Category Archives: Courts and ADR

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Delaware Court of Chancery Addresses Pleading ‘With Particularity’ Under Rule 23.1

John StigiAlejandro MorenoBy John Stigi and Alejandro Moreno on Posted in Courts and ADR
Rule 23.1 of the Delaware Court of Chancery Rules requires a plaintiff asserting a shareholder derivative action to plead “with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and the reasons for the plaintiff’s failure to obtain the action or for … Continue Reading

Second Circuit Holds that Registering to do Business in New York Under Section 1301 of the Business Corporation Law Does Not Constitute Consent to General Personal Jurisdiction in New York Courts

Sarah AbergBochan KimBy Sarah Aberg and Bochan Kim on Posted in Courts and ADR
In Chufen Chen v. Dunkin’ Brands, Inc., No. 18-CV-3087, 2020 WL 1522826 (2d Cir. Mar. 31, 2020), the United States Court of Appeals for the Second Circuit held that the act of registering as a foreign corporation under Section 1301 of the New York Business Corporation Law (“BCL”) does not constitute consent to general personal … Continue Reading

Delaware Supreme Court Confirms That Federal Forum Provision Is Facially Valid, Reversing Court of Chancery

John StigiMeilissa MikailBy John Stigi and Meilissa Mikail on Posted in Courts and ADR, Securities Litigation
In Sciabacucchi v. Salzberg, No. 346, 2019, 2020 WL 1280785 (Del. Mar. 18, 2020), the Delaware Supreme Court reversed a Delaware Court of Chancery (Laster, V.C.) decision declaring invalid a federal forum selection provision in a Delaware corporation’s charter or bylaws.  The federal forum selection provision was intended to require claims by investors under the … Continue Reading

Delaware Court of Chancery Holds that a Stockholder’s Disagreement with a Board’s Business Judgment and Intent to Pursue a Proxy Contest is Not a “Proper Purpose” for a Section 220 Demand

Jeffrey FesslerJohn StigiJustin AnslowBy Jeffrey Fessler, John Stigi and Justin Anslow on Posted in Corporate Governance, Courts and ADR
In High River Limited Partnership v. Occidental Petroleum Corp., C.A. No. 2019-0403-JRS, 2019 WL 6040285 (Del. Ch. Nov. 14, 2019) (Slights, V.C.), the Delaware Court of Chancery held that a stockholder’s mere disagreement with a business decision of a board of directors and intent to pursue a bone fide proxy contest is not a “proper … Continue Reading

Start Spreadin’ the News: California Court Says No to New York, New York; Rejects Forum Selection Clause

Steven CardozaJacqueline Gottlieb LutherBy Steven Cardoza and Jacqueline Gottlieb Luther on Posted in Courts and ADR, Mergers & Acquisitions, Securities Litigation
Sinatra may have found success in the city that never sleeps, but a California court has just made it more difficult for any party doing business with a California resident to do the same.  At least, when it comes to resolving disputes without a jury in a New York courtroom, or in the courtroom of … Continue Reading

Court Finds Cybersecurity-Related Claims Sufficient in Securities Class Action

Jonathan E. MeyerElfin NoceBy Jonathan E. Meyer and Elfin Noce on Posted in Courts and ADR, Cybersecurity, Disclosure, Securities Litigation
In the aftermath of Equifax’s data breach, a federal court recently found that allegations of poor cybersecurity coupled with misleading statements supported a proper cause of action. In its decision, the U.S. District Court for the Northern District of Georgia allowed a securities fraud class action case to continue against Equifax. The lawsuit claims the company issued … Continue Reading

Delaware Courts Address Production of Emails and Other Electronically Stored Information In Response to Section 220 Demands

Jeffrey FesslerJohn StigiJustin AnslowBy Jeffrey Fessler, John Stigi and Justin Anslow on Posted in Corporate Governance, Courts and ADR
UPDATE:  On August 5, 2020, the Delaware Supreme Court summarily affirmed the judgment of the Court of Chancery “on the basis of and for the reasons stated in its January 25, 2019 opinion.” Section 220 of the Delaware General Corporation Law, 8 Del. C. § 220, provides that any stockholder of a Delaware corporation “shall, … Continue Reading

California Court of Appeal Enforces Delaware Forum Selection Bylaw

John StigiMeilissa MikailBy John Stigi and Meilissa Mikail on Posted in Courts and ADR, Securities Litigation
In Drulias v. 1st Century Bancshares, Inc., No. H045049, 2018 WL 6735137 (Cal. App. Dec. 21, 2018), the California Court of Appeal, Sixth Appellate District, affirmed an order staying a stockholder lawsuit brought in the Superior Court of California, Santa Clara County, on forum non conveniens grounds based upon enforcement of an exclusive Delaware forum … Continue Reading

Delaware Court of Chancery Declares Ineffective Exclusive Federal Forum Provision for 1933 Act Claims

