The Delaware Court of Chancery decision in In re WeWork Litigation, issued on December 22, 2020, underscores the need for heightened care with respect to corporate communications and the preservation of the attorney-client privilege.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jim Ducayethttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJim Ducayet2021-02-03 10:38:202023-09-08 12:27:58Chancery Court Orders Company to Wave Goodbye to Privilege after Seconded Employees Use Other Company Email to Discuss Non-Company Business
The above-referenced turn of phrase was penned by Benjamin Franklin in admonishing his fellow Philadelphians to take heed of fire prevention strategies. Although the benefits discussed here are short of life-saving, attention to implementation and periodic review of your practices for the preparation and maintenance of board minutes and related materials can yield significant dividends in managing and mitigating litigation risk, including the risk of personal liability for directors. In addition to providing an accurate record of board decisions, to the extent that minutes evidence directors’ good faith, diligence, and absence of conflict (or appropriate handling of conflict), minutes can help support early termination of stockholder suits for breach of duty. Attention to board (and board committee) minutes is especially important given the increase in demands by would-be stockholder plaintiffs for corporate books and records to assist them in assessing potential claims and constructing their allegations.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Charlotte K. Newellhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngCharlotte K. Newell2021-02-01 11:00:172023-09-08 12:28:41“An Ounce Of Prevention Is Worth A Pound Of Cure”: Effective Practices for Board Minutes and Related Board Materials
A recent Texas Court of Appeals case held that members of a Delaware limited liability company (LLC) can contract around (i.e., waive) the general principle protecting against usurpation of corporate opportunities. This decision is of particular importance to private equity owners that may hold other investments in companies in the same industry and closely follows recent Delaware case law. The case also should limit the ability for parties to forum shop and seek to obtain a different outcome on Delaware legal issues by filing in another forum, in this case Texas.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2021-01-28 14:37:412023-09-08 12:29:20Texas Appeals Court Confirms That Protections Against Usurpation of Corporate Opportunities Under Delaware Law Can Be Contractually “Worked-Around”
The Court of Chancery provided its latest guidance on so-called Caremark claims in a New Year’s Eve opinion issued by Vice Chancellor Glasscock in Richardson v. Clark, an action brought derivatively by a stockholder of Moneygram International, Inc. The opinion dismissing the claims, in which the Court had some fun with film titles from Tom Cruise’s career, provides an important level-setting because some have questioned whether Delaware’s courts are lowering the bar for claims alleging that a board of directors failed in its oversight duties. Richardson should provide some comfort to directors that the standards have not changed: absent particularized allegations of bad-faith action (or inaction) by a board, such claims should not survive a motion to dismiss.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Charlotte K. Newellhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngCharlotte K. Newell2021-01-21 08:00:562023-09-08 12:30:12Caremark Claims: Not Mission Impossible, but Still Risky Business for Plaintiffs
On December 29, 2020, in a 76-page memorandum opinion, the Court of Chancery denied a motion to dismiss breach of fiduciary duty claims against National Amusements, Inc. (NAI), Viacom Inc.’s controlling stockholder; Shari Redstone, the director, president, and controlling stockholder of NAI; and four individual NAI directors. All were sued for their roles in the Viacom/CBS Corp. merger in a decision that is important for mergers in which a controlling party stands on both sides of a transaction and receives nonratable benefits that are measured in terms of control, rather than based on merger consideration.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2021-01-13 14:03:172023-09-08 12:30:54Court of Chancery Allows Breach of Fiduciary Duty Claims Stemming from CBS-Viacom Merger to Proceed
Please join us for an exclusive discussion on the current state of hostile M&A and shareholder activism. The leaders of Sidley’s Shareholder Activism practice will discuss the evolution of hostile M&A and shareholder activism in the COVID era, what to expect in the 2021 proxy season, and how to stay on the front foot in the current environment.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Enhanced Scrutiny Contributorshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngEnhanced Scrutiny Contributors2021-01-07 15:02:352023-09-08 12:31:38Webinar: Hostile Takeovers and Shareholder Activism in a COVID-19 World
Just before year-end, the Delaware Court of Chancery issued a notable decision regarding disclosures around equity incentive plans. On December 16, 2020, the Chancery Court dismissed a stockholder’s direct claim that members of the board of Columbia Financial Inc. (“Columbia” or the “Company”) breached fiduciary duties for failing to disclose purportedly material information regarding equity awards provided to directors. The decision provides guidance on standards for adequate disclosures and affirms the Chancery Court’s willingness to decide questions of materiality at the pleading stage.
Chancery Court Orders Company to Wave Goodbye to Privilege after Seconded Employees Use Other Company Email to Discuss Non-Company Business
The Delaware Court of Chancery decision in In re WeWork Litigation, issued on December 22, 2020, underscores the need for heightened care with respect to corporate communications and the preservation of the attorney-client privilege.
