Justia Delaware Court of Chancery Opinion Summaries

This matter involved a master limited partnership (MLP) created with interested transactions involving the general partner as part of its business model. Plaintiff was a limited unitholder in an MLP, Defendant TC Pipelines, LP (TCP). Plaintiff filed this action challenging a conflicted transaction in which the parent of TCP’s general partner, TC Pipelines GP, Inc. (TCP-GP), sold a pipeline asset to TCP. Defendants filed a motion to dismiss, arguing that the sale was approved by a special committee, which created a conclusive presumption that the transaction was fair and reasonable to TCP. The Court of Chancery granted the motion, holding that, under the circumstances, the committee’s approval precluded judicial scrutiny of the substance of the transaction. View "Employees Ret. Sys. of City of St. Louis v. TC Pipelines GP, Inc." on Justia Law

Plaintiff, a stockholder of The ADT Corporation (ADT), challenged a series of decisions by ADT’s board of directors (the Board) for the alleged purpose of appeasing an activist investor and avoiding a proxy contest. Prior to the filing of Plaintiff’s complaint, another ADT stockholder, in Ryan v. Gursahaney, filed a complaint challenging the Board’s decisions. The Court of Chancery dismissed the complaint under Court of Chancery Rule 23.1. Plaintiff’s complaint in this case largely mirrored the operative complaint in Ryan. The Court of Chancery dismissed Plaintiff’s complaint under Rule 23.1, holding that Plaintiff failed to distinguish his complaint from the Court’s decision in Ryan sufficiently to avoid dismissal. View "Binning v. Gursahaney" on Justia Law

RayTrans Holdings, Inc., through the Chapter 7 Trustee for the bankruptcy estate of RayTrans Holdings, cross-claimed against RayTrans Distribution Services, Inc., Echo Global Logistics, Inc., and Echo/RT Holdings, LLC (collectively, Defendants) seeking avoidance of certain transfers among Defendants, an accounting, and injunction prohibiting any further transfers of RayTrans assets by Defendants until all creditors of RayTrans Holdings were paid in full. The Court of Chancery granted Defendants’ motion to dismiss the cross-claims, holding (1) the Trustee does not have standing to sue for fraudulent transfer on behalf of RayTrans Distribution; (2) RayTrans Distribution’s transfer of assets was not fraudulent; and (3) the Trustee’s request for leave to amend the cross-claims is denied. View "Spring Real Estate, LLC v. Echo/RT Holdings, LLC" on Justia Law

The underlying action in this case took place in a California court and resulted in a jury award of compensatory damages of $22.3 million in favor of Sierra Railroad Company and against Patriot Rail Company LLC. The jury also awarded punitive damages and exemplary damages in favor of Sierra. Sierra moved to amend the California judgment to add Gary Marino, the former Chairman, President and CEO of Patriot Rail, as a judgment debtor. Marino subsequently commenced this action seeking advancements of attorneys’ fees and expenses for the claims asserted against him in the post-judgment motion. The Court of Chancery granted summary judgment in favor of Marino, holding that Marino was entitled to some, but not all, of the fees and expenses that he has and will incur defending against the post-judgment motion. View "Marino v. Patriot Rail Co. LLC" on Justia Law

In 2012, a private equity firm purchased a trucking company now owned by Buyer through a merger transaction. Plaintiff initiated this action as the representative of the selling securityholders (Securityholders) to recover a preclosing tax refund. Buyer, in response, asserted several counterclaims. Securityholders sought to dismiss Buyer’s counterclaims. The Court of Chancery (1) denied Securityholders’ motion to dismiss Buyer’s common law fraud claim insofar as that claim asserted fraud based on extra-contractual statements made to Buyer before it entered the merger agreement, as Buyer was not prevented from asserting a claim for fraud based on representations outside the four corners of the merger agreement; (2) granted Securityholders’ motion to dismiss Buyer’s claim under the Delaware Securities Act and Buyer’s claim of unilateral mistake, as these claims failed to state a claim for relief; and (3) granted Plaintiff’s motion for summary judgment concerning the tax refund claim, as Buyer had no defense to Plaintiff’s motion. View "FdG Logistics LLC v. A&R Logistics Holdings, Inc." on Justia Law

