Special Committee – Delaware Docket

Chancery Court Reaffirms Application of Business Judgment Rule from M & F Worldwide While Dismissing Unsupported Complaint

Oct 25 2021

By Michael Waller and Molly Mugford

In Franchi v. Firestone, et al., C.A. No. 2020-0503-KSMJ (Del. Ch. May 10, 2020), Defendants’ moved to dismiss Plaintiffs’ action challenging a going-private transaction claiming that the Special Committee set up by the Board of Directors (“Board”) to analyze the merger lacked independence and failed to exercise its duty of care, and the vote of the minority stockholders was not informed. The Chancery Court granted Defendants’ motion to dismiss, relying on the business judