Among the key corporate and commercial Delaware decisions
that we have highlighted on these pages during the first five months of 2013,
the following decisions either clarified existing Delaware law or announced new
law on important substantive or procedural topics. This is a supplement to the
annual review of cases we have provided on this blog for the last eight years.
Other cases decided so far in 2013 may have been the subject of more commentary
elsewhere, but we think that among the 80 or so cases we have reviewed from
January through May of 2013, those listed below have the most wide-ranging
importance and relevance.
The list was intentionally kept relatively short, which
increased the risk of omitting some opinions that also are noteworthy, so we
encourage readers to send us suggestions for additions to this list. Hyperlinks
below lead to both a synopsis and each slip opinion.
Court Determines that There is No Fiduciary Duty to Structure Executive
Compensation to Take Advantage of Corporate Tax Deduction (Freedman v. Adams).
This decision is another example of how difficult it remains to challenge
compensation decisions on the basis of Delaware corporate law.
Court Enforces Duty to Negotiate in Good Faith (SIGA Technologies v.
PharmAthene). Most lawyers will be surprised to know that an obligation
to negotiate can be enforced in Delaware even when a term sheet is not complete
Court Upholds Presumption of Good Faith in Agreement to Bar Claims (Norton
v. K-Sea Transportation). This is one of many recent examples where an
LP agreement waived all duties except the non-waivable implied duty of good
faith, but the agreement also created a presumption of good faith that made it
almost impossible to challenge wrongdoing. N.B. Waivers will be enforced. Read
before signing to know what duties and rights are being waived.
Clarifies Fiduciary Duty of Disclosure Owed by Directors and Majority
Shareholders when Purchasing Shares or Selling Shares to Existing Shareholders
(In re: Wayport, Inc. Litigation). This opinion provides a
textbook-style explanation of the duty of disclosure in general, as well as in
the context of selling and buying shares among existing shareholders.
Court Establishes New Standard for Trial Courts to Determine Appropriate
Penalty when Pretrial Deadlines are Not Met (Christian v. Counseling
Resource Associates, Inc.). This is a must-read for lawyers (and their
clients) to understand when court approval is needed to extend pre-trial
deadlines and the consequences of missing pre-trial filing deadlines.
Emphasizes Duty of Oversight Owed by Directors Includes Corporate Operations in
Foreign Countries (Rich v. Chong and
Puda Coal and In
re: China Agritech, Inc. Shareholder Derivative Litigation).
This trio of decisions, all involving operations in China of Delaware
corporations, should worry directors of companies with far-flung operations in
distant countries unless they make visits to those countries or otherwise make
themselves sufficiently aware of those operations.
Judgement Rule Announced as Standard Applicable to Controlling Shareholder
Transactions with Safeguards (In Re MFW Shareholders Litigation). This
iconic Chancery decision provides a clear standard to practitioners who
formerly had less definitive guidance (and multiple conflicting standards) to
advise clients on the standard that would apply in Delaware to controlling
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 Eckert Seamans.
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