The recent Court of Chancery decision in Delman v. GigAcquisitions3 offers some interesting insights into the circumstances in which “entire fairness” review applies, and where “Corwin cleansing” can be used to achieve a lesser review standard.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jon Muenzhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJon Muenz2023-02-21 09:08:312023-09-08 10:27:20SPAC in Action: Court of Chancery Applies Entire Fairness Review in Declining to Dismiss SPAC Lawsuit
In a recent post on PharmExec.com, Paul Kalb (a co-founder of Sidley’s Global Life Science practice) and Coleen Klasmeier (a former partner who co-led Sidley’s Food, Drug and Medical Device practice) discuss how the intersection of the Caremark and Park doctrines impact life science companies, particularly when it comes to regulatory compliance and the liability of company officials.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/02/GLS-Blog_Generic-imagery-02.png606833Paul E. Kalb, M.D.https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngPaul E. Kalb, M.D.2023-02-16 14:11:462023-09-08 10:28:23Where Caremark Meets Park: A New Era of Regulatory Compliance and Criminal Liability
In a January 25, 2023 opinion (In re McDonald’s Corp. Stockholder Derivative Litig., C.A. No. 2021-0324-JTL), the Delaware Court of Chancery clarified that corporate officers’ fiduciary duties encompass a duty of oversight. As with directors, the duty of oversight requires that officers: (1) make a good faith effort to put in place reasonable information systems to generate the information necessary to address risks and report upward to higher level officers or the board; and (2) not consciously ignore red flags indicating that the company may suffer harm. The Court of Chancery also clarified that officers will not be held liable for violations of the duty of oversight unless they are shown to have acted in bad faith, as opposed to mere gross negligence.
The Delaware Court of Chancery recently issued an opinion that reminds controlling stockholders they can successfully implement a going private merger even when a competing bidder makes an offer that is substantially higher than that offered by the controlling stockholder. The court dismissed a lawsuit brought by former Eidos Therapeutics, Inc. stockholders against Bridgebio Pharma, Inc. and three of its directors over a merger in which Bridgebio, as Eidos’s controlling stockholder, acquired the remaining minority shares of Eidos stock. Smart Loc. Unions & Councils Pension Fund v. BridgeBio Pharma, Inc., No. 2021-1030-PAF, 2022 WL 17986515 (Del. Ch. Dec. 29, 2022).
On December 27, 2022, after a 10-day bench trial in July and August 2022 and post-trial argument, the Court granted Plaintiffs’ stipulation to voluntarily dismiss Renée James, the Chair of a Special Committee of the Oracle Board in In re Oracle Derivative Litigation, 2017-0337-SG, a shareholder derivative litigation case arising out of Oracle’s US$9.3 billion acquisition of NetSuite. This case is one of the rare post-Cornerstone director independence cases to proceed to trial, following an investigation and decision by a special litigation committee to return the case to the shareholder Plaintiffs to pursue. The case was also procedurally unique as Plaintiffs opted to dismiss James following the 10-day trial and post-trial argument, rather than wait for an opinion from the Court.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jaime A. Bartletthttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJaime A. Bartlett2023-01-30 10:07:392023-09-08 10:31:45Special Committee Chair Dismissed in Post-Trial Win
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.
SPAC in Action: Court of Chancery Applies Entire Fairness Review in Declining to Dismiss SPAC Lawsuit
The recent Court of Chancery decision in Delman v. GigAcquisitions3 offers some interesting insights into the circumstances in which “entire fairness” review applies, and where “Corwin cleansing” can be used to achieve a lesser review standard.
(more…)
Jon Muenz
New York
jmuenz@sidley.com
Where Caremark Meets Park: A New Era of Regulatory Compliance and Criminal Liability
In a recent post on PharmExec.com, Paul Kalb (a co-founder of Sidley’s Global Life Science practice) and Coleen Klasmeier (a former partner who co-led Sidley’s Food, Drug and Medical Device practice) discuss how the intersection of the Caremark and Park doctrines impact life science companies, particularly when it comes to regulatory compliance and the liability of company officials.
(more…)
Paul E. Kalb, M.D.
Delaware Court of Chancery Addresses Officer Oversight Obligations
In a January 25, 2023 opinion (In re McDonald’s Corp. Stockholder Derivative Litig., C.A. No. 2021-0324-JTL), the Delaware Court of Chancery clarified that corporate officers’ fiduciary duties encompass a duty of oversight. As with directors, the duty of oversight requires that officers: (1) make a good faith effort to put in place reasonable information systems to generate the information necessary to address risks and report upward to higher level officers or the board; and (2) not consciously ignore red flags indicating that the company may suffer harm. The Court of Chancery also clarified that officers will not be held liable for violations of the duty of oversight unless they are shown to have acted in bad faith, as opposed to mere gross negligence.
(more…)
Nilofer Umar
Chicago
numar@sidley.com
Jarrett H. Gross
Sudeep S. Dhanoa
Procedure Prevails When Applying MFW Framework to Interested Merger
The Delaware Court of Chancery recently issued an opinion that reminds controlling stockholders they can successfully implement a going private merger even when a competing bidder makes an offer that is substantially higher than that offered by the controlling stockholder. The court dismissed a lawsuit brought by former Eidos Therapeutics, Inc. stockholders against Bridgebio Pharma, Inc. and three of its directors over a merger in which Bridgebio, as Eidos’s controlling stockholder, acquired the remaining minority shares of Eidos stock. Smart Loc. Unions & Councils Pension Fund v. BridgeBio Pharma, Inc., No. 2021-1030-PAF, 2022 WL 17986515 (Del. Ch. Dec. 29, 2022).
(more…)
Fiona Collins
Elizabeth Y. Austin
Chicago
laustin@sidley.com
Special Committee Chair Dismissed in Post-Trial Win
On December 27, 2022, after a 10-day bench trial in July and August 2022 and post-trial argument, the Court granted Plaintiffs’ stipulation to voluntarily dismiss Renée James, the Chair of a Special Committee of the Oracle Board in In re Oracle Derivative Litigation, 2017-0337-SG, a shareholder derivative litigation case arising out of Oracle’s US$9.3 billion acquisition of NetSuite. This case is one of the rare post-Cornerstone director independence cases to proceed to trial, following an investigation and decision by a special litigation committee to return the case to the shareholder Plaintiffs to pursue. The case was also procedurally unique as Plaintiffs opted to dismiss James following the 10-day trial and post-trial argument, rather than wait for an opinion from the Court.
(more…)
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Stephen Chang
San Francisco
stephen.chang@sidley.com
Categories
Archives
Meet the Team
Charlotte K. Newell
cnewell@sidley.com
Jaime A. Bartlett
jbartlett@sidley.com
Elizabeth Y. Austin
laustin@sidley.com
Jim Ducayet
jducayet@sidley.com
Yolanda C. Garcia
ygarcia@sidley.com
James Heyworth
jheyworth@sidley.com
Alex J. Kaplan
ajkaplan@sidley.com
Jodi E. Lopez
jlopez@sidley.com
Jon Muenz
jmuenz@sidley.com
Ian M. Ross
iross@sidley.com
Hille R. Sheppard
hsheppard@sidley.com
Heather Benzmiller Sultanian
hsultanian@sidley.com
Robert S. Velevis
rvelevis@sidley.com
Robin E. Wechkin
rwechkin@sidley.com