John StigiMeilissa MikailBy John Stigi and Meilissa Mikail on Posted in Courts and ADR, Securities Litigation
In Sciabacucchi v. Salzberg, C.A. No. 2017-0931-JTL, 2018 WL 6719718 (Del. Ch. Dec. 19, 2018), the Delaware Court of Chancery (Laster, V.C.) held that a forum-selection provision in a Delaware corporation’s charter or bylaws which purported to govern external investor claims not involving the internal affairs of the corporation are not authorized under Delaware law. … Continue Reading

New York Court of Appeals Rules that Civil Securities Fraud Claims Brought Under Martin Act are Subject to Three-Year Statute of Limitations

Sarah AbergKate RossBy Sarah Aberg and Kate Ross on Posted in Courts and ADR
In People v. Credit Suisse Securities (USA) LLC, No. 40, 2018 WL 2899299 (N.Y. June 12, 2018), the Court of Appeals for the State of New York ruled that the three-year statute of limitations of Section 214(2) of the New York Civil Practice Law & Rules (“CPLR”) applies to civil enforcement actions brought under the … Continue Reading

Contracts with Foreign Companies May Require a Rewrite

Hwan KimNeil PopovicBy Hwan Kim and Neil Popovic on Posted in Courts and ADR
A recent California case may force companies doing business with foreign entities to reconsider—and maybe rewrite—their contracts. In Rockefeller Tech. Invs. (Asia) VII v. Changzhou Sinotype Tech. Co., No. B272170, 2018 WL 2455092 (Cal. App. June 1, 2018), the California Court of Appeal held that parties may not contract around the formal service requirements of … Continue Reading

California Court of Appeal Enforces Delaware Forum Selection Clause Contained in Certificate of Incorporation

John StigiBy John Stigi on Posted in Courts and ADR
In Bushansky v. Soon-Shiong, 2018 Cal. App. LEXIS 493 (Cal. App. May 25, 2018), the California Court of Appeal, Fourth Appellate District, affirmed the dismissal of a shareholder derivative action brought in the Superior Court of California, San Diego County, on forum non conveniens grounds based upon an exclusive Delaware forum selection clause in the … Continue Reading

Delaware Court of Chancery Holds that Cancellation of Shares Through Merger Deprives Stockholder of Standing in Section 220 Action

John StigiRyan D. SchiedermayerBy John Stigi and Ryan D. Schiedermayer on Posted in Courts and ADR, Mergers & Acquisitions
In Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG, 2017 WL 752179 (Del. Ch. Feb. 27, 2017), the Delaware Court of Chancery (Glasscock, V.C.) clarified when a plaintiff has standing to vitiate inspection rights under Delaware General Corporation Law Section 220, 8  Del. C. § 220.  In a case of first impression, the Court decided that … Continue Reading

New York Appellate Division Revives Non-Monetary Class Action Settlement in M&A Class Action with Revised Standard of Review

John StigiChristopher BoschBy John Stigi and Christopher Bosch on Posted in Courts and ADR, Mergers & Acquisitions
In Gordon v. Verizon Communications, Inc., No. 653084/13, 2017 WL 442871 (N.Y. App. Div. Feb. 2, 2017), the Appellate Division of the Supreme Court of the State of New York, First Judicial Department (the “First Department”), reversed an order denying plaintiffs’ motion for final approval of a proposed non-monetary settlement in a shareholder class action … Continue Reading

Delaware Court of Chancery Dismisses Post-Closing Disclosure Claims for Damages, Cautioning That Such Claims Are Best Pursued Pre-Closing

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In Nguyen v. Barrett, C.A. No. 11511-VCG, 2016 WL 5404095 (Del. Ch. Sept. 28, 2016) (Glasscock, V.C.), the Delaware Court of Chancery dismissed an amended complaint seeking damages for alleged disclosure violations in connection with a tender offer that had already closed.  The Chancery Court’s opinion demonstrates the challenges plaintiffs face when they pursue non-exculpated … Continue Reading

Eleventh Circuit Holds That a Corporation Is Not Distinct From Its Agents For Purposes of a RICO Enterprise, Following Sister Circuits

Jeff KernSarah AbergBy Jeff Kern and Sarah Aberg on Posted in Courts and ADR
In Ray v. Spirit Airlines, Inc., No. 15-13792, 2016 WL 4578347 (11th Cir. Sept. 2, 2016), the United States Court of Appeals for the Eleventh Circuit held that a defendant corporation is not distinct from its own officers and employees for purposes of forming an “enterprise” under the Racketeer Influenced and Corrupt Organizations Act, 18 … Continue Reading

Delaware Court of Chancery Addresses the “Cleansing Effect” of Stockholder Approval In Post-Closing M&A Damages Actions

