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.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jaime A. Bartletthttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJaime A. Bartlett2022-12-01 09:01:462022-12-01 09:19:04The Forum Selection Saga Continues
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.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Elizabeth Y. Austinhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngElizabeth Y. Austin2022-11-29 09:14:282022-11-29 09:14:28A Reminder that in Books and Records, Nonpublic Does Not Always Mean Confidential
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.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Kai H.E. Liekefetthttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngKai H.E. Liekefett2022-11-21 16:38:212022-11-21 16:38:21Bylaw Amendments, Shareholder Activism, and Flying Close to the Sun
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]
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Joshua J. Rimhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJoshua J. Rim2022-11-18 10:25:352022-11-18 10:25:35Indirect Transfers May Not Include Upstairs Entities
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.”
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Ian M. Rosshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngIan M. Ross2022-11-15 11:33:132022-11-15 11:33:13Special Committee Counsel Prohibited from “Advocating” as Both Counsel and Witness in Shareholder Derivative Trial
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…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/11/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_17.jpg606833Charlotte K. Newellhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngCharlotte K. Newell2022-11-03 09:10:542022-11-11 12:55:38Another Musk-Twitter Sideshow Reminds That Which Email Address You Use Matters
It has long been the law in Delaware that fee shifting provisions, particularly when contained within indemnification agreements, must be “clear and unequivocal” before they will apply to direct claims between contracting parties (known as “first-party claims”). The recent decision in Schneider National Carriers, Inc. v. Kuntz – a breach of contract case that involves the purchase of a group of trucking companies – demonstrates that what constitutes a “clear and unequivocal” agreement, however, is not always unequivocally clear. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Elizabeth Pyjovhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngElizabeth Pyjov2022-10-27 09:20:032022-10-27 09:20:03What Is “Clear” Is Not So Clear: Delaware Addresses Contractual Fee-Shifting
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.
(more…)
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Tyler Baylis
San Francisco
tbaylis@sidley.com
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.
(more…)
Elizabeth Y. Austin
Chicago
laustin@sidley.com
Claire Grace Lee
Chicago
claire.lee@sidley.com
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.
(more…)
Kai H.E. Liekefett
New York
kliekefett@sidley.com
Derek Zaba
Palo Alto, New York
dzaba@sidley.com
Beth E. Berg
Chicago
bberg@sidley.com
Leonard Wood
Houston
lwood@sidley.com
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]
(more…)
Joshua J. Rim
New York
joshua.rim@sidley.com
Alex J. Kaplan
New York
akaplan@sidley.com
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.”
(more…)
Ian M. Ross
Miami
iross@sidley.com
Kil Hyun Kim
kilhyun.kim@sidley.com
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…)
Charlotte K. Newell
New York
cnewell@sidley.com
What Is “Clear” Is Not So Clear: Delaware Addresses Contractual Fee-Shifting
It has long been the law in Delaware that fee shifting provisions, particularly when contained within indemnification agreements, must be “clear and unequivocal” before they will apply to direct claims between contracting parties (known as “first-party claims”). The recent decision in Schneider National Carriers, Inc. v. Kuntz – a breach of contract case that involves the purchase of a group of trucking companies – demonstrates that what constitutes a “clear and unequivocal” agreement, however, is not always unequivocally clear. (more…)
Elizabeth Pyjov
New York
epyjov@sidley.com
Jon Muenz
New York
jmuenz@sidley.com
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Andrew W. Stern
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Charlotte K. Newell
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Elizabeth Y. Austin
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Matthew J. Dolan
mdolan@sidley.com
Jim Ducayet
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Yolanda C. Garcia
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James Heyworth
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Alex J. Kaplan
ajkaplan@sidley.com
Jon Muenz
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Ian M. Ross
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Hille R. Sheppard
hsheppard@sidley.com
Heather Benzmiller Sultanian
hsultanian@sidley.com
Robert S. Velevis
rvelevis@sidley.com