Justia Delaware Court of Chancery Opinion Summaries

This dispute concerned an underlying breach of fiduciary duty case that was coordinated with an appraisal proceeding, both arising out of a take-private transaction involving Dole Food Company, Inc. (Dole). During the proceedings, Defendants identified a corporation as their expert witness on the subject of Dole’s value at the time of the transaction. Plaintiffs objected, arguing that an expert witness must be a biological person. The Court of Chancery agreed with Plaintiffs, holding that an expert witness must be a biological person, and therefore, Defendants could not rely on the corporation that they designated to serve as their expert witness. View "In re Dole Food Co., Inc. Stockholder Litig." on Justia Law

Plaintiff served as the Chairman and CEO of Smashburger Master LLC until his termination in early 2014. Smashburger subsequently informed Plaintiff that it was redeeming Plaintiff’s units in the company. Plaintiff disagreed with Smashburger’s valuation of the units and demanded that Smashburger provide him with documents from specific categories of business and financial records. Smashburger refused Plaintiff’s request on the grounds that it had already redeemed all of Plaintiff’s units, thus terminating Plaintiff's status as a member of Smashburger and precluding him from properly demanding inspection. Plaintiff then filed a complaint against Smashburger. The Court of Chancery granted Smashburger’s motion to dismiss, concluding that Plaintiff was no longer a member of Smashburger when he demanded inspection, and Delaware law does not provide pertinent inspection rights to former LLC members. View "Prokupek v. Consumer Capital Partners LLC" on Justia Law

After David H. Murdock, the CEO and controlling stockholder of Dole Food Company, Inc., acquired all the shares of Dole common stock that he did not already own, Petitioners pursued their statutory right to an appraisal of their shares of Dole common stock. During discovery, Dole sought information about any valuations of Dole common stock that Petitioners prepared, reviewed, or considered when buying to selling Dole common stock or when seeking appraisal. Petitioners objected to the document requests. Dole subsequently served notices of deposition for each Petitioner pursuant to Court of Chancery Rule 30(b)(6) and identified the valuations as a topic of questioning. During the depositions, Petitioners’ counsel instructed the Rule 30(b)(6) witnesses not to testify about the valuations on the basis of relevance. Dole moved to compel production of the valuation-related information and for supplemental Rule 30(b)(6) depositions. The Court of Chancery granted the motion, holding that, under the circumstances, Petitioners’ failure to provide the discovery was not substantially justified. View "In re Appraisal of Dole Food Co., Inc." on Justia Law

The underlying case involved a deadlock relating to the management of the business of TransPerfect Global, Inc. and its wholly owned subsidiaries. Here, Plaintiff filed a motion for the appointment of a interim custodian until a trial could be held to resolve, among other things, Plaintiff’s petition for the appointment of a custodian. The Court of Chancery denied the motion, as Plaintiff failed to establish that the appointment of a temporary custodian was urgently needed to serve during the interim between now and trial for the immediate protection of the corporation. View "In re TransPerfect Global, Inc." on Justia Law

In 2004, KKR & Co. LP (KKR) acquired KKR Financial Holdings LLC (KFN) in a stock-for-stock merger. Plaintiffs, stockholders of KFN, challenged the merger by filing a class action complaint, asserting breach of fiduciary duty claims against the members of the KFN board and KKR. The Court of Chancery dismissed the action for failure to state a claim for relief, holding (1) Plaintiffs’ fiduciary duty claim against KKR premised on the theory that KKR was a controlling stockholder of KFN failed, as KKR did not control the board of KFN when it approved the merger; and (2) Plaintiffs’ fiduciary duty claim against the directors of KFN failed because the board’s approval of the merger was subject to business judgment review. View "In re KKR Fin. Holdings LLC Shareholder Litig." on Justia Law

