Kitchen-Sink Pleading Will Not Fly In Delaware
Vice Chancellor Glasscock recently affirmed in BV Advisory Partners, LLC v. Quantum Computing Inc., C.A. No. 2022-0719-SG, that more is not always better when it comes to pleading claims. In ruling on motions to dismiss filed by all defendants, the Court dismissed six Defendants for failure to plead personal jurisdiction under Rule 12(b)(2), and also dismissed eight of ten causes of action pled against the remaining Defendants for failure to state a claim under Rule 12(b)(6). In each of the Court’s holdings dismissing both Defendants and causes of action (summarized below), the Court identified the various ways in which Plaintiff relied to its detriment on conclusory allegations and impermissible bootstrapping. This ruling serves as a reminder to litigants that the Court of Chancery is well-equipped to strip down complaints bloated by tangential claims and theories of liability that are not sufficiently supported by alleged facts.
Even After Multiplan, Pleading Standards Still Have Teeth in SPAC Cases
In 2022, the Delaware Court of Chancery decided In re MultiPlan Corp. S’holders Litig., 268 A.3d 784 (Del. Ch. 2022) (“Multiplan”), a landmark case setting the legal framework for assessing claims that the directors of a Special Purpose Acquisition Company (“SPAC”) breached their fiduciary duties in connection with “de-SPAC” mergers. Given the popularity of de-SPAC mergers, in which the SPAC merges with a private target company and takes it public, the Delaware courts have been faced with a series of cases initiated by public stockholders who did not redeem their shares at the time of the merger but became unhappy when the post-merger public companies underperformed. The focus of those cases is the redemption right: whether stockholders in the SPAC were properly informed when they made the critical decision at the time of the merger to either redeem their shares or remain invested in the newly public company.
