A federal criminal case in the Northern District of California raises an unusual scenario involving the interplay between a defendant’s right to counsel of his choice under the Constitution and a corporate officer’s right to advancement of legal fees under Delaware law. Aubrey Shelton is a former senior VP of Delaware corporation RepairPal, Inc. On August 15, 2023, the United States government indicted Shelton on three counts of bank fraud, five counts of wire fraud, and four counts of tax evasion. The indictment alleged that Shelton embezzled millions of dollars from RepairPal over eight years. According to the indictment, Shelton used his control of the company’s payroll account to submit false information about his compensation to the payroll processor, inflating his salary and bonus and representing that he was entitled to receive “executive loans” and “reimbursements” for expenses he did not actually incur. In the criminal proceeding, Shelton sought to have his former employer advance legal fees for his defense, relying on a broad indemnification agreement he had signed with the company in 2020.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/10/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_11.jpg606833James Heyworthhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJames Heyworth2025-04-22 09:03:382025-04-21 16:40:09Is There a 6th Amendment Right to Advancement of Legal Fees? In One Unique Case, A Court Says Yes.
2024 was called a “super year” for political elections, with 72 countries and half the world’s population going to the polls. Incumbent political parties across the globe lost these elections at a dizzying rate as voters punished those seen as responsible for inflation and other economic woes. It was also a booming year for shareholder activism, but incumbent directors fared much better than their political counterparts at the ballot box as activists failed to persuade investors of their case for change in proxy contests that went to a vote. With many expecting 2025 to be another “super year” for activism, here is a look at what we observed in 2024. (more…)
Earlier this month, in one of the first opinions in which the newly established Texas Business Court has addressed the merits of a claim, the court granted in part and denied in part a motion for summary judgment in Primexx Energy Opportunity Fund, LP v. Primexx Energy Corporation. The opinion provides a first look at how the newly established Texas court will compare to Delaware courts in its approach to a foundational issue for many limited partnerships: the extent to which partners can modify or even eliminate their fiduciary duties and obligations by contract. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_32.jpg606833Heather Benzmiller Sultanianhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngHeather Benzmiller Sultanian2025-04-10 09:00:182025-04-09 16:04:46Texas Business Court Weighs In on Contractual Restrictions on Fiduciary Duties
In February, in an offshoot of the dwindling SPAC boom, the Delaware Court of Chancery dismissed a shareholder derivative lawsuit in In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Feb. 7, 2025). Notably, Vice Chancellor J. Travis Laster dismissed the case even though it evaluated the transaction under the demanding entire fairness standard. The court recently denied the plaintiffs’ motion for reargument, briefly noting that it “did not misapprehend any issue of fact or law.” In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Mar. 27, 2025). (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Deepa A. Charihttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngDeepa A. Chari2025-04-08 10:18:332025-04-08 10:18:33Court of Chancery Issues Rare Pre-Discovery Dismissal of Entire Fairness Claim
Vice Chancellor Laster’s opinion in In re Dura Medic Holdings, Inc. is a helpful reminder of potentially bespoke equitable remedies available for breaches of fiduciary duties. The case involved claims brought by a co-founder of Dura Medic, Inc. (“Dura Medic” or “Company”) against affiliates of Comvest, a private equity backer that acquired Dura Medic in 2018 through subsidiary affiliates. The claims focused in particular on Comvest’s subsequent extension of debt and equity financing to the Company without approval by disinterested and independent decisionmakers. Ultimately, the Delaware Court of Chancery held that these controller-interested transactions implicated the entire fairness standard, that Comvest failed to satisfy it (and therefore breached fiduciary duties as a controlling stockholder). This led the Court to hold that Comvest’s financings were equitably subordinated to the Seller Note. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/10/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_11.jpg606833Connor P. Wisehttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngConnor P. Wise2025-04-03 09:00:012025-04-02 15:00:45Controller’s Breach of Fiduciary Duties Leads To Novel Remedy
