Thoughts on Third-Party Liability – Tortious Interference vs. Aiding and Abetting the Breach of a Fiduciary Duty

A recent Delaware Court of Chancery ruling provides useful clarity on the differences between two commonly asserted claims of third-party liability: tortious interference and aiding and abetting the breach of a fiduciary duty. In Atlantic NWI, LLC v. The Carlyle Group Inc., et al., https://courts.delaware.gov/Opinions/Download.aspx?id=339620, Vice Chancellor Glasscock discussed how and why these claims differ.

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The Forum Selection Saga Continues

On October 24, 2022, the Ninth Circuit granted en banc review in Lee v. Fisher 34 F.4th 777 (9th Cir. 2022), vacating the Circuit’s prior ruling that the forum selection clause in the bylaws of Gap Inc. (“Gap”) is enforceable. This is the latest chapter in the saga of forum selection enforceability that has gripped the Courts and litigants for years. With this ruling, the  Ninth Circuit is set to consider whether forum selection clauses are enforceable, even if they result in a waiver of substantive rights under federal law. A ruling enforcing Gap’s clause will leave the Ninth and Seventh Circuits in direct conflict, while a ruling against Gap could bring the two circuits back into alignment.

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A Reminder that in Books and Records, Nonpublic Does Not Always Mean Confidential

A recent Delaware Court of Chancery decision provides a timely reminder that a confidential document production may not always satisfy a Section 220 demand, and there are circumstances when a single stockholder’s request for books and records will require a company to disclose nonpublic books and records without any restriction on who may view them or how they may be used.

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Bylaw Amendments, Shareholder Activism, and Flying Close to the Sun

A case presently before the Delaware Court of Chancery challenging a corporation’s advance notice bylaw amendments, initiated by activist investor Politan Capital Management LP in October 2022,[2] brings to mind the storied Icarus. In the legend, a master craftsman creates wings of feathers and wax for himself and his son to escape danger. He cautions his son Icarus not to fly too close to the sun, lest the wings melt. Icarus, carried away with this device figuratively and literally, flies too high and tumbles into the sea.

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Indirect Transfers May Not Include Upstairs Entities

The decision in The American Bottling Company v. BA Sports (“American Bottling”)[1] demonstrates that in the context of anti-assignment or change of control provisions, prohibitions against “indirect transfers” (such as those occurring at an entity’s great-grandparent level) are not necessarily triggered by changes at the parent level.  This ruling from the Delaware Superior Court, which applied Illinois law, tracks similar rulings applying Delaware law.[2]

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Special Committee Counsel Prohibited from “Advocating” as Both Counsel and Witness in Shareholder Derivative Trial

The Delaware Court of Chancery in In re Straight Path recently applied the state’s professional conduct rules to prohibit Special Committee counsel from both appearing as a fact witness at trial and representing former Special Committee members in the same trial. In so doing, the Court offered its most recent consideration of Delaware Rules of Professional Conduct 3.7(a), which precludes a lawyer in most circumstances from “advocat[ing] at a trial in which the lawyer is likely to be a necessary witness.”

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Another Musk-Twitter Sideshow Reminds That Which Email Address You Use Matters

The headline-generating Twitter-Musk saga has caused the Court’s rapid-fire issuance of more than 30 letters and memorandum opinions.  Others have already been discussed on this blog.  Another among them is notable for the Court’s consideration of whether Elon Musk waived privilege by sending and receiving otherwise privileged communications about the Twitter acquisition using his Tesla and SpaceX email addresses.  This brief decision is an important reminder that yes, it does matter which email address you use to communicate about otherwise privileged matters. (more…)

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<a target=‘_blank’ href="https://www.sidley.com/en/people/s/stern-andrew-w">Andrew W. Stern</a>

Andrew W. Stern

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Charlotte K. Newell

New York
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Elizabeth Y. Austin

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Jaime A. Bartlett

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Matthew J. Dolan

Palo Alto
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Jim Ducayet

Chicago
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Yolanda C. Garcia

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James Heyworth

New York
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Alex J. Kaplan

New York
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Jon Muenz

New York
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Ian M. Ross

Miami

<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sheppard-hille-r">Hille R. Sheppard</a>

Hille R. Sheppard

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sultanian-heather">Heather Benzmiller Sultanian</a>

Heather Benzmiller Sultanian

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/v/velevis-robert-s">Robert S. Velevis</a>

Robert S. Velevis

Dallas

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