Two Cautionary Tales: Fee Shifting Imposed for Litigating Books-and-Records Inspection Demands

While there are limits to a stockholder’s right to inspect books and records under Section 220 of the Delaware General Corporation Law or other sections allowing inspection—and corporations can negotiate the scope of inspection—there are also limits to how vigorously a corporation can resist a stockholder’s inspection demand, particularly when it does not present novel legal issues. Two recent fee-shifting decisions issued by Vice Chancellor Zurn provide a cautionary reminder of those limits, which were previously set out by the Court of Chancery in opinions such as Pettry v. Gilead Scis. Inc. (2020), Marilyn Abrams Living Trust v. Pope Invs. Inc. (2017), and McGowan v. Empress Entm’t (2000). The unmistakable message: if the right to inspection is clear, a defendant should think twice about a blanket opposition, unless the defendant does not mind paying the plaintiff’s legal fees in the end.


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…)

Delaware Courts Closely Examine Indemnification Claims for Attorneys’ Fees, “Whether or Not” the Parties Intend

In Samuel J. Heyman 1981 Continuing Tr. v. Ashland LLC (Sep. 12, 2022), the Delaware Supreme Court recently resolved a contractual dispute over potentially massive liability for cleaning up the Arthur Kill waterway in New Jersey. The contract at issue was a stock purchase agreement (SPA) in which Ashland LLC purchased 100% of the stock of an entity owned by a set of trusts affiliated with the Heyman family, but then immediately transferred back a particular property in Linden, New Jersey, to another entity affiliated with the Heyman parties. (more…)