Justia Delaware Court of Chancery Opinion Summaries

The court issued a post-trial opinion holding that the loan agreement between plaintiff and National was unconscionable and that National violated the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. At issue is the court's award of attorneys' fees and costs to plaintiff. The court concluded that, because plaintiff prevailed on her TILA claims, and because plaintiff's other claims arose out of the same common core of facts as her TILA claims, the fee award extends to all of plaintiff's attorneys' fees and costs. The court also concluded that the bad faith with which National and its counsel acted throughout the litigation provides an independent basis for awarding plaintiff her attorneys' fees. Finally, the court rejected National's various procedural arguments. Therefore, plaintiff is entitled to the full amount sought and, given the seriousness of the misconduct in which National and its counsel engaged, they are jointly and severally liable for the fee award. View "James v. National Financial, LLC" on Justia Law

Tuscan filed suit against defendant, alleging conflict with and misconduct by defendant surrounding his termination from Tuscan. Defendant asserts Tuscan’s records indicate Tuscan’s majority stockholder and director, Anne Jacobi, misappropriated and misspent Tuscan’s funds. Defendant seeks leave to file a third party complaint against Jacobi, which in turn seeks an accounting, for Jacobi to repay any misappropriated funds to Tuscan, and for Jacobi to cause Tuscan to remit to defendant his share of Tuscan’s assets, or in the alternative to appoint defendant as Tuscan’s receiver. The court denied the motion. The court concluded that, because this case is still in the pleading stage and no immediate relief is sought, and Jacobi has not alleged any prejudice from joinder other than being forced to address the claims against her, it is hard to imagine any prejudice from consolidation. The court asked the parties to provide their positions on consolidating Tuscan v. Capaldi with the claims against Jacobi in letters of no more than two pages, to be submitted along with any exceptions to the draft report. View "Tuscan Construction, Inc. v. Capaldi" on Justia Law

Plaintiff, a stockholder, filed suit alleging corporate wrongdoing involving, among others, directors of BioScrip, Inc. Plaintiff made allegations intended to demonstrate that demand against the allegedly faithless directors would be futile. Before service of the complaint could be made, the anticipated change in board composition took place, such that the majority of the current directors are not the subject of the allegations of the complaint. Defendants moved to dismiss. The court agreed that, in these particular circumstances, plaintiff must demonstrate demand futility with respect to the new - that is, the current - board of directors. In light of this determination, which involves an application of the Delaware demand requirement to circumstances heretofore unlitigated, the court found it appropriate to defer a ruling on defendants’ motions to dismiss sufficient to allow plaintiff an opportunity to consider whether it should move to amend the complaint. View "Park Emp. and Retirement Bd. Emp. Annuity and Benefit Fund v. Smith" on Justia Law

In 2013, the Company completed a merger that gave rise to appraisal rights. Petitioners, owners of shares of common stock of the Company, seek appraisal. The court concluded that the fair value of the Company on the closing date was $17.62 per share; the legal rate of interest, compounded quarterly, shall accrue on this amount from the date of closing until the date of payment; the parties shall cooperate on preparing a final order for the court; and, if there are additional issues for the court to resolve before a final order can be entered, the parties shall submit a joint letter within two weeks that identifies them and recommends a schedule for bringing this case to conclusion, at least at the trial court level. View "In Re: Appraisal of Dell Inc." on Justia Law

Plaintiffs, a current and a former inmate at the JTVCC, filed suit challenging the constitutionality of a Delaware statute, 11 Del. C. 4322(c) & (d), that denies inmates access to certain Department of Correction policies and procedures. The court concluded that plaintiffs have not satisfied their burden of establishing standing because the complaint does not allege a legally protected interest affected by, or an injury-in-fact caused by, Sections 4322(c) & (d). Even if plaintiffs had standing, plaintiffs' constitutional challenges lack merit. The court concluded that the DOC is not constitutionally obliged to promulgate internal policies and procedures; the single-subject provision at issue is not implicated by Section 4322; and plaintiff's motion to amend is futile. Accordingly, the court granted defendants' motion to dismiss and denied plaintiffs' motions for summary judgment and to amend. View "Hall v. Coupe" on Justia Law