On March 25, 2025, Delaware Gov. Matt Meyer signed into law significant changes to the Delaware General Corporation Law. These amendments provide greater clarity in a number of important areas that had been the subject of common law development, and they underscore Delaware’s commitment to deferring to the decisions of informed and disinterested directors and stockholders. They also reflect the Delaware legislature’s ability to respond promptly to judicial and market developments, which is one of many reasons Delaware has been the incorporation destination of choice for many years. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Paul L. Choihttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngPaul L. Choi2025-04-01 10:25:402025-04-01 10:29:20Delaware Adopts Significant Changes to Its General Corporation Law
Securities class actions against life sciences companies are mostly second-order problems. The first-order problem is a business or regulatory setback that, when disclosed by the company or a third party, triggers a stock price decline. Following the decline, plaintiffs’ class-action attorneys search the company’s previous public statements and seek to identify inconsistencies between past positive comments and the current negative development. In most cases, plaintiffs’ attorneys then seek to show that any arguable inconsistency amounts to fraud—that is, they will claim that the earlier statement was knowingly or recklessly false or misleading. When the challenged statement appears in a public offering document (that is, a registration statement or prospectus), plaintiffs need only show that the statement was materially false or misleading, not that it was made with scienter or caused their losses.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2025/03/MN-25980-Securities-Class-Actions-in-the-Life-Sciences-Sector-Survey-2024-Imagery_600x400.jpg400600Sara B. Brodyhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngSara B. Brody2025-03-28 11:03:122025-03-28 12:20:46Securities Litigation Against Life Sciences Companies: 2024
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Is There a 6th Amendment Right to Advancement of Legal Fees? In One Unique Case, A Court Says Yes.
A federal criminal case in the Northern District of California raises an unusual scenario involving the interplay between a defendant’s right to counsel of his choice under the Constitution and a corporate officer’s right to advancement of legal fees under Delaware law. Aubrey Shelton is a former senior VP of Delaware corporation RepairPal, Inc. On August 15, 2023, the United States government indicted Shelton on three counts of bank fraud, five counts of wire fraud, and four counts of tax evasion. The indictment alleged that Shelton embezzled millions of dollars from RepairPal over eight years. According to the indictment, Shelton used his control of the company’s payroll account to submit false information about his compensation to the payroll processor, inflating his salary and bonus and representing that he was entitled to receive “executive loans” and “reimbursements” for expenses he did not actually incur. In the criminal proceeding, Shelton sought to have his former employer advance legal fees for his defense, relying on a broad indemnification agreement he had signed with the company in 2020.
(more…)
James Heyworth
New York
jheyworth@sidley.com
Sheila A.G. Armbrust
San Francisco
sarmbrust@sidley.com
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Michael Ferguson
Law Clerk
michael.ferguson@sidley.com
Another “Super Year” for Activism
2024 was called a “super year” for political elections, with 72 countries and half the world’s population going to the polls. Incumbent political parties across the globe lost these elections at a dizzying rate as voters punished those seen as responsible for inflation and other economic woes. It was also a booming year for shareholder activism, but incumbent directors fared much better than their political counterparts at the ballot box as activists failed to persuade investors of their case for change in proxy contests that went to a vote. With many expecting 2025 to be another “super year” for activism, here is a look at what we observed in 2024. (more…)
Kai H.E. Liekefett
New York
kliekefett@sidley.com
Derek Zaba
Palo Alto, New York
dzaba@sidley.com
Texas Business Court Weighs In on Contractual Restrictions on Fiduciary Duties
