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

An employer terminated an employee, who was represented by a union. The union grieved the termination and, in accordance with a collective bargaining agreement, the matter was submitted to arbitration. An arbitrator ordered the employee reinstated and directed that the employee be credited with benefits that were lost as a result of the termination, including the payment of bonuses for safety and attendance. When the employer did not pay these bonuses to the employee, the union filed an unfair labor practice charge with the Public Employment Relations Board (PERB). The PERB concluded that safety and attendance bonuses were within the language and scope of the arbitrator’s award. The employer appealed, arguing that the PERB substituted its judgment improperly to modify or to interpret an ambiguous, and thus unenforceable, arbitration award. The Court of Chancery affirmed the decision of the PERB, holding that the bonuses were unambiguously awarded and thus fell within the plain language of the arbitration award, and therefore, the PERB’s decision, whether or not entitled to deference in this context, must be sustained. View "State, Del. Transit Corp. v. Amalgamated Transit Union, Local 842" 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

The parties in this case were two members of a Delaware LLC that was created to hold a subsidiary operating a wind farm on the island of Maui in Hawaii. Defendant filed an arbitration demand in Hawaii based on its understanding of the operative LLC agreement. In response, Plaintiff filed suit in the Court of Chancery seeking to enjoin the Hawaii arbitration. After the initiation of this litigation, Defendant filed a motion to compel arbitration in Hawaii. Defendant argued that the Court of Chancery should dismiss this litigation in favor of the pending Hawaii action. The Court of Chancery concluded that the parties agreed in the LLC agreement that both arbitration and questions of arbitrability shall be undertaken in a Hawaii court, and therefore, this action must be stayed or dismissed in favor of Defendant’s action currently pending in Hawaii. View "Kahuku Holdings, LLC v. MNA Kahuku, 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

Plaintiff was a senior in the nursing program at Delaware State University (DSU) when she was dismissed for consuming a half of a margarita while on break during a clinical program. Plaintiff filed suit seeking reinstatement in the nursing program. The Court of Chancery granted relief, holding (1) DSU dismissed Plaintiff for academic reasons; (2) because Plaintiff was not fully informed of the charges against her or the severity of the consequences, she was not validly removed from the nursing program; and (3) Plaintiff was duly excluded from the clinical course but not from the nursing program. View "Jenkins v. Del. State Univ." on Justia Law

A former officer and director of two Delaware companies filed an action for mandatory advancement from those companies of the legal fees and expenses he incurred in underlying litigation between the parties in a Pennsylvania federal court, seeking indemnification from January 2013. Defendants filed a motion to dismiss, contending that Plaintiff lacked standing to pursue advancement and indemnification from them because he was entitled to and had been receiving mandatory advancement from his new employer or client through at least the end of 2012. Defendants contended that because Plaintiff had incurred no out-of-pocket expenses, he had no standing to seek advancement from them. The Court of Chancery (1) granted the motion to dismiss as to any legal fees and expenses incurred since January 2013 that had been paid by Plaintiff’s current employer or client on the ground that Plaintiff lacked standing to pursue those claims; and (2) denied the motion to dismiss with respect to any fees and expenses incurred since January 2013 that had not been paid by the co-indemnitor, holding that Plaintiff was entitled to advancement from at least one defendant that clearly owed a mandatory advancement and indemnification obligation to Plaintiff. View "Pontone v. Milso Indus. Corp." on Justia Law

Defendants, collectively referred to as “InterDigital,” and LG Electronics, Inc. entered into a non-disclosure agreement, titled “Agreement Governing Confidential Settlement Communications (the NDA), after LG filed a demand for arbitration with the International Centre for Dispute Resolution. InterDigital claimed that the parties did not intend to prevent the submission of pre-NDA evidence to the arbitral tribunal and disclosed in its brief to the tribunal alleged settlement communications. LG then filed this action seeking injunctive relief compelling InterDigital to withdraw its brief, claiming that InterDigital breached the NDA by submitting the documents to the arbitrators. InterDigital moved to dismiss LG’s complaint in favor of arbitration, asking the Court of Chancery to exercise its discretion under the doctrine established in McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co. to dismiss the action in favor of the earlier-filed arbitral proceeding. The Court of Chancery dismissed the action in favor of the earlier-filed arbitral proceeding under the McWane doctrine, concluding that this case met the McWane doctrine’s requirements. View "LG Elecs., Inc. v. Interdigital Commc’ns, Inc." on Justia Law