Derivative Litigation Archives

Feb 62025

The Final Chapter: Delaware Supreme Court Affirms Ruling in Favor of Larry Ellison and Safra Catz for NetSuite Deal Litigation

Corporate Control, Derivative Litigation, Director Independence and Conflicts, M&A, Special Committee, Special Litigation Committees

Jaime A. Bartlett, Sara B. Brody and Chaddy Georges

On January 21, 2025, the Delaware Supreme Court affirmed the Court of Chancery’s post-trial opinion in favor of the Defendants in In re Oracle Corp. Derivative Litigation.

(more…)

Aug 152024

Chancery Court Reminds Bricklayers of Sturdy Foundation Required to Plead Demand Futility for Caremark Claims

Caremark, Demand Futility, Derivative Litigation

Vincent J. Margiotta and Andrew W. Stern

Last month, in Bricklayers Pension Fund of Western Pennsylvania v. Brinkley, Delaware’s Court of Chancery dismissed a stockholder plaintiff’s derivative suit against the directors and officers of Centene Corporation for purported breaches of fiduciary duty in connection with their oversight of company compliance with Medicaid laws and regulations. The Court concluded that the plaintiff failed to establish demand futility pursuant to Court of Chancery Rule 23.1. Put another way, the plaintiff failed to demonstrate that it had standing to pursue claims on behalf of Centene.

(more…)

Apr 292024

Controller’s Ability to Appoint and Remove Directors at Will Insufficient to Establish Demand Futility

Derivative Litigation, Director Independence and Conflicts

Robin E. Wechkin

In Harrison Metal Capital, an investment fund with an 18% stake in a privately held company called MixMax, Inc. believed the CEO was committing financial improprieties, but found no legal recourse for its complaint. Although certain features of the case are unusual as a factual matter, the Court of Chancery’s analysis of demand futility in a company with a controlling stockholder will be applicable in more conventional derivative actions as well.

(more…)

Apr 42024

Carvana SLC Drives Away Derivative Case

Derivative Litigation, Director Independence and Conflicts, Special Litigation Committees

Jaime A. Bartlett

On March 27, 2024, Chancellor McCormick granted the Carvana Special Litigation Committee’s motion to dismiss after finding no wrongdoing by the Company’s controlling stockholders in connection with its March 2020 direct offering and the controlling stockholders’ subsequent sale of Company stock for over US$1 billion. See https://courts.delaware.gov/Opinions/Download.aspx?id=362010.

(more…)

Mar 272024

Delaware Court of Chancery Says It’s Game Over on Massive Fees for “Minuscule” Work

Derivative Litigation, M&A, SPACs

Jon Muenz and Maya S. Shair

Last month, in an oral ruling likely to bring great joy to the Delaware defense bar, Vice Chancellor Zurn issued an atypical “Statement of the Court” in Garfield v. Getaround that swiftly rejected an $850,000 fee request in a derivative action. Plaintiff sought the fee for its efforts in prompting Defendant Getaround Inc. to make changes to its voting structure. Calling attention to the slew of similar actions by stockholders following Garfield v. Boxed, Vice Chancellor Zurn said the “game is over” for attorneys’ “making a literal fortune off of a minuscule number of hours of work.”

(more…)

Feb 142024

“A Bad Bull”: Chancery Court Rejects Plaintiffs’ Fee Application in Oracle Derivative Litigation

Corporate Control, Derivative Litigation, Director Independence and Conflicts, M&A, Special Committee, Special Litigation Committees

Jaime A. Bartlett and Chaddy Georges

Plaintiffs’ bid for a US$5 million mootness fee in In re Oracle Corp. Derivative Litigation, C.A. No. 2017-0337-SG was denied by Vice Chancellor Glasscock, who noted that “not even great counsel can wring significant stockholder value from litigation over an essentially loyal and careful sales process.”

(more…)

Jan 232024

Protecting Its “Unwaivable Right to a Jury Trial,” California Waves Goodbye to a Delaware Forum Selection Clause

Charter/Bylaw Provisions and Amendments, Derivative Litigation, Forum/Jurisdiction Issues, Shareholder Activism

Robert S. Velevis and Maggie Gianvecchio

I. Overview of Enforceability of Forum Selection Clauses

The Delaware Court of Chancery has promoted the use of forum selection clauses in corporate charters since its 2010 opinion In re Revlon Inc. Shareholders Litigation. Three years later, in Boilermakers v. Chevron, the Delaware Court of Chancery ruled that forum selection clauses in corporate bylaws are facially valid for types of shareholder litigation, including derivative claims, fiduciary claims, statutory claims under the Delaware General Corporation Law, and claims regarding internal affairs. In light of these decisions, Delaware forum selection clauses contained in corporate charters or bylaws of the type found facially valid in Boilermakers have been enforced by state courts in many states. But a recent decision from a California appellate court suggests that some California courts may be resistant to such provisions based on California public policy in favor of the right to a jury trial.

(more…)

Jan 42024

A Judicial Notice That Judicial Notice Has Its Limits

Caremark, Demand Futility, Derivative Litigation

Vincent J. Margiotta and Andrew W. Stern

In a significant decision the week before the Christmas holiday, the Delaware Supreme Court, sitting en banc, reversed the Delaware Court of Chancery’s dismissal of Lebanon County Employees’ Retirement Fund v. Collis et al. (“Lebanon”), reinstating stockholder derivative claims against the directors of AmerisourceBergen Corporation arising out of the Company’s wholesale distribution of prescription opioids in the United States. Interested readers can view our blog’s prior discussion of the Court of Chancery’s dismissal here.

(more…)

Sep 262023

Special Committees Require Special Attention: Lessons from GoDaddy

Best Practices, Board Minutes and Materials, Derivative Litigation, MFW, Special Committee

James Heyworth and Vincent J. Margiotta

Previously this blog has discussed the importance of procedural compliance with various transaction structures when the transaction involves controlling or interested parties (see an example here). For instance, in Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), the Delaware Supreme Court held that compliance with certain process elements enables deferential business judgment review of decisions regarding interested transactions with controlling parties (see here for a helpful discussion about MFW protections). Delaware courts have since expanded the role of MFW-like process protections in various contexts, thus demonstrating that adequate decisionmaking procedures are a central prerequisite to business judgment deference when controllers or interested parties are involved in contemplated transactions.

(more…)

Sep 182023

Five Essential D&O Insurance Questions

Best Practices, Derivative Litigation

John M. Skakun III

Recent cases highlight the increased risk of personal liability for directors. Is your company doing enough to protect the board?

Jaime A. Bartlett

Sara B. Brody

Chaddy Georges

Vincent J. Margiotta

Andrew W. Stern

Robin E. Wechkin

Jaime A. Bartlett

Jon Muenz

Maya S. Shair

Jaime A. Bartlett

Chaddy Georges

Robert S. Velevis

Maggie Gianvecchio

Vincent J. Margiotta

Andrew W. Stern

James Heyworth

Vincent J. Margiotta

John M. Skakun III

SUBSCRIBE