A class of stockholders of Rural/Metro Corporation (Rural) filed a class action against RBC Capital Markets, LLC (RBC) for aiding and abetting breaches of fiduciary duty by the board of directors of Rural in relation to a merger between Rural and Warburg Pincus, LLC. The post-trial decision held RBC liable to Plaintiffs but did not fix an amount of damages suffered by the class. This opinion quantified the amount of damages for which RBC was liable, setting the amount of RBC’s liability to the class at $75,798,550, which represented eighty-three percent of the total damages. The court also awarded pre- and post-judgment interest at the legal rate from June 30, 2011, until the date of payment. View "In re Rural/Metro Corp. Stockholders Litig." on Justia Law

Plaintiff-individual, who owned common stock of Defendant-corporation, sent a letter to Defendant seeking to inspect certain of Defendant’s books and records pursuant to 8 Del. C. 220. Plaintiff’s ultimate goal in pursuing her books and records request was to determine whether there was a basis to bring a derivative suit based on wrongs alleged in a previous derivative action. In defense to the request Defendant alleged that Plaintiff’s contemplated derivative action would be time-barred. The Court of Chancery entered judgment in favor of Defendant, holding that because Plaintiff’s contemplated derivative action would be time-barred and because no other purpose had been identified, Plaintiff failed to prove a proper purpose for the books and records inspection, which was an essential element of her case under section 220. View "Wolst v. Monster Beverage Corp." on Justia Law

Plaintiff owned debt securities issued by Defendant, a Delaware corporation. Plaintiff sued Defendant, asserting breach of fiduciary duty claims derivatively against Defendant’s board of directors (Board) and Defendant’s controller (Controller). Specifically, Plaintiff alleged that Defendant was insolvent and that the individual defendants, members of the Board, should wind down Defendant’s business and dissolve the company, but instead, the Board had transferred value preferentially to its Controller. Plaintiff also asserted fraudulent transfer claims directly against the Controller and its affiliate. Defendants filed a motion to dismiss the complaint. The Court of Chancery (1) denied the motion to the extent that Plaintiff challenged specific transfers of value to the Controller and its affiliate, as the complaint adequately stated a claim in this regard; and (2) granted the motion to the extent that Plaintiff challenged the Board’s business decision to take on greater risk, as the complaint did not plead facts that would be sufficient to rebut the business judgment rule. View "Quadrant Structured Prods. Co., Ltd. v. Vertin" on Justia Law

Seaport Village Operating Company, LLC (the “Company”) sought to recover from Seaport Village Ltd. (“Limited”) attorneys’ fees and expenses that the Company incurred in two lawsuits against Limited. The Company’s limited liability company agreement included a fee-shifting provision providing that the prevailing party in disputes arising out of the Agreement is entitled to recover reasonable attorneys’ fees in connection with the prosecution or defense of the action. Limited argued that because the Company did not sign the agreement, it was not a party to the agreement. The Court of Chancery awarded the Company fees and expenses, holding that, under Delaware law, the Company, although not a signatory, was a party to the operating agreement and could therefore enforce the fee-shifting provision against Limited. View "Seaport Village Ltd. v. Seaport Village Operating Co., LLC" on Justia Law

First Citizens BancShares, Inc. (FC North), a bank holding company incorporated in Delaware and headquartered in Raleigh, North Carolina, adopted by forum selection bylaw (the “Forum Selection Bylaw”) the same day it announced it had entered into a merger agreement to acquire First Citizens Bancorporation, Inc. The Forum Selection Bylaw selected as the forum the federal or state courts of North Carolina instead of the state or federal courts of Delaware. The City of Providence filed complaints challenging as invalid the Forum Selection Bylaw and asserting various claims against the FC North board of directors concerning the proposed merger. The Court of Chancery granted Defendants’ motions to dismiss both complaints for failure to state a claim, holding (1) the Forum Selection Bylaw is facially valid; and (2) it is not unreasonable, unjust, or inequitable to enforce the Forum Selection Bylaw in this case. View "City of Providence v. First Citizens Bancshares, Inc." on Justia Law