Justia Delaware Court of Chancery Opinion Summaries

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

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

After Occam Networks, Inc. merged with Calix, Inc., Plaintiffs filed an action contending that Defendants, Occam directors and others, breached their fiduciary duties by making decisions during Occam’s sale process that fell outside the range of reasonableness and by issuing a proxy statement for Occam’s stockholder vote on the merger that contained materially misleading disclosures and material omissions. Defendants moved for summary judgment. The Court of Chancery (1) granted the director defendants’ motion for summary judgment, holding that a provision in Occam’s certificate of incorporation exculpated them from liability; and (2) denied summary judgment as to the disclosure claims because genuine issues of material fact existed as to these claims. View "Chen v. Anderson" on Justia Law

Since 2007, Dimensional Associates, LLC, a private equity fund, had controlled Orchard Enterprises, Inc., a Delaware corporation. In 2010, Dimensional squeezed out the minority stockholders of Orchard. The merger consideration was $2.05 per share, but in 2012, the then-Chancellor determined that the fair value of the common stock at the time of the merger was $4.76 per share. Plaintiffs subsequently filed this breach of fiduciary action, contending that Dimensional and the directors who approved the merger should be held liable for damages. Plaintiffs also named Orchard as a defendant. Plaintiffs and Defendants filed cross motions for summary judgment. The Court of Chancery (1) denied Plaintiffs’ motion except in two respects: one of Plaintiffs’ claimed violations of Defendants' duty of disclosure was a material misrepresentation, and entire fairness was the operative standard of review with the burden of persuasion on Defendants; and (2) denied Defendants’ motions except in two respects: one of the alleged disclosure violations was factually accurate, and Orchard could not be held liable for breach of fiduciary duty or for aiding and abetting. View "In Re Orchard Enters., Inc. Stockholder Litig." on Justia Law

Plaintiffs in this case were former shareholders of McMoRan Exploration Company (MMR). Plaintiffs challenged MMR’s acquisition by Freeport-McMoRan Copper & Gold, Inc. The case settled, and the only remaining issue was an award to Plaintiff of their attorneys’ fees and expenses upon the Court of Chancery’s discretion. After a consideration of numerous factors, the most important of which was the benefits achieved by Plaintiffs for the shareholder class, the Court of Chancery concluded that the appropriate award of fees and expenses for the efforts of Plaintiffs’ attorneys was $2.4 million. View "In re McMoRan Exploration Co. Stockholder Litig." on Justia Law

This matter involved the acquisition of R&S by KBR from ENI pursuant to a stock purchase agreement (SPA). At issue was whether the entire escrow fund should be released to ENI or whether it was entitled to a portion of this fund. KBR sought a preliminary injunction of any further proceedings before the arbitrator. The court denied the motion for a preliminary injunction because the issues involved in this request were largely mooted by clarification of the parties' positions during briefing and by clarification of the law by the Supreme Court in Viacom International v. Winchell, which was decided while this matter was being briefed. View "ENI Holdings, LLC v. KBR Group Holdings, LLC" on Justia Law

In 2000, Trados Inc. obtained venture capital (VC) to support a growth strategy that could lead to an initial public offering. The VC firms received preferred stock and placed representatives on the Trados board of directors (the Board). Trados, however, failed to satisfy its VC backers. The Board subsequently adopted a management incentive plan (MIP) that compensated management for achieving a sale even if the sale yielded nothing for the common stock. In 2005, SDL plc acquired Trados for $60 million. The merger constituted a liquidation that entitled the preferred stockholders to a liquidation preference of $57.9 million. Without the MIP, the common stockholders would have received $2.1 million. With the MIP, the common stockholders received nothing. Plaintiff contended that instead of selling to SDL, the board had a fiduciary duty to continue operating Trados independently to generate value for the common stock. The Court of Chancery held that Defendants proved the decision to approve the merger was fair, as the common stock had no economic value before the merger, making it fair for its holders to receive in the merger the substantial equivalent of what they had before. Likewise, the fair value of the common stock for purposes of appraisal was zero. View "In re Trados Inc. S'holders Litig." on Justia Law

A holding company (Company) whose equity was solely owned by Defendant owned forty-three percent of M&F Worldwide (MFW). Company offered to purchase the rest of the corporation's equity in a going private merger. The merger was conditioned on both independent committee approval and a majority-of-the-minority vote. A special committee was formed, which picked its own legal and financial advisors. After the committee successfully negotiated with Company to raise its bid by $1 per share, the merger was approved by the majority of the stockholders unaffiliated with the controlling stockholder (the minority stockholders). Company, Defendant, and other directors of MFW were sued by stockholders, who alleged that the merger was unfair. The Court of Chancery granted Defendants' motion for summary judgment, holding that when a controlling stockholder merger has, from the time of the controller's first overture, been subject to (i) negotiation and approval by a special committee of independent directors empowered to say no, and (ii) approval by an uncoerced, fully informed vote of majority of the minority investors, the business judgment rule standard of review applies, under which the Court was required to dismiss the challenge to the merger in this case. View "In re MFW S'holders Litig." on Justia Law

This case arose when Martin Marietta sought to purchase all of Vulcan's outstanding shares (Exchange Offer). At issue was the meaning of confidentiality agreements entered into by both parties. The court found in favor of Vulcan on its counterclaims for breach of the non-disclosure agreement (NDA) (Count I), and the joint defense and confidentiality agreement (JDA)(Count II), and against Martin Marietta on its claim that it did not breach the NDA (Count I). Martin Marietta shall be enjoined for a period of four months from prosecuting a proxy contest, making an exchange or tender offer, or otherwise taking steps to acquire control of Vulcan shares or assets. During that period, it is also enjoined from any further violations of the NDA and JDA. Vulcan shall submit a conforming final judgment within five days, upon approval as to form by Martin Marietta. View "Martin Marietta Materials, Inc. v. Vulcan Materials Co." on Justia Law

Plaintiffs brought their Verified Complaint asserting claims for breach of contract and breach of the implied covenant of good faith and fair dealing against defendant. J.P.Morgan also asserted a claim for attorneys' fees and costs under an option agreement that J.P. Morgan and defendant entered into, which was the contract central to the dispute. Defendant moved to dismiss pursuant to Court of Chancery Rule 12(b)(6). The court held that J.P. Morgan has failed to state a claim that defendant breached the express terms of the Option Agreement and therefore, defendant's motion to dismiss was granted as to Count I. Defendant's motion to dismiss was denied as to Count II because J.P. Morgan's allegations, taken together, were sufficient to state a claim of the implied covenant. Finally, defendant's motion to dismiss was denied as to Count III where J.P. Morgan could eventually be the prevailing party in this action. View "JPMorgan Chase & Co. v. American Century Co." on Justia Law