Justia Business Law Opinion Summaries

The issue before the Supreme Court in this matter centered on a Court of Chancery decision arising from a 2011 acquisition by MacAndrews & Forbes Holdings, Inc. (M&F), a 43% stockholder in M&F Worldwide Corp (MFW), of the remaining common stock of MFW. M&F’s proposal to take MFW private was made contingent upon two procedural conditions. Appellants initially sought to enjoin the transaction. They withdrew their request for injunctive relief after taking expedited discovery, including several depositions. Appellants then sought post-closing relief against M&F, Ronald Perelman, and MFW’s directors for breach of fiduciary duty. Defendants then moved for summary judgment, which the Court of Chancery granted. Appellants raised two arguments on appeal: (1) the Court of Chancery erred in concluding that no material disputed facts existed regarding the conditions precedent to business judgment review; and (2) the Court of Chancery erred, as a matter of law, in holding that the business judgment standard applied to controller freeze-out mergers where the controller’s proposal is conditioned on both Special Committee approval and a favorable majority-of-the-minority vote.The Supreme Court concluded Defendants’ motion for summary judgment was properly granted on all of those issues. The Court determined that the business judgment rule standard of review applied to this controlling stockholder buyout. View "Kahn, et al v. M&F Worldwide Corp., et al." on Justia Law

Plaintiff-appellant Eldon Klaassen appealed a Court of Chancery judgment which held that Klaassen was not the de jure chief executive officer of Allegro Development Corporation. Klaassen claimed that the remaining Allegro directors, by removing him as CEO, violated an equitable notice requirement and also improperly employed deceptive tactics. After a trial and without addressing its merits, the Court of Chancery held that the claim was barred under laches and acquiescence. Upon review of the matter, the Supreme Court affirmed the Court of Chancery: to the extent that Klaassen’s claim was cognizable, it was equitable in nature. Furthermore, the Court concluded that the Court of Chancery properly found that Klaassen acquiesced in his removal as CEO, and was therefore barred from challenging removal. View "Klaassen v. Allegro Development Corporation, et al." on Justia Law

Plaintiff-appellant RBC Capital Markets, LLC (RBC) appealed a Superior Court judgment dismissing its claims against the defendant-appellees U.S. Education Loan Trust IV, LLC and Education Loan Trust IV. RBC sued the Defendants in the Court of Chancery in 2011, alleging that Defendants had been paying excessive fees from the Trust. The court dismissed the Chancery action as barred by the Trust Indenture’s "no-action" clause. Then in 2012, RBC filed this case, claiming that the Defendants had unlawfully failed to pay interest owed to RBC under the Issuer notes that RBC held. The Superior Court dismissed, finding: (1) the complaint failed to state a claim upon which relief can be granted; and (2) that the earlier Court of Chancery judgment of dismissal precluded RBC’s claim as res judicata. Upon review, the Supreme Court concluded the Superior Court erred in dismissing the case. The Court held that RBC’s complaint satisfied Delaware’s "reasonable conceivability" pleading standard, that the claim was not barred by the Trust Indenture’s no-action clause, and that on the current record it could not be determined as a matter of law that RBC’s Superior Court claim was precluded as res judicata. View "RBC Capital Markets, LLC, et al. v. Education Loan Trust IV, et al." on Justia Law

This case was one of thirty-two cases filed against defendant-appellee E.I. DuPont de Demours and Company, Inc. (DuPont) by Argentine nationals who claimed they were exposed to asbestos while working in textile plants in Argentina. Plaintiff-appellant Maria Elena Martinez, widow of an Argentine plant worker, alleged her husband suffered injuries from the asbestos exposure. The Superior Court dismissed plaintiff's complaint for inadequate pleading, failing to state a claim, failing to join necessary parties, and for forum non conveniens. Plaintiff appealed to the Delaware Supreme Court, arguing the Superior Court erred in its ruling. Finding no error, the Supreme Court affirmed the Superior Court. View "Martinez, et al. v. E.I. duPont de Nemours & Company, Inc." on Justia Law

The issue before the Supreme Court in this case centered on whether a minority stockholder in a closely held corporation had a right to a non-conflicted board decision on whether to repurchase her shares. That stockholder argued that such a right exists, under common law fiduciary duty principles and under the implied covenant of good faith and fair dealing. The Court of Chancery found that the common law did not impose any duties on directors to consider buying out minority stockholders. The trial court also found that, given the language in the repurchase provision of the stockholders agreement, the implied covenant of good faith and fair dealing did not create any duty to negotiate a reasonable repurchase price. The Supreme Court agreed and affirmed the trial court. View "Blaustein v. Lord Baltimore Capital Corp." on Justia Law