(more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Vincent J. Margiotta
New York
vmargiotta@sidley.com
“An Ounce Of Prevention Is Worth A Pound Of Cure”: Effective Practices for Board Minutes and Related Board Materials
The above-referenced turn of phrase was penned by Benjamin Franklin in admonishing his fellow Philadelphians to take heed of fire prevention strategies. Although the benefits discussed here are short of life-saving, attention to implementation and periodic review of your practices for the preparation and maintenance of board minutes and related materials can yield significant dividends in managing and mitigating litigation risk, including the risk of personal liability for directors. In addition to providing an accurate record of board decisions, to the extent that minutes evidence directors’ good faith, diligence, and absence of conflict (or appropriate handling of conflict), minutes can help support early termination of stockholder suits for breach of duty. Attention to board (and board committee) minutes is especially important given the increase in demands by would-be stockholder plaintiffs for corporate books and records to assist them in assessing potential claims and constructing their allegations.
(more…)
Charlotte K. Newell
New York
cnewell@sidley.com
Holly J. Gregory
New York
holly.gregory@sidley.com
Texas Appeals Court Confirms That Protections Against Usurpation of Corporate Opportunities Under Delaware Law Can Be Contractually “Worked-Around”
A recent Texas Court of Appeals case held that members of a Delaware limited liability company (LLC) can contract around (i.e., waive) the general principle protecting against usurpation of corporate opportunities. This decision is of particular importance to private equity owners that may hold other investments in companies in the same industry and closely follows recent Delaware case law. The case also should limit the ability for parties to forum shop and seek to obtain a different outcome on Delaware legal issues by filing in another forum, in this case Texas.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Lora Chowdhury
lchowdhury@sidley.com
Caremark Claims: Not Mission Impossible, but Still Risky Business for Plaintiffs
The Court of Chancery provided its latest guidance on so-called Caremark claims in a New Year’s Eve opinion issued by Vice Chancellor Glasscock in Richardson v. Clark, an action brought derivatively by a stockholder of Moneygram International, Inc. The opinion dismissing the claims, in which the Court had some fun with film titles from Tom Cruise’s career, provides an important level-setting because some have questioned whether Delaware’s courts are lowering the bar for claims alleging that a board of directors failed in its oversight duties. Richardson should provide some comfort to directors that the standards have not changed: absent particularized allegations of bad-faith action (or inaction) by a board, such claims should not survive a motion to dismiss.
(more…)
Charlotte K. Newell
New York
cnewell@sidley.com
Andrew W. Stern
New York
astern@sidley.com
Court of Chancery Allows Breach of Fiduciary Duty Claims Stemming from CBS-Viacom Merger to Proceed
On December 29, 2020, in a 76-page memorandum opinion, the Court of Chancery denied a motion to dismiss breach of fiduciary duty claims against National Amusements, Inc. (NAI), Viacom Inc.’s controlling stockholder; Shari Redstone, the director, president, and controlling stockholder of NAI; and four individual NAI directors. All were sued for their roles in the Viacom/CBS Corp. merger in a decision that is important for mergers in which a controlling party stands on both sides of a transaction and receives nonratable benefits that are measured in terms of control, rather than based on merger consideration.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Lora Chowdhury
lchowdhury@sidley.com
Webinar: Hostile Takeovers and Shareholder Activism in a COVID-19 World
Please join us for an exclusive discussion on the current state of hostile M&A and shareholder activism. The leaders of Sidley’s Shareholder Activism practice will discuss the evolution of hostile M&A and shareholder activism in the COVID era, what to expect in the 2021 proxy season, and how to stay on the front foot in the current environment.
(more…)
Enhanced Scrutiny Contributors
delawarelit@sidley.com
Chancery Court Tosses Claim Regarding Disclosures Around Equity Incentive Plans
Just before year-end, the Delaware Court of Chancery issued a notable decision regarding disclosures around equity incentive plans. On December 16, 2020, the Chancery Court dismissed a stockholder’s direct claim that members of the board of Columbia Financial Inc. (“Columbia” or the “Company”) breached fiduciary duties for failing to disclose purportedly material information regarding equity awards provided to directors. The decision provides guidance on standards for adequate disclosures and affirms the Chancery Court’s willingness to decide questions of materiality at the pleading stage.
(more…)
Robert M. Garsson
New York
rgarsson@sidley.com
Alex J. Kaplan
New York
akaplan@sidley.com
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Andrew W. Stern
astern@sidley.com
Charlotte K. Newell
cnewell@sidley.com
Elizabeth Y. Austin
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Jaime A. Bartlett
jbartlett@sidley.com
Matthew J. Dolan
mdolan@sidley.com
Jim Ducayet
jducayet@sidley.com
Yolanda C. Garcia
ygarcia@sidley.com
James Heyworth
jheyworth@sidley.com
Alex J. Kaplan
ajkaplan@sidley.com
Jon Muenz
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Ian M. Ross
iross@sidley.com
Hille R. Sheppard
hsheppard@sidley.com
Heather Benzmiller Sultanian
hsultanian@sidley.com
Robert S. Velevis
rvelevis@sidley.com