Chancery Addresses Impact of Merger on Anti-Assignment Clause and Applies Federal Motion to Dismiss Standard

Chancery Addresses Impact of Merger on Anti-Assignment Clause and Applies Federal Motion to Dismiss Standard

Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH,  C.A. No. 5589-VCP (Del. Ch. Apr. 8, 2011), read opinion here. This case arises out of a series of agreements between the parties to license certain technology. A complaint was filed alleging a breach of two agreements based on a purchase by Roche of a company called BioVeris. This 53-page decision explains why a motion to dismiss was denied and related issues.

Takeaways

1) The Court addresses the impact on an anti-assignment clause of a reverse triangular merger, an issue of first impression in Delaware. See footnote 95. Cf. footnote 98 and related text.

2) The sophisticated analysis of intellectual property rights in overlapping agreements offered by this opinion includes a primer on Delaware contract interpretation principles.

3) Another widely applicable benefit is the Court's discussion of the motion to dismiss standard under Court of Chancery Rule 12(b)(6). See Slip op. at 18-19. Although posts highlighting several recent cases discussed here and here on this blog have addressed the Court of Chancery applying the relatively "newer" standard announced by the United States Supreme Court in Bell Atlantic v. Twombly, 550 U.S. 544, 555-56 (2007) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], I would venture to add that many practitioners are more familiar with the less stringent standard that prevailed formerly on the federal level for a Rule 12(b)(6) motion to dismiss.  Even though the rules of civil procedure in Delaware state courts are based on the federal rules of civil procedure, it was not always clear exactly when the Delaware courts would definitively adopt the interpretation of Rule 12(b)(6) in the Twombly case. A comparison of the two cases linked above indicate the topic may still not be as well-settled as some suggest.

4) The perennial issue of substantive versus procedural arbitrability is also discussed.  See Slip op. at 40 to 50.

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Fox Rothschild LLP.

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