RED Capital Investment L.P. and George Polk (together, Plaintiffs) filed this suit claiming that RED Parent LLC (the Company) violated their rights to inspect certain Company books and records pursuant to the Company’s amended and restated operating agreement and 6 Del. C. 18-305(a)-(b). The request was made by Polk, a member of the Company’s board of managers. The Court of Chancery agreed with Plaintiffs and ordered the Company to allow Plaintiffs to inspect the requested books and records, holding (1) Polk’s request was made in his representative capacity on behalf of RED Capital as a member and in his individual capacity as manager; and (2) Polk was entitled to the requested books and records. View "RED Capital Inv. L.P. v. RED Parent LLC" on Justia Law

Amalgamated Bank requested to inspect the books and records of Yahoo! Inc., stating that its purpose was to investigate the hiring and subsequent firing of Yahoo’s chief operating officer. Yahoo produced some, but not all, of the requested documents. Amalgamated subsequently filed this action pursuant to section 220 of the Delaware General Corporation Law demanding to inspect the books and records. This post-trial decision ordered a production of some of the documents identified in the demand subject to an Incorporation Condition setting forth that the resulting documents will be deemed incorporated by reference in any derivative complaint that Amalgamated may file relating to the subject matter of the demand. View "Amalgamated Bank v. Yahoo! Inc." on Justia Law

Four stockholders of Trulia, Inc. filed class action complaints alleging that Trulia’s directors had breached their fiduciary duties in approving the Zillow Inc.’s acquisition of Trulia in a stock-for-stock merger at what Plaintiffs alleged was an unfair exchange ratio. The parties eventually reached an agreement-in-principle to settle under which Trulia agreed to supplement materials provided to its stockholders that would include additional information that theoretically would allow the stockholders to be better informed in exercising their franchise rights. The Court of Chancery declined to approve the proposed settlement, holding that the terms of this proposed settlement were not fair or reasonable because the proposed settlement did not afford Trulia’s stockholders any meaningful consideration to warrant providing a release of claims to the defendants. View "In re Trulia, Inc. Stockholder Litig." on Justia Law

Plaintiff brought his derivative action on behalf of a Corporation against the Corporation’s CEO. The parties entered into a settlement agreement that embodied much of the relief sought by Plaintiff. Under the settlement agreement, however, the Corporation committed to buy Plaintiff’s corporate stock at the price Plaintiff paid fifteen years ago. This opportunity was not available to other Corporation stockholders. Other Corporation stockholders objected to the settlement. The Court of Chancery refused to approve the settlement, holding that Plaintiff’s achievements for the benefit of the Corporation were significantly outweighed by the concerns raised by the unique benefits accruing solely to Plaintiff. View "Smollar v. Potarazu" on Justia Law

Plaintiff filed this action against three outside directors of nominal defendant EXCORP, Inc., alleging breach of fiduciary duty, among other claims. The directors filed a motion to dismiss. Recognizing that he had not pled a non-exculpated claim against the directors, Plaintiff proposed a dismissal without prejudice. The directors, in turn, sought a dismissal with prejudice that would bind all potential plaintiffs. The Court of Chancery dismissed the claims against the outside directors with prejudice as to the named plaintiff only, holding (1) Plaintiff failed to establish good cause for a without-prejudice dismissal; and (2) the Due Process Clause prevents a judgment in a derivative action that is entered before the stockholder plaintiff acquires authority to litigate on behalf of the corporation from binding anyone other than the named stockholder plaintiff. View "In re EZCORP INC. Consulting Agreement Derivative Litig." on Justia Law