The Delaware Court of Chancery recently denied a motion to dismiss stockholder derivative claims against Carvana Co. arising out of a stock offering Carvana announced in March 2020. The Court found that, based on the plaintiff’s allegations, it was reasonably conceivable that the stock offering had been orchestrated to take advantage of pandemic-related market volatility to benefit investors hand-selected by Carvana’s controlling stockholders. In doing so, the Court rejected the defendants’ arguments of demand futility and provided useful guidance regarding the types of allegations necessary to establish a director’s lack of independence.
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. Ross2022-08-02 10:03:192023-09-08 10:58:54“Thick-As-Thieves” Narrative Persuades Court That Director Independence Is In Question in Carvana
Readers who have been around for the past couple of decades will recall well a simpler time in our national politics, when the leader of the free world contended that he had not lied when telling aides, regarding a relationship with a White House intern, that “There’s nothing going on between us” because “It depends on what the meaning of ‘is’ is.”
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Andrew W. Sternhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngAndrew W. Stern2022-07-28 12:18:292023-09-08 10:59:55Grammarian’s Delight: It Depends On What The Meaning Of “And” Is
This post continues our prior discussion of Vice Chancellor Laster’s motion to dismiss denial in Goldstein v. Denner. “Part II” of that decision focuses on interesting – and rarely addressed – matters relating to Delaware law insider trading claims pursuant to Brophy v. Cities Service Co, 70 A.2d 5 (Del. Ch. 1949).
In a recent split decision in Diep v. Trimaran Pollo Partners LLC et al., the Delaware Supreme Court, sitting en banc, addressed the level of independence required of members of Special Litigation Committees recommending dismissal of shareholder derivative actions. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Heather Benzmiller Sultanianhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngHeather Benzmiller Sultanian2022-07-13 10:27:502023-09-08 11:01:33Don’t Let the Fox in the Henhouse: Lessons from the El Pollo Loco Decision on Special Litigation Committee Independence
Sidley is pleased to share the June 2022 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. (more…)
A recent Court of Chancery decision may signal increased scrutiny of the independence of directors repeatedly placed on boards by activist investors.
On May 26, 2022, Vice Chancellor Laster issued the first installment of a two-part decision denying the motions to dismiss filed in Goldstein v. Denner. The litigation is grounded in the decision made by the board of directors of Bioverativ, Inc. (the “Company”) to merge with Sanofi S.A (“Sanofi”). (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Lia M. Higginshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngLia M. Higgins2022-06-29 09:11:072023-09-08 11:03:36Delaware Chancery Court Examines Independence of Board Members Nominated by Activist Investors
On April 28, 2022, a state appellate court for the first time addressed provisions in a public company’s certification of incorporation that designate federal court as the sole forum for the litigation of Section 11 claims. Wong v. Restoration Robotics, Inc., – Cal. Rptr. 3d –, 2022 WL 1261423. Section 11 of the Securities Act of 1933 gives stock purchasers a claim against stock issuers and a broad range of other defendants for materially false or misleading statements in registration statements. (more…)
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robin E. Wechkinhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobin E. Wechkin2022-06-23 09:21:252023-09-08 11:05:43The Era of Section 11 Litigation in State Courts Appears To Be Ending
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“Thick-As-Thieves” Narrative Persuades Court That Director Independence Is In Question in Carvana
The Delaware Court of Chancery recently denied a motion to dismiss stockholder derivative claims against Carvana Co. arising out of a stock offering Carvana announced in March 2020. The Court found that, based on the plaintiff’s allegations, it was reasonably conceivable that the stock offering had been orchestrated to take advantage of pandemic-related market volatility to benefit investors hand-selected by Carvana’s controlling stockholders. In doing so, the Court rejected the defendants’ arguments of demand futility and provided useful guidance regarding the types of allegations necessary to establish a director’s lack of independence.
(more…)
Ian M. Ross
Miami
iross@sidley.com
Grammarian’s Delight: It Depends On What The Meaning Of “And” Is
Readers who have been around for the past couple of decades will recall well a simpler time in our national politics, when the leader of the free world contended that he had not lied when telling aides, regarding a relationship with a White House intern, that “There’s nothing going on between us” because “It depends on what the meaning of ‘is’ is.”
(more…)
Andrew W. Stern
New York
astern@sidley.com
Delaware Chancery Court Addresses Insider Trading Claims Under Brophy
This post continues our prior discussion of Vice Chancellor Laster’s motion to dismiss denial in Goldstein v. Denner. “Part II” of that decision focuses on interesting – and rarely addressed – matters relating to Delaware law insider trading claims pursuant to Brophy v. Cities Service Co, 70 A.2d 5 (Del. Ch. 1949).
(more…)
Jon Muenz
New York
jmuenz@sidley.com
Lia M. Higgins
New York
lhiggins@sidley.com
Don’t Let the Fox in the Henhouse: Lessons from the El Pollo Loco Decision on Special Litigation Committee Independence
In a recent split decision in Diep v. Trimaran Pollo Partners LLC et al., the Delaware Supreme Court, sitting en banc, addressed the level of independence required of members of Special Litigation Committees recommending dismissal of shareholder derivative actions. (more…)
Heather Benzmiller Sultanian
Chicago
hsultanian@sidley.com
Maseeh Moradi
Chicago
mmoradi@sidley.com
Sidley Perspectives on M&A and Corporate Governance
Sidley is pleased to share the June 2022 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. (more…)
Enhanced Scrutiny Contributors
delawarelit@sidley.com
Delaware Chancery Court Examines Independence of Board Members Nominated by Activist Investors
A recent Court of Chancery decision may signal increased scrutiny of the independence of directors repeatedly placed on boards by activist investors.
On May 26, 2022, Vice Chancellor Laster issued the first installment of a two-part decision denying the motions to dismiss filed in Goldstein v. Denner. The litigation is grounded in the decision made by the board of directors of Bioverativ, Inc. (the “Company”) to merge with Sanofi S.A (“Sanofi”). (more…)
Lia M. Higgins
New York
lhiggins@sidley.com
Jon Muenz
New York
jmuenz@sidley.com
The Era of Section 11 Litigation in State Courts Appears To Be Ending
On April 28, 2022, a state appellate court for the first time addressed provisions in a public company’s certification of incorporation that designate federal court as the sole forum for the litigation of Section 11 claims. Wong v. Restoration Robotics, Inc., – Cal. Rptr. 3d –, 2022 WL 1261423. Section 11 of the Securities Act of 1933 gives stock purchasers a claim against stock issuers and a broad range of other defendants for materially false or misleading statements in registration statements. (more…)
Robin E. Wechkin
Seattle
rwechkin@sidley.com
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