Earlier this month, in one of the first opinions in which the newly established Texas Business Court has addressed the merits of a claim, the court granted in part and denied in part a motion for summary judgment in Primexx Energy Opportunity Fund, LP v. Primexx Energy Corporation. The opinion provides a first look at how the newly established Texas court will compare to Delaware courts in its approach to a foundational issue for many limited partnerships: the extent to which partners can modify or even eliminate their fiduciary duties and obligations by contract. (more…)
Heather Benzmiller Sultanian
Chicago
hsultanian@sidley.com
Katherine M. Surma
Chicago
ksurma@sidley.com
Court of Chancery Issues Rare Pre-Discovery Dismissal of Entire Fairness Claim
In February, in an offshoot of the dwindling SPAC boom, the Delaware Court of Chancery dismissed a shareholder derivative lawsuit in In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Feb. 7, 2025). Notably, Vice Chancellor J. Travis Laster dismissed the case even though it evaluated the transaction under the demanding entire fairness standard. The court recently denied the plaintiffs’ motion for reargument, briefly noting that it “did not misapprehend any issue of fact or law.” In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Mar. 27, 2025). (more…)
Deepa A. Chari
Chicago
dchari@sidley.com
Ian M. Ross
Miami
iross@sidley.com
Controller’s Breach of Fiduciary Duties Leads To Novel Remedy
Vice Chancellor Laster’s opinion in In re Dura Medic Holdings, Inc. is a helpful reminder of potentially bespoke equitable remedies available for breaches of fiduciary duties. The case involved claims brought by a co-founder of Dura Medic, Inc. (“Dura Medic” or “Company”) against affiliates of Comvest, a private equity backer that acquired Dura Medic in 2018 through subsidiary affiliates. The claims focused in particular on Comvest’s subsequent extension of debt and equity financing to the Company without approval by disinterested and independent decisionmakers. Ultimately, the Delaware Court of Chancery held that these controller-interested transactions implicated the entire fairness standard, that Comvest failed to satisfy it (and therefore breached fiduciary duties as a controlling stockholder). This led the Court to hold that Comvest’s financings were equitably subordinated to the Seller Note. (more…)
Connor P. Wise
Law Clerk
connor.wise@sidley.com
Alex J. Kaplan
New York
akaplan@sidley.com
Delaware Adopts Significant Changes to Its General Corporation Law
On March 25, 2025, Delaware Gov. Matt Meyer signed into law significant changes to the Delaware General Corporation Law. These amendments provide greater clarity in a number of important areas that had been the subject of common law development, and they underscore Delaware’s commitment to deferring to the decisions of informed and disinterested directors and stockholders. They also reflect the Delaware legislature’s ability to respond promptly to judicial and market developments, which is one of many reasons Delaware has been the incorporation destination of choice for many years. (more…)
Paul L. Choi
Chicago
pchoi@sidley.com
Jim Ducayet
Chicago
jducayet@sidley.com
David Grubman
New York
david.grubman@sidley.com
J. Mark Metts
Houston
mmetts@sidley.com
Charlotte K. Newell
New York
cnewell@sidley.com
Kristen Seeger
Chicago
kseeger@sidley.com
Anika Hermann Bargfrede
Chicago
abargfrede@sidley.com
Securities Litigation Against Life Sciences Companies: 2024
Securities class actions against life sciences companies are mostly second-order problems. The first-order problem is a business or regulatory setback that, when disclosed by the company or a third party, triggers a stock price decline. Following the decline, plaintiffs’ class-action attorneys search the company’s previous public statements and seek to identify inconsistencies between past positive comments and the current negative development. In most cases, plaintiffs’ attorneys then seek to show that any arguable inconsistency amounts to fraud—that is, they will claim that the earlier statement was knowingly or recklessly false or misleading. When the challenged statement appears in a public offering document (that is, a registration statement or prospectus), plaintiffs need only show that the statement was materially false or misleading, not that it was made with scienter or caused their losses.
(more…)
Sara B. Brody
San Francisco, Palo Alto
sbrody@sidley.com
Sarah A. Hemmendinger
San Francisco
shemmendinger@sidley.com
Francesca E. Brody
New York
fbrody@sidley.com
Robin E. Wechkin
Seattle
rwechkin@sidley.com
Zarine L. Alam
San Francisco
zalam@sidley.com
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James Heyworth
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Alex J. Kaplan
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Ian M. Ross
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