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In two recent decisions, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust v. Comstock, C.A. No. 9980-CB, 2016 Del. Ch. LEXIS 133 (Del. Ch. Aug. 24, 2016) (Bouchard, C.) (“Comstock”), and Larkin v. Shah, C.A. No. 10918-VCS, 2016 Del. Ch. LEXIS 134 (Del. Ch. Aug. 25, 2016) (Slights, V.C.), the Delaware Court of … Continue Reading

Seventh Circuit Criticizes Disclosure-Only M&A Litigation Settlements, Holding That Supplemental Proxy Disclosures Must Address and Correct a Plainly Material Misrepresentation or Omission

Kenneth E. RechtorisJohn StigiBy Kenneth E. Rechtoris and John Stigi on Posted in Courts and ADR, Mergers & Acquisitions
In In re Walgreen Co. Stockholder Litigation, No. 14 C 9786, 2016 WL 4207962 (7th Cir. Aug. 10, 2016) (Posner, J.), the United States Court of Appeals for the Seventh Circuit issued a highly charged opinion critical of an unopposed settlement of a stockholder class action “strike suit” which provided “nonexistent” benefits to class members … Continue Reading

Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation

John StigiJohn LandryBy John Stigi and John Landry on Posted in Courts and ADR
In In re Zagg Inc. Shareholder Derivative Action, No. 15-4001, 2016 U.S. App. LEXIS 11095 (10th Cir. June 20, 2016), the United States Court of Appeals for the Tenth Circuit held that stockholders of a Utah-based, Nevada corporation, who failed to make pre-suit demand that the corporation’s board of directors cause the corporation to file … Continue Reading

Delaware Supreme Court Holds That a Stockholder Plaintiff Must Plead a Non-Exculpated Claim to Avoid Section 102(b)(7)-Based Dismissal When Seeking Damages From Independent and Disinterested Directors

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In the consolidated appeal In re Cornerstone Therapeutics Inc., Stockholder Litigation and In re Zhongpin Stockholders Litigation, Nos. 564, 2014 and 706, 2014, 2015 Del. LEXIS 231 (Del. May 14, 2015), the Delaware Supreme Court considered for the first time the pleading burden a stockholder plaintiff must meet when seeking to recover monetary damages from … Continue Reading

California and Delaware Courts Agree: Amendments to Corporate Bylaws Do Not Apply Retroactively to Impair Pursuit of Previously Accrued Claims

John StigiMadalyn MacarrBy John Stigi and Madalyn Macarr on Posted in Corporate Governance, Courts and ADR
Two recent decisions, one from the Delaware Court of Chancery and one from the California Court of Appeal, Fourth Appellate District, refused to apply bylaws that impaired a shareholder/member plaintiff’s ability to pursue his or her claims against the corporation where the the relevant bylaw was adopted after the plaintiff’s claims accrued.… Continue Reading

Delaware Court of Chancery Rejects Share-Tracing Standing Requirement for Appraisal Petitioners

John StigiAlex KuljisBy John Stigi and Alex Kuljis on Posted in Courts and ADR, Mergers & Acquisitions
The Delaware Court of Chancery issued companion opinions clarifying Delaware’s standing requirements for appraisal petitions under 8 Del. C. § 262.  In In re Appraisal of Ancestry.com, Inc., C.A. No. 8173-VGC, 2015 WL 66825 (Del. Ch. Jan. 5, 2015), and Merion Capital LP v. BMC Software, Inc., C.A. No. 8900-VCG, 2015 WL 67586 (Del. Ch. Jan. … Continue Reading

Delaware Supreme Court Confirms Chancery Court’s Broad Authority to Impose Use Restrictions on Information Obtained From Section 220 Books and Records Inspections

John StigiJohn LandryBy John Stigi and John Landry on Posted in Corporate Governance, Courts and ADR
In United Technologies Corp. v. Treppel, No. 127, 2014, 2014 Del. LEXIS (Del. Dec. 23, 2014), the Delaware Supreme Court held that the Delaware Court of Chancery is authorized regulate how stockholders use information obtained through books and records inspections under Section 220 of the Delaware General Corporation Law (“Section 220”).  The defendant corporation, in … Continue Reading

Ninth Circuit Holds that Under Nevada Law, a Prior Stockholder’s Litigation of Demand Futility Precludes Another Stockholder From Litigating Demand Futility In a Subsequent Derivative Action

John StigiAlejandro MorenoBy John Stigi and Alejandro Moreno on Posted in Corporate Governance, Courts and ADR
In Arduini v. Hart, 2014 WL 7156764 (9th Cir. Dec. 17, 2014), the United States Court of Appeals for the Ninth Circuit considered whether the doctrine of issue preclusion prevents a stockholder from relitigating a prior adverse determination concerning demand futility in derivative action brought by a different stockholder.  Applying Nevada law, the Court held … Continue Reading
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