Justia Delaware Court of Chancery Opinion Summaries

This action arose from Selling Source, LLC’s acquisition of assets from Interpid Investments, LLC. Intrepid sought an order requiring Selling Source to pay it thirty percent of the aggregate distributions disbursed in several fiscal quarters preceding an “earn-out adjustment.” The Court of Chancery entered summary judgment in favor of Selling Source and against Intrepid, except that Selling Source’s motion was denied to the limited extent that Interpret sought recovery based on cash distributions, holding that that there was no dispute of material fact and that controlling contractual provisions were not ambiguous and must be read as Selling Source argued. View "Intrepid Invs., LLC v. Selling Source, LLC" on Justia Law

This matter involved a former presidential yacht whose owner (the LLC) and its sole member (together, Plaintiffs) co-induced Defendant by means of fraud to extend the owner a loan with the yacht as collateral. Under the operative loan documents, Defendant had the option to purchase up to a 100 percent interest in either the LLC or the yacht itself. Plaintiffs brought this case to enjoin Defendant from pursuing its rights in connection with the loan. Once the fraud came to light, Plaintiffs entered a stipulated order in default judgment (the judgment order). The judgment order provided that Defendant was entitled to exercise its rights under the loan documents, specifically including the option, and provided for the appointment of an independent counsel to determine outstanding current and potential liabilities of the LLC and the yacht. The judgment order retained the Court of Chancery’s jurisdiction to hear disputes arising out of the interpretation and enforcement of the order. The parties disagreed about the conclusions of the independent counsel concerning liabilities that may constitute liens against the LLC or the yacht. The Court of Chancery held (1) Defendant must exercise its option within sixty days of this letter opinion at the default option price as defined by the judgment order; and (2) the deduction for the liabilities used in reaching the default option price are as stated in the report of the independent counsel. View "Sequoia Presidential Yacht Group LLC v. FE Partners, LLC" on Justia Law

In a related case, a receiver was appointed for Silicon Valley Innovation Company, LLC (SVIC), whose only assets were contingent claims against SVIC’s former officer and directors. The receiver filed two cases involving two defendants who were the plaintiffs in this case. Plaintiffs requested from SVIC advancement for their legal expenses by virtue of their previous employment agreements with SVIC. After the request was denied Plaintiffs commenced this advancement action. The parties ultimately stipulated to Plaintiffs’ entitlement to advancement and the validity of the employment agreements. At issue in this case was to what extent Plaintiffs’ advancement claims were entitled to priority as against the other claims asserted against SVIC in the receivership. The Court of Chancery held that SVIC was entitled to entry of an order declaring that Plaintiffs’ advancement claims were not entitled to administrative priority but, rather, should be treated on par with the claims of other unsecured creditors and paid pro rata. View "Andrikopoulos v. Silicon Valley Innovation Co., LLC" on Justia Law

This matter involved the creation of a subsidiary, AbbVie, Inc., by Abbott Laboratires, the transfer of assets and liabilities to AbbVie and, as part of that transfer, mutual general releases of liability between the entities. Plaintiffs, in their capacity as AbbVie stockholders, sought to pursue derivatively a claim against certain of both Abbott’s and AbbVie’s directors for breach of fiduciary duties in connection with their approval of the releases. The Court of Chancery granted Defendants’ motions to dismiss, holding (1) Plaintiffs lacked statutory standing to derivatively sue Defendants on behalf of AbbVie for breach of duty in connection with the releases because they were not AbbVie stockholders at the time of the alleged wrong; and (2) the equitable considerations were too tenuous to support the equitable exception to 8 Del. C. 327 set forth in Shaev v. Wyly. View "In re AbbVie Inc. Stockholder Derivative Litig." on Justia Law

Plaintiff, a stockholder of Orbitz Worldwide, Inc., asserted four derivative claims challenging the fairness of the terms of a services agreement Orbitz entered into with a group of entities affiliated with Travelport Limited. Plaintiff alleged that Travelport owned forty-eight percent of Orbitz and thus controlled Orbitz when it signed the agreement. Plaintiff’s primary claims were that Travelport breached its fiduciary duty as a controlling stockholder by causing Orbitz to enter into the agreement on unfair terms and that Orbitz’s directors breached their fiduciary duties by approving the agreement. Defendants moved to dismiss the claims for failure to make a demand or to adequately plead demand is excused and for failure to state a claim upon which relief may be granted. The Court of Chancery granted the motions to dismiss, holding that demand was not excused as to any of Plaintiff’s derivative claims because Plaintiff failed to raise a reasonable doubt that at least half of the directors on Orbitz’s board could have exercised impartial business judgment in responding to a demand. View "Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera" on Justia Law

