June 2018 – Delaware Docket

CHANCERY COURT SETS FAIR VALUE IN APPRAISAL ACTION BELOW THE VALUATIONS SUGGESTED BY THE PARTIES

Jun 29 2018

In Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., C.A. No. 11448-VCL (Del. Ch. May 21, 2018), the Delaware Court of Chancery denied a motion for reargument of its earlier decision setting the appraisal value of the shares of Aruba Networks, Inc. (“Aruba” or the “Company”) at the time of its acquisition by Hewlett-Packard Company (“HP”). Although the merger agreement offered $24.67 per share of the Company, and the Company ultimately suggested that the fair value of the Company’s shares was $19.75, the Court of Chancery set the fair value of the Company’s shares at $17.13. In denying the motion for reargument, the Court of Chancery reiterated its position that the trial court must independently determine the fair value of the shares in an appraisal proceeding and that the market price of a publicly traded firm can itself be an accurate measurement of fair value.

MOTION FOR A TEMPORARY RESTRAINING ORDER OF CONTROLLING STOCKHOLDERS DENIED AS NO EXTRAORDINARY CIRCUMSTANCES FOUND

Jun 26 2018

By Annette Becker and Caitlin Velasco

In CBS Corporation, et al. v. National Amusements, Inc., et al., Civil Action No. 2018-0342-AGB, the Court of Chancery denied a motion for temporary retraining order brought by CBS Corporation (“CBS”) and five independent directors of CBS (the “Plaintiffs”) to restrain controlling shareholders, Shari Redstone, her father Sumner Redstone, National Amusements, Inc. (“NAI”), NAI Entertainment Holdings LLC, and the Sumner M. Redstone National Amusements Trust (the “Defendants”) from taking certain actions that would interfere with the governance of CBS or other proposed actions of the board of directors of CBS. The Court found that there was no precedent for the type of relief requested by Plaintiff and that no extraordinary circumstances existed to warrant the grant of such relief. Read More

Chancery Court Allows Complaint Alleging Waste of Corporate Assets to Move Forward to Discovery as a Result of Extreme Facts

Jun 26 2018

By Annette Becker and Rashida Stevens

In R.A. Feuer on behalf of CBS Corporation v. Sumner M. Redstone (C.A. No. 12575-CB (Del. Ch. April 19, 2018)), R. A. Feuer (“Plaintiff”), a stockholder of CBS Corporation (“CBS”) brought a derivative suit against the directors of CBS Corporation (“Board”) alleging corporate waste, bad faith, and unjust enrichment for compensation in excess of $13 million dollars paid to Sumner Redstone, the controlling stockholder, former executive chairman and chairman emeritus of CBS (“Redstone”). The payments were made under an extreme set of circumstances that resulted in the claims partially surviving a Rule 23.1 motion to dismiss for failure to make a pre-suit demand on the board and a 12(b)(6) motion to dismiss for failure to state a claim upon which relief could be granted. Read More

CHANCERY COURT FINDS REQUEST FOR SPECIFIC ENFORCEMENT OF A PARTNERSHIP INTEREST CALL RIGHT IS PROVED BY CLEAR AND CONVINCING EVIDENCE

Jun 19 2018

By Scott E. Waxman and Joseph Phelps

In Simon-Mills II, LLC v. Kan Am USA XVI Ltd. Partnership, No. 8520-VCG (Del. Ch. May 30, 2018), the plaintiffs, a number of entities organized under an umbrella real estate investment trust and referred to as “Simon,” sought specific performance of a call right applicable to partnership interests under a joint venture agreement (the “JVA”) with the defendant Kan Am, a group of Delaware limited partnerships. In exchange for the called units, Simon proposed to issue to Kan Am units (the “Successor Units”) that it argued had “substantially the same” rights as the originally contemplated consideration units (the “Original Units”). The Court of Chancery concluded that the Successor Units did indeed have “substantially the same” rights as the Original Units, within the meaning of the JVA, and that Simon proved by clear and convincing evidence that it was entitled to specific performance of the call right. Read More

Manager is Entitled to Books and Records in Capacity as Manager, and as a Member Under the LLC Agreement, Despite Assertion of Improper Purpose

Jun 15 2018

By: Scott E. Waxman and Douglas A. Logan

In William T. Obeid v. Gemini Real Estate Advisors, LLC, et al., (C.A. No. 2017-0510-JTL (Del. Ch. June 5, 2018)) the Court ruled the manager of a limited liability company had an essentially unfettered right to access the books and records of the company.

Misunderstanding Regarding Dates Does Not Provide Grounds to Reform Earn-Out Provision in Purchase Agreement, Rules Chancery Court

Jun 15 2018

By Scott E. Waxman and H. Corinne Smith

In Glidepath Limited v. Beumer Corporation, the Delaware Court of Chancery ruled against the sellers of a limited liability company, holding that the purchase agreement should not be reformed to correct the dates comprising the earn-out period for the transaction. The Court reasoned that while the seller was in fact mistaken about the terms of the agreement, there was neither a mutual mistake nor a unilateral mistake with knowing silence; additionally, the Court was unable to reform the contract because the parties did not come to a specific prior understanding that differed from the written agreement.

Chancery Court Denies In Part Motion to Dismiss Breach of Contract and Breach of Fiduciary Duties Claims

Jun 14 2018

By Shoshannah Katz and Priya Chadha

In Feldman v. Soon-Shiong, et al. (C.A No. 2017-0487-AGB), the Delaware Court of Chancery denied in part and granted in part a motion to dismiss claims involving, among other things, breach of contract and breach of the fiduciary duty of loyalty, following a defendant’s withdrawal of $47 million from a company bank account.

Archive:June 2018