LexisNexis® Legal Newsroom
Corporate Officers Held Not Entitled to Business Judgment Rule Protection Under California Law

A federal court has denied the motion of former IndyMac CEO Matthew Perry to dismiss the action that the FDIC, as the failed bank's receiver, had filed against him. In a December 13, 2011 order ( here ), Central District of California Judge Otis D. Wright II held that under California law the...

Dole CEO Looking for BJR

So it looks like David Murdock, Dole's CEO and 40% shareholder, is putting in an offer to take Dole Foods private at $12/share . According to the WSJ , this offer is subject to two conditions: 1) that a majority of the disinterested directors approve it; and 2) that it be approved by a majority...

When the Business Judgment Rule Isn't Available to Protect Directors

A recurring issue in the litigation the FDIC has filed against the directors and officers of failed banks is the question of whether or not officers – as opposed to directors – can rely on the business judgment rule as a defense under applicable state law. A July 8, 2013 decision by Judge...

Delaware Court of Chancery Allows Claims Against Ron Burkle in Challenged Transaction

OTK Associates, LLC v. Friedman , C.A. No. 8447-VCL (Del. Ch. Feb. 5, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ]. A few takeaways from this Court of Chancery opinion involving a challenged recapitalization of Morgans Hotel Group by investor Ron Burkle include...

Delaware Supreme Court Affirms Decision to Use Business Judgment Standard of Review in Controlling Stockholder Buyout

Merger Conditioned Ab Initio on Two Procedural Protections: Majority of Minority Vote and Special Committee Approval Kahn v. M & F Worldwide Corp. , Del. Supr., No. 334, 2013 (March 14, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ] The Delaware Supreme...

Revlon's High Bar

You know the drill. A merger is announced and immediately a number of lawsuits are filed. Of course, they allege Revlon duties, yada yada… But what does it take for one of these typical Revlon claims to survive a motion to dismiss? A lot. In Dent v Ramtron [ an enhanced version of this opinion...

Georgia Supreme Court Affirms, Elucidates Business Judgment Rule – and Its Limitations

A recurring issue in FDIC litigation against the former directors and officers of failed banks has been whether the business judgment rule insulates the defendants from claims of ordinary negligence. This question has been particularly important in Georgia, where there were more bank failures than any...

Dismissal Denied for Disinterested Directors When Entire Fairness Applies to Transaction

In re Cornerstone Therapeutics Inc. Stockholders Litigation, Cons. C.A. No. 8922-VCG (Del. Ch. Sept. 10, 2014) [ an enhanced version of this opinion is available to lexis.com subscribers ]. This Chancery decision is noteworthy for its analysis of the applicable standard for a motion to dismiss members...

Failed NC Bank Execs Granted Summary Judgment on All FDIC Claims

On September 11, 2014, in a sharply worded order that will give heart to the FDIC’s many other failed bank litigation targets, Eastern District of North Carolina Judge Terrence Boyle, applying North Carolina law, granted the summary judgment motion of the former directors and officers of the failed...

When Is a Controller a Controller?

A recent opinion in the Chancery Court, In re Crimson Exploration , deals with the question of when is a stockholder a controlling stockholder [ an enhanced version of this opinion is available to lexis.com subscribers ]. This case deals with an application of the proper standard of review in a transaction...

The Influence of Kahn v. M&F Worldwide Corp. in Going-Private Transactions

In a sign that Delaware's approach to going-private transactions has some legs, an appellate court in NY recently applied the principles of Kahn v. M&F Worldwide Corp. (MFW) to a going private transaction, thereby aligning New York's law in this area with Delaware's [ an enhanced version...

Delaware Court of Chancery Dismisses Claim of Excessive Compensation

Friedman v. Dolan, C.A. No. 9425-VCN (Del. Ch. June 30, 2015), is a Delaware Court of Chancery decision that should be read by anyone who thinks they should be able to challenge allegedly excessive compensation packages granted to members of a family in a family-controlled company [subscribers can access...

Delaware Court of Chancery Awards Damages Related to Intentionally Low Valuation

The Delaware Court of Chancery’s opinion in Fox v. CDx Holdings, Inc. , C.A. No. 8031-VCL (Del. Ch. July 28, 2015), addresses a complex set of facts relating to the liability resulting from the intentionally inaccurate valuation of a spin-off in order to avoid tax consequences to the controlling...

A Look at the Modern Business Judgment Rule

Under time-honored standards, and as developed over time by Delaware’s court, the business judgment rule is, as is often stated, a “presumption that in making a business decision, the directors of a company have acted on an informed basis, in good faith, and in the honest belief that the...

Delaware Court of Chancery Dismisses Challenge to Board Decision to Settle Claims

In Shaev v. Adkerson , C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015), the Delaware Court of Chancery dismissed claims for breach of fiduciary duty including the disclosure obligations of the board which granted stock units valued at approximately $35 million in connection with its decision to settle potential...

A Trio of Delaware Decisions Reaffirms Corporate Director Protections

Because the vast majority of U.S. publicly traded companies are incorporated in Delaware, legal developments in Delaware have a particularly important impact on legal standards governing corporate conduct in the U.S. Delaware law is particularly influential with respect to the responsibilities and potential...