Bylaw Amendments, Shareholder Activism, and Flying Close to the Sun

A case presently before the Delaware Court of Chancery challenging a corporation’s advance notice bylaw amendments, initiated by activist investor Politan Capital Management LP in October 2022,[2] brings to mind the storied Icarus. In the legend, a master craftsman creates wings of feathers and wax for himself and his son to escape danger. He cautions his son Icarus not to fly too close to the sun, lest the wings melt. Icarus, carried away with this device figuratively and literally, flies too high and tumbles into the sea.

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Indirect Transfers May Not Include Upstairs Entities

The decision in The American Bottling Company v. BA Sports (“American Bottling”)[1] demonstrates that in the context of anti-assignment or change of control provisions, prohibitions against “indirect transfers” (such as those occurring at an entity’s great-grandparent level) are not necessarily triggered by changes at the parent level.  This ruling from the Delaware Superior Court, which applied Illinois law, tracks similar rulings applying Delaware law.[2]

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Special Committee Counsel Prohibited from “Advocating” as Both Counsel and Witness in Shareholder Derivative Trial

The Delaware Court of Chancery in In re Straight Path recently applied the state’s professional conduct rules to prohibit Special Committee counsel from both appearing as a fact witness at trial and representing former Special Committee members in the same trial. In so doing, the Court offered its most recent consideration of Delaware Rules of Professional Conduct 3.7(a), which precludes a lawyer in most circumstances from “advocat[ing] at a trial in which the lawyer is likely to be a necessary witness.”

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Another Musk-Twitter Sideshow Reminds That Which Email Address You Use Matters

The headline-generating Twitter-Musk saga has caused the Court’s rapid-fire issuance of more than 30 letters and memorandum opinions.  Others have already been discussed on this blog.  Another among them is notable for the Court’s consideration of whether Elon Musk waived privilege by sending and receiving otherwise privileged communications about the Twitter acquisition using his Tesla and SpaceX email addresses.  This brief decision is an important reminder that yes, it does matter which email address you use to communicate about otherwise privileged matters. (more…)

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…)

In Musk-Twitter Sideshow, Stockholder Standing To Sue for “Lost Premium” Damages Makes Appearance

The on-then-off-then-on-again acquisition of Twitter, Inc. by Elon Musk has generated an unusual amount of attention for corporate litigation.  Much of that has focused on the “main show” – the litigation commenced by Twitter seeking to compel Musk to close the transaction.  Recently, however, the Delaware Court of Chancery issued a decision in a companion case, brought against Musk directly on behalf of a class of Twitter stockholders. (more…)

Activist Investing Today: Zaba Sees M&A Activism Amid Uncertainty

In the recent podcast episode with The Deal, Derek Zaba, co-chair of Sidley’s Shareholder Activism and Corporate Defense practice, explains why an insurgent investor might be more willing to push for M&A than seek out an operational thesis in today’s volatile markets.

Derek Zaba

Palo Alto, New York

dzaba@sidley.com

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<a target=‘_blank’ href="https://www.sidley.com/en/people/s/stern-andrew-w">Andrew W. Stern</a>

Andrew W. Stern

New York
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Charlotte K. Newell

New York
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Elizabeth Y. Austin

Chicago
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Jaime A. Bartlett

San Francisco
<a target=‘_blank’ href="https://www.sidley.com/en/people/d/ducayet-james-w">Jim Ducayet</a>

Jim Ducayet

Chicago
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Yolanda C. Garcia

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James Heyworth

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Alex J. Kaplan

New York
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Jodi E. Lopez

Los Angeles

<a target=‘_blank’ href="https://www.sidley.com/en/people/m/muenz-jon">Jon Muenz</a>

Jon Muenz

New York
<a target=‘_blank’ href="https://www.sidley.com/en/people/r/ross-ian-m">Ian M. Ross</a>

Ian M. Ross

Miami
<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sheppard-hille-r">Hille R. Sheppard</a>

Hille R. Sheppard

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/s/sultanian-heather">Heather Benzmiller Sultanian</a>

Heather Benzmiller Sultanian

Chicago
<a target=‘_blank’ href="https://www.sidley.com/en/people/v/velevis-robert-s">Robert S. Velevis</a>

Robert S. Velevis

Dallas
<a target=‘_blank’ href="https://www.sidley.com/en/people/w/wechkin-robin-e">Robin E. Wechkin</a>

Robin E. Wechkin

Seattle

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