Petitioners-Appellants, tort claimants in lawsuits pending against Krafft-Murphy Company, Inc. in other jurisdictions, sought the appointment of a receiver to enable them lawfully to pursue those claims against the company in those other courts. The company argued argued that because it held no assets other than unexhausted liability insurance policies, Delaware law did not authorize the appointment of a receiver and that it was not necessary to appoint one. The Court of Chancery granted summary judgment in favor of the company. The Petitioners appealed. The case raised two questions of first impression in for the Delaware Court, plus a third question directly addressed by settled Delaware law: (1) does a contingent contractual right, such as an insurance policy, constitute "property"?; (2) does Delaware's statutory corporate dissolution scheme contain a generally applicable statute of limitations that time-bars claims against a dissolved corporation by third parties after the limitations period expires?; and (3) after a three year winding-up period expires, does a dissolved corporation have the power to act absent a court-appointed receiver or trustee? Upon review, the Supreme Court concluded: (1) under 8 Del. C. 279, contingent contractual rights, such as unexhausted insurance policies, constitute "property" of a dissolved corporation, so long as those rights are capable of vesting; (2) Delaware's dissolution statutes impose no generally applicable statute of limitations that would time-bar claims against a dissolved corporation by third parties; and (3) the existence of the "body corporate" continues beyond the expiration of the statutory winding-up period of 8 Del. C. sec. 278 for purposes of conducting litigation commenced before the expiration of that period. But, for litigation commenced after the expiration of that statutory period, a dissolved corporation may act only through a receiver or appointed trustee. Because the judgment of the Court of Chancery rested on legal determinations inconsistent with these holdings, the Supreme Court reversed the judgment and remanded the case for further proceedings. View "Anderson v. Krafft-Murphy Co. Inc." on Justia Law

Plaintiff-Appellants asserted various tort claims against Advanced Micro Devices, Inc. (AMD). AMD moved to exclude certain expert testimony under Delaware Rule of Evidence 702, which the Superior Court granted after determining that the evidence was not relevant. Plaintiff-Appellants appealed to the Supreme Court, which remanded the case to the Superior Court for further findings related to the expert testimony’s admissibility. On remand, the Superior Court found that the expert testimony was unreliable and therefore inadmissible. After review of that decision, the Supreme Court concluded that the Superior Court did not abuse its discretion in finding the expert testimony unreliable, and affirmed its judgment. View "Tumlinson, et al. v. Advanced Micro Devices, Inc." on Justia Law

The issue before the Supreme Court in this case was an interlocutory appeal by the Court of Chancery of a preliminary injunction halting consummation of a stock purchase agreement under which Vivendi, S.A. would have divested itself of its controlling interest in Appellee Activision Blizzard, Inc., and an Activision stockholder. Appellees convinced the trial court that the company’s charter required that a majority of the public stockholders vote in favor of the transaction. The relevant provision applied to "any merger, business combination, or similar transaction" involving Vivendi and Activision. The trial court held that Activision's purchase of its own stock would be a business combination because significant value would be transferred to Vivendi in exchange for Activision's acquisition of a newly-formed Vivendi subsidiary that held Vivendi's Activision stock. In October 2013, the Supreme Court reversed, and this opinion set forth the basis for its decision. View "Activision Blizzard, Inc., et al. v. Hayes, et al." on Justia Law

Appellant Quadrant Structured Products Company appealed the Court of Chancery's dismissal of its complaint. Quadrant holds certain Notes issued by Athilon Capital Corp., an allegedly insolvent Delaware corporation. The Notes are long term obligations covered by two separate trust indentures that are governed by New York law. Defendants EBF & Associates, LP, Athilon Structured Investment Advisors ('ASIA'), an affiliated EBF entity, Athilon's board of directors, and Athilon itself, all which indirectly own 100% of Athilon's equity. The Court of Chancery granted defendants' motion to dismiss Quadrant's complaint on the ground that all claims alleged were barred for failure to comply with the 'no-action' clauses in the Athilon trust indentures. In both cases the cited by the Court of Chancery applied New York law, and held that those bondholder actions were barred by the no-action clauses of the respective trust indentures that governed the bonds at issue. Quadrant appealed to the Delaware Supreme Court. The Delaware Court remanded the case to the Court of Chancery with directions to analyze the significance under New York law (if any) of the differences between the wording of the no-action clauses at issue in the two cited cases and in this case. In its Report, the Court of Chancery held that: (i) 'the language of the Athilon no-action clause distinguishe[d] this case from [the two cited cases],' and (ii) the motion to dismiss should have been denied except as to two (and part of a third) of the ten Counts of the Quadrant complaint. After its re-review, the Delware Supreme Court concluded that the resolution of this case depended on dispositive and unsettled questions of New York law that, in its view, were properly answered in the first instance by the New York Court of Appeals. View "Quadrant Structured Products Co., Ltd. v. Vertin, et al." on Justia Law

Walter A. Winshall, as representative of the former stockholders of Harmonix Music Systems, Inc., sued to block the merger between Harmonix and Viacom International, Inc. The Court of Chancery dismissed Winshall's complaint against Viacom and Harmonix for failing to state a legally cognizable claim for relief, declared that Viacom was not entitled to indemnification from the selling shareholders for alleged breaches of representations and warranties contained in the Merger Agreement, and ordered payment of the escrowed portion of the merger cash consideration owed by Viacom to the shareholders. Winshall appealed the portion of the final judgment dismissing Count I of his complaint. Viacom cross-appealed the portion of the judgment relating to Counts II and III of the complaint, in which the court determined that Viacom was not entitled to indemnification and directed that the escrowed funds be paid to the shareholders. Finding no error or abuse of discretion, the Supreme Court affirmed the judgment of the Court of Chancery in its entirety. View "Winshall v. Viacom International, Inc., et al." on Justia Law