Pending litigation asserted claims related to compensation awarded to Defendants. Specifically, a compensation committee with various ties to the controlling shareholder family awarded executive compensation and benefits to the patriarch of that family and his son. In addition, a board dominated by members of the controlling family approved non-executive director compensation, which accrued to three family-member directors with qualifications and attendance records that were called into question. Plaintiff filed this action to remedy alleged harms primarily through damages and disgorgement. Defendants moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The Court of Chancery granted Defendants’ motions to dismiss, holding that although the amount of compensation and board composition raised some concern, that concern did not justify judicial intervention in this case. View "Friedman v. Dolan" on Justia Law

Petitioner Meyer Natural Foods LLC (Meyer) was a managing member and owner of a fifty-one percent capital interest in Premium Natural Beef LLC (PNB). Respondents owned twelve percent, twelve percent, and twenty-five percent capital interests of PNB. Petitioner asked for judicial dissolution of PNB, citing an inability to continue the business “in conformity with the parties’ original agreement.” Respondents opposed dissolution, stating concerns about prejudice in litigation ongoing in another forum and asserting that the business remained reasonably practicable. Petitioner moved for partial summary judgment on the issue of dissolution, arguing that continued operation was not reasonably practicable and that Respondents had sought rescission, effectively consenting to dissolution. The Court of Chancery granted partial summary judgment, concluding (1) it was no longer reasonably practicable to continue to operate PNB in accordance with the LLC agreement’s stated purpose; and (2) while Respondents had not agreed to dissolution, the equities weighed in favor of dissolution. View "Meyer Natural Foods LLC v. Duff" on Justia Law

In 2012, the Court of Chancery concluded in a Memorandum Opinion that Defendant Simon Michael had breached his fiduciary duties as a director of Plaintiff Shocking Technologies, Inc. In the Memorandum Opinion, the Court asked counsel to submit a form of implementing order. That did not occur, and judgment was not entered. Therefore, Michael lost the opportunity to appeal. The Court of Chancery vacated the Memorandum Opinion on the grounds that Michael’s expectation of appellate review was frustrated because of events not within his control. View "Shocking Technologies, Inc. v. Michael" on Justia Law

This dispute concerned the question of whether a secondary stock offering at an unusually high price, demanded by private equity investors that owned 44 percent of a corporation’s stock and facilitated by the directors that they appointed, impermissibly allowed select shareholders to benefit to the detriment of the corporation. From as early as 2012 complaints were filed related to the sale of stock in June 2011. Plaintiffs in the instant derivative action demanded futility based on the composition of the board at the time of the earlier-filed complaints. Plaintiffs asserted claims for breach of fiduciary duties, aiding and abetting, and unjust enrichment. In light of the investors’ contractual right to sell and the absence of a demonstrable basis for recovery, the Court of Chancery dismissed Plaintiffs’ claims for failure to state a claim. View "In re Molycorp, Inc. Shareholder Derivative Litig." on Justia Law

This action concerned a transaction in which Vivendi S.A. divested its controlling equity position in Activision Blizzard, Inc.. The transaction (“the Restructuring”) restructured Activision’s governance profile and stockholder base. The Lead Plaintiff and his attorneys (Lead Counsel) challenged the Restructuring. Before trial, the parties entered into a Settlement, and Lead Counsel sought court approval for the settlement. Thereafter, three objectors appeared. The first objector objected to the Settlement itself and the other two sought a fee award for their counsel. The Court of Chancery approved the Settlement, awarded $72.5 million to Lead Counsel, authorized Lead Counsel to make a $50,000 payment to the Lead Plaintiff from their award, and denied any fee award to the objectors’ counsel. View "In re Activision Blizzard, Inc. Stockholder Litig." on Justia Law