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In a significant early ruling, one of Texas’s newly established Business Courts addressed a key procedural question: whether pre-existing cases may be removed to the specialized forum. Judge Bill Whitehill’s October 30, 2024 decision in Energy Transfer LP v. Culberson Midstream LLC held that, regardless of subject matter, cases filed before September 1, 2024 must remain in their original courts.Continue Reading No Move to Greener Pastures: Texas Business Court Holds Parties May Not Remove Pre-September 1, 2024 Cases to New Court System

Inside and outside counsel should know that the way they guide clients through legal and business issues may need to change based on a recent Ninth Circuit case governing the protections afforded to those communications.[1] The following update and insights will help you mitigate against the risk of attorney-client emails being produced in litigation: Continue Reading SCOTUS (Almost) Weighs in on Attorney-Client Privilege for Dual Purpose Communications: 5 Practical Tips to Protect Privilege

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 Chancery addressed the salutary effect of stockholder approval on the standard of review to be applied when evaluating damages claims in post-closing merger litigation.  The Delaware Supreme Court first recognized this effect in Corwin v. KKR Financial Holdings, LLC, 125 A.3d 304, 309 (Del. 2015), holding that “[w]hen a transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies.”  But, since Corwin, the precise meaning of the phrase “not subject to the entire fairness standard” — and thus the scope of Corwin’s holding — had not been addressed.  Comstock and Larkin do so, with Larkin extending Corwin’s holding the furthest.  Larkin declares that fully informed, uncoerced stockholder approval changes the standard of review in post-closing litigation to the more deferential business judgment rule in all instances save one:  when the presence of a controlling stockholder triggers entire fairness review, in which case the entire fairness standard remains applicable.
Continue Reading Delaware Court of Chancery Addresses the “Cleansing Effect” of Stockholder Approval In Post-Closing M&A Damages Actions

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 claims against past and present directors (including one-half of the corporation’s board of directors), could not litigate those claims derivatively.  The Court rested its decision on Nevada’s exculpation statute, Nev. Rev. Stat. § 78.138(7), which protects directors and officers of Nevada corporations from personal liability to the corporation when the statute’s requirements are met.  According to the Court, the complaint did not plead a non-exculpated claim, and so did not show that the current directors faced a risk of liability sufficient to render them self-interested such that a pre-suit demand on the board would have been futile.  Hence, the lack of pre-suit demand required dismissal.  The decision confirms the extensive personal liability protection Nevada affords officers and directors of Nevada corporations.  It also illustrates how, by broadly limiting director and officer liability, Nevada further allocates to boards of directors (as opposed to stockholders) the power to control the corporation’s decision to litigate.
Continue Reading Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation