs purported to represent, holding that the proposed settlement was not fair and did not fulfill the principles of due process.Plaintiffs, common stockholders of AMC Entertainment Holdings, Inc., brought direct claims on behalf of a putative class of common stockholders seeking injunctive relief to stop AMC from holding a special meeting at which Plaintiffs, along with holders of fractional units of blank check preferred stock, were scheduled to vote upon two charter amendments that would authorize more common stock triggering the conversion of the fractional units into shares of common stock and reverse a stock split. Before a preliminary injunctive hearing, Plaintiffs negotiated a settlement with Defendants. The Court of Chancery held that the settlement could not be approved as submitted because, among other things, the settlement purported to release claims that did not arise out of the same factual predicate as the claims asserted in this action and because the release of claims arising out of preferred interests was not supported by consideration. View "In re AMC Entertainment Holdings, Inc. Stockholder Litigation" on Justia Law

The Court of Chancery granted Petitioner's petition to hold Respondents - Hone Capital LLC and CSC Upshot Ventures I, L.P. - in contempt for failing to comply with an order to advance expenses (the advancement order), holding that coercive contempt sanctions can be used to enforce an advancement right.At issue before the Court of Chancery was whether contempt sanctions could be used to enforce the advancement order in this case where contempt is not generally available to enforce a money judgment. The Court of Chancery held (1) due to the harm that a covered person faces, the holder of an advancement right is not relegated to collection mechanisms; and (2) Petitioner was entitled to relief on her request of a daily fine to coerce compliance until Respondents comply with the advancement order. View "Gandhi-Kapoor v. Hone Capital LLC" on Justia Law

The Court of Chancery affirmed the judgment of the trial court awarding $75,000 in fees and expenses to Plaintiff's counsel in the underlying stockholder class action instead of the requested award of $1,100,000, holding that the amount requested in this case was unreasonable because the benefits achieved by mooting the lawsuit were insignificant.Plaintiff brought the underlying action challenging a merger agreement under which Centene Corporation agreed to acquire Magellan Health, Inc. Specifically, Plaintiff claimed that, as part of a sale process conducted by Magellan, prospective bidders entered confidentiality agreements that contained provisions that rendered stockholder disclosures materially deficient. Shortly thereafter, Magellan issued supplemental disclosures and waived its rights under three of the four confidentiality agreements. These actions mooted Plaintiff's claims and stipulated to dismissal. Plaintiff's counsel then petitioned the court for the $1,100,000 attorneys' fees and expenses award. The court awarded $75,000 in fees and expenses. The Court of Chancery affirmed and then issued this decision to warn other courts applying Delaware law of policy dangers in regard to mootness fee petitions, holding that there was no error in the award of fees and expenses in this case. View "Anderson v. Magellan Health, Inc." on Justia Law