The court reviewed letters submitted regarding the scope of issues to be tried during the trial scheduled in this matter. Plaintiffs contend that two issues related to Count I of their Verified Complaint should be decided at that trial. Issue No. 1: Does the Stockholders Agreement provide that the price to exercise the Option is the purchase price of a bona fide, third party purchaser . . . (assuming arguendo the Option still exists), or is it some lower formula price as Peter consistently has maintained? Issue No. 2: Have the statements or conduct of [Plaintiffs] or anyone at the Company breached the Stockholders Agreement (or induced such a breach)? The court agreed with defendants' contention that plaintiffs have mooted all of Count I by conceding via letter that the Option has not been triggered by any “act, event, or occurrence” to date. To the extent that plaintiffs seek reargument of the May 10 ruling, such a motion is untimely under Court of Chancery Rule 59(f). View "Edwards v. Edwards" on Justia Law

The Company, a developmental biopharmaceutical company, which has researched and developed a drug called NORTHERA, filed a class action alleging breaches of fiduciary duty against defendants in connection with the sale of Chelsea to Lundbeck through a tender offer and short-form merger (the Transaction). Plaintiffs contend that the Board acted in bad faith by instructing its financial advisors to ignore one set of projections in opining on the fairness of the Transaction, and by choosing to disregard a second set of projections before recommending the Transaction to Chelsea’s stockholders. The court granted defendants' motion to dismiss for failure to state a claim under Court of Chancery Rule 12(b)(6). The Board, after deliberation and in consideration of the sale of the Company, instructed its advisors not to consider projections that its assets would increase in value, years in the future, on speculation that the FDA would approve one of its products for currently-prohibited uses, or would remove a competing drug from the market altogether. Both sets of projections involved contingencies over which the Company had no control, and which might never come to pass. Such actions do not, on their face, plead a conceivable breach of the Directors loyalty-based duty to act in good faith. No other grounds conceivably leading to a finding of bad faith are pled. Accordingly, the court affirmed the judgment. View "In re Chelsea Therapeutics Int'l Ltd. Stockholders Litig." on Justia Law

Before the events giving rise to this litigation, the eight members of the Board were aligned to varying degrees with either plaintiff Lewis C. Pell or defendant Robert C. Kill. Through a Board Reduction Plan, the Defendant Directors sought to preserve the legacy-Uroplasty directors' control over the Board and neutralize the threat of Pell's proxy contest. Although the point is contested, the court assumed for purposes of analysis that the Defendant Directors sought to preserve their control not to extract personal benefits, but rather for the selfless purpose of overseeing a thorough and deliberative process after the Annual Meeting to re-constitute the Board with independent directors that they would identify, vet, and select. The court held that, when facing an electoral contest, incumbent directors are not entitled to determine the outcome for the stockholders. Stockholders elect directors, not the other way around. Even assuming that the Defendant Directors acted for an unselfish purpose, they still acted inequitably. Therefore, the court issued a preliminary injunction enjoining the Company from implementing the portion of the Board Reduction Plan that otherwise would become effective at the Annual Meeting. View "Pell v. Kill" on Justia Law

Dell Inc. completed a merger that gave rise to appraisal rights. Fourteen appraisal petitioners were mutual funds sponsored by T. Rowe Price & Associates, Inc. (T. Rowe) or institutions that relied on T. Rowe to direct the voting of their shares (collectively, Petitioners). Petitioners held their shares through a custodial bank, which was a participant member in a trust company, which held Petitioners’ shares in the name of Cede & Co., which, for purposes of Delaware law, was the holder of record. Cede was constrained to vote Petitioners’ shares as T. Rowe directed and fulfilled its obligation through a chain of authorizations. Although T. Rowe opposed the merger, its voting system generated instructions to vote Petitioners’ shares in favor of it. Ultimately, Cede voted Petitioners’ shares in favor of the merger. Petitioners sought appraisal in favor of the merger. The Court of Chancery held (1) because the holder of record did not dissent as to the shares for which Petitioners sought appraisal, the dissenter requirement was not met of these shares; and (2) therefore, Petitioners’ shares did not qualify for appraisal, and Petitioners remained entitled to the merger consideration without an award of interest. View "In re Appraisal of Dell Inc." on Justia Law

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