Watch What You Say: Disparaging Comments May Trigger Contractual Repurchase Rights Even If Shielded From A Defamation Claim
A recent Delaware decision has demonstrated the limits of the absolute litigation privilege, holding that it did not protect an LLC member from claims that his defamatory statements triggered contractual repurchase rights of his membership interests. Absolute litigation privilege, in Delaware and many other jurisdictions, protects parties from actions for allegedly defamatory statements made during a judicial proceeding that are relevant to the case. While Judge Paul R. Wallace found absolute litigation privilege served an important interest in allowing parties to speak freely once in litigation, those public policy concerns do not always apply when a party is seeking to enforce private contractual rights resulting from the alleged breach of a non-disparagement claim. In so holding, the court demonstrated that Delaware courts will continue to show caution before allowing public policy interests to obviate the obligations in sophisticated parties’ private contracts.
Sidley Perspectives on M&A and Corporate Governance
Sidley is pleased to share the June 2024 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
Don’t Go It Alone? Or Do. Delaware Chancery Court Rules That A Single-Member Special Litigation Committee’s Recommendation Passes Muster
Last month, Vice Chancellor Glasscock dismissed shareholder claims in Teamsters Local 443 Health Services & Insurance Plan v. John C. Chou (Del. Ch. Nov. 17, 2023) (“Teamsters II”) after finding that a single-member special litigation committee (“SLC”) had sufficiently investigated the stockholder’s allegations before recommending dismissal. Vice Chancellor Glasscock’s decision is not the first time that the Court of Chancery approved a single-member SLC’s motion to dismiss a derivative suit. For example, in April 2023, Vice Chancellor Lori W. Will granted a single-member SLC’s motion to terminate a shareholder action In re Baker Hughes Derivative Litig., 2023 WL 2967780 (Del. Ch. Apr. 17, 2023).
Sidley Perspectives on M&A and Corporate Governance
Sidley is pleased to share the December 2023 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
“Simplify, simplify, simplify”: Delaware Chancery Declines to Dismiss Claims Regarding a Gordian Knot of Private Equity-Related Contracts
Vice Chancellor Sam Glasscock III recently declined to grant a motion to dismiss in Paul Capital Advisors, L.L.C. et al. v. Holland, 2023 WL 5551017, C.A. No. 2022-0167-SG (Del. Aug. 29, 2023) (“Paul Capital”), which involved claims arising out of an intricate set of transactions intended to monetize certain illiquid assets. In sustaining the claims, the Court of Chancery colorfully outlined the challenges of deciphering a highly complex, “monkey’s fist of contracts” without accompanying provisions describing the purpose for such complexity in the first place, and encouraged practitioners to instead choose the path of simplicity.
Sidley Perspectives on M&A and Corporate Governance
Sidley is pleased to share the September 2023 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.
Beware “Lite” Reasoning: Delaware Vice Chancellor Refuses to Disturb Arbitration Ruling Despite Concerns About Flawed Reasoning and Outcome
A recent Delaware Court of Chancery decision offers an important lesson on the limits of court review of an arbitration award, particularly when parties forego a fully reasoned award. Even though Vice Chancellor Glasscock found that “[t]he arbitration proceeding and the resulting award [were] flawed,” the court refused to overturn the award that appeared to find a contractual nonparty jointly and severally liable for breaches of the representations and warranties in a purchase agreement. The risk parties sometimes take when they contract for arbitration, the court found, is “receiving an arbitral decision that is questionable under the law and facts, but that is nonetheless—not coming within the narrow window of judicial oversight—not reviewable.”
Delaware Chancery Court Clarifies What Constitutes a Sale of “Substantially All” Assets
In a recent decision, Chancellor Kathaleen McCormick of the Delaware Chancery Court examined what constitutes a sale of “substantially all” of a selling company’s assets for purposes of Section 271 of the Delaware General Corporation Law (DGCL), granting a company’s motion to dismiss a stockholder’s lawsuit alleging that a sale of the “crown jewel” of the company amounted to a sale of substantially all of its assets and accordingly required stockholder approval. Altieri v. Alexy, No. 2021-0946-KSJM (Del. Ch. May 22, 2023).
Delaware Supreme Court Confirms That “and” Is a Word of Many Meanings
Last year we explained how a word as common as the conjunction “and” could be subject to different interpretations in a contract. See Grammarian’s Delight: It Depends On What The Meaning Of ‘And’ Is. The Delaware Supreme Court recently affirmed Vice-Chancellor Glasscock’s construction of the word “and” given the “range of possible interpretations” that courts have endorsed for the word—a good reminder for parties to exercise care when drafting agreements.
Sidley Perspectives on M&A and Corporate Governance: 2023 Year-in-Review
Sidley is pleased to share the March 2023 issue of Sidley Perspectives on M&A and Corporate Governance, a quarterly newsletter designed to keep you current on what we consider to be the most important legal developments involving M&A and corporate governance matters.