Texas’ new business courts are one month away from opening their doors on September 1. Over the last few weeks, Texas has been preparing for that day. Texas Governor Greg Abbott recently appointed the inaugural set of business court judges, and the Texas Supreme Court finalized the business court’s rules and filing fees. Companies that do business in or that otherwise have ties to Texas should also start planning now for the strategic questions that may arise when business courts become an option in just a few short weeks.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_32.jpg606833Angela C. Zambranohttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngAngela C. Zambrano2024-08-08 09:01:482024-08-07 16:04:29Strategic Questions to Consider as Business Courts Open in Texas
Prince Rogers Nelson – better known by the mononym Prince, or for a time by a really cool symbol – was a world-famous musician, known for playing up to 27 instruments. He wrote dozens of hit songs: Purple Rain, When Doves Cry, Little Res Judicata, er, Red Corvette, the list goes on. But as discussed in McMillan v. Nelson, a recent decision from the Delaware Court of Chancery, what he did not write was a will.
In City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings, Inc., the Delaware Supreme Court provided additional guidance on the contours of the MFW framework and its application – a timely reminder that stockholders (and courts) are looking at the big picture when assessing disclosures in the MFW context.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/07/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_31.jpg606833Ian M. Rosshttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngIan M. Ross2024-07-31 09:02:232024-07-30 14:43:46Look at the Big Picture: A Message to Boards Seeking Business Judgment Rule Protection
The Delaware Court of Chancery is of course a court of equity, focusing often on governance and contractual rights. The Court of Chancery also periodically issues damages opinions, and on May 28, 2024, Vice Chancellor Lori Will did just that in Brown v. Matterport, Inc. At issue in Matterport was whether the plaintiff stockholder—following an earlier trial ruling that the defendant corporation had wrongfully (albeit in good faith) prohibited the stockholder from selling his shares—was entitled to damages and, if so, the proper method for computing damages. Vice Chancellor Will held that damages were appropriate based on the facts at issue, and in issuing a damages award of approximately $79 million, the Court undertook a rigorous approach in determining both the appropriate method to compute damages as well as the inputs for that calculation.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Kedrick Glinskihttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngKedrick Glinski2024-07-18 09:02:162024-07-16 10:25:14The Delaware Court of Chancery Undertakes Exacting Calculations of Equitable Damages and Will Award Tens of Millions of Dollars? Yes, It Does That, Too.
On Thursday, the Delaware Supreme Court issued a long-awaited decision regarding the validity and enforceability of certain provisions in a company’s advance notice bylaws. The Kellner v. AIM Immunotech Inc. decision clarifies how the Delaware courts will evaluate claims challenging an advance notice bylaw. Critically, it confirms that different standards attach when a plaintiff challenges (i) the language of a company’s bylaw (a so-called facial or validity challenge) in the abstract, absent a proxy contest versus (ii) a board’s decision to adopt, amend, or enforce an advance notice bylaw during a proxy contest (a so-called as applied challenge). This decision provides helpful guidance to practitioners and will hopefully limit the wave of facial challenge litigation that followed the Kellner trial court ruling.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2023/05/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_11.jpg606833Beth E. Berghttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngBeth E. Berg2024-07-15 14:34:212024-07-15 14:34:21Sunshine Breaking Through the Clouds: Delaware Supreme Court Sheds Light on Standard of Review for Challenges to Advance Notice Bylaws
Vice Chancellor Glasscock recently affirmed in BV Advisory Partners, LLC v. Quantum Computing Inc., C.A. No. 2022-0719-SG, that more is not always better when it comes to pleading claims. In ruling on motions to dismiss filed by all defendants, the Court dismissed six Defendants for failure to plead personal jurisdiction under Rule 12(b)(2), and also dismissed eight of ten causes of action pled against the remaining Defendants for failure to state a claim under Rule 12(b)(6). In each of the Court’s holdings dismissing both Defendants and causes of action (summarized below), the Court identified the various ways in which Plaintiff relied to its detriment on conclusory allegations and impermissible bootstrapping. This ruling serves as a reminder to litigants that the Court of Chancery is well-equipped to strip down complaints bloated by tangential claims and theories of liability that are not sufficiently supported by alleged facts.
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. Bartlett2024-07-11 09:02:572024-07-10 17:18:56Kitchen-Sink Pleading Will Not Fly In Delaware
In Barbey v. Cerego, Inc., the Delaware Supreme Court affirmed a post-trial judgment denying relief to the plaintiffs in a Section 225 action, despite what the court called the “unusual and troubling circumstances of [the] case.” The Supreme Court’s decision illustrates the limitations of Section 225 proceedings. The underlying Court of Chancery decision shows that voiding board actions may in some cases have no practical effect, even when a board acts in the context of entity-altering corporate transactions.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/11/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_26.jpg606833Robin E. Wechkinhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobin E. Wechkin2024-07-08 09:08:422024-07-03 10:09:30Director Wins In Claim of Improper Removal – But Still Loses
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Strategic Questions to Consider as Business Courts Open in Texas
Texas’ new business courts are one month away from opening their doors on September 1. Over the last few weeks, Texas has been preparing for that day. Texas Governor Greg Abbott recently appointed the inaugural set of business court judges, and the Texas Supreme Court finalized the business court’s rules and filing fees. Companies that do business in or that otherwise have ties to Texas should also start planning now for the strategic questions that may arise when business courts become an option in just a few short weeks.
(more…)
Angela C. Zambrano
Dallas
azambrano@sidley.com
Natali Wyson
Dallas
nwyson@sidley.com
Chelsea A. Priest
Dallas
cpriest@sidley.com
Purple Rain on Non-Managing LLC Members’ Parade
Prince Rogers Nelson – better known by the mononym Prince, or for a time by a really cool symbol – was a world-famous musician, known for playing up to 27 instruments. He wrote dozens of hit songs: Purple Rain, When Doves Cry, Little Res Judicata, er, Red Corvette, the list goes on. But as discussed in McMillan v. Nelson, a recent decision from the Delaware Court of Chancery, what he did not write was a will.
(more…)
Jon Muenz
New York
jmuenz@sidley.com
Look at the Big Picture: A Message to Boards Seeking Business Judgment Rule Protection
In City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings, Inc., the Delaware Supreme Court provided additional guidance on the contours of the MFW framework and its application – a timely reminder that stockholders (and courts) are looking at the big picture when assessing disclosures in the MFW context.
(more…)
Ian M. Ross
Miami
iross@sidley.com
Natalie A. Piazza
Dallas
npiazza@sidley.com
Arthur E. Adler
New York
aadler@sidley.com
The Delaware Court of Chancery Undertakes Exacting Calculations of Equitable Damages and Will Award Tens of Millions of Dollars? Yes, It Does That, Too.
The Delaware Court of Chancery is of course a court of equity, focusing often on governance and contractual rights. The Court of Chancery also periodically issues damages opinions, and on May 28, 2024, Vice Chancellor Lori Will did just that in Brown v. Matterport, Inc. At issue in Matterport was whether the plaintiff stockholder—following an earlier trial ruling that the defendant corporation had wrongfully (albeit in good faith) prohibited the stockholder from selling his shares—was entitled to damages and, if so, the proper method for computing damages. Vice Chancellor Will held that damages were appropriate based on the facts at issue, and in issuing a damages award of approximately $79 million, the Court undertook a rigorous approach in determining both the appropriate method to compute damages as well as the inputs for that calculation.
(more…)
Kedrick Glinski
Summer Associate
kedrick.glinski@sidley.com
Alex J. Kaplan
New York
akaplan@sidley.com
Sunshine Breaking Through the Clouds: Delaware Supreme Court Sheds Light on Standard of Review for Challenges to Advance Notice Bylaws
On Thursday, the Delaware Supreme Court issued a long-awaited decision regarding the validity and enforceability of certain provisions in a company’s advance notice bylaws. The Kellner v. AIM Immunotech Inc. decision clarifies how the Delaware courts will evaluate claims challenging an advance notice bylaw. Critically, it confirms that different standards attach when a plaintiff challenges (i) the language of a company’s bylaw (a so-called facial or validity challenge) in the abstract, absent a proxy contest versus (ii) a board’s decision to adopt, amend, or enforce an advance notice bylaw during a proxy contest (a so-called as applied challenge). This decision provides helpful guidance to practitioners and will hopefully limit the wave of facial challenge litigation that followed the Kellner trial court ruling.
(more…)
Beth E. Berg
Chicago
bberg@sidley.com
Charlotte K. Newell
New York
cnewell@sidley.com
Loren Braswell
Houston
lbraswell@sidley.com
Arthur E. Adler
New York
aadler@sidley.com
Kitchen-Sink Pleading Will Not Fly In Delaware
Vice Chancellor Glasscock recently affirmed in BV Advisory Partners, LLC v. Quantum Computing Inc., C.A. No. 2022-0719-SG, that more is not always better when it comes to pleading claims. In ruling on motions to dismiss filed by all defendants, the Court dismissed six Defendants for failure to plead personal jurisdiction under Rule 12(b)(2), and also dismissed eight of ten causes of action pled against the remaining Defendants for failure to state a claim under Rule 12(b)(6). In each of the Court’s holdings dismissing both Defendants and causes of action (summarized below), the Court identified the various ways in which Plaintiff relied to its detriment on conclusory allegations and impermissible bootstrapping. This ruling serves as a reminder to litigants that the Court of Chancery is well-equipped to strip down complaints bloated by tangential claims and theories of liability that are not sufficiently supported by alleged facts.
(more…)
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Director Wins In Claim of Improper Removal – But Still Loses
In Barbey v. Cerego, Inc., the Delaware Supreme Court affirmed a post-trial judgment denying relief to the plaintiffs in a Section 225 action, despite what the court called the “unusual and troubling circumstances of [the] case.” The Supreme Court’s decision illustrates the limitations of Section 225 proceedings. The underlying Court of Chancery decision shows that voiding board actions may in some cases have no practical effect, even when a board acts in the context of entity-altering corporate transactions.
(more…)
Robin E. Wechkin
Seattle
rwechkin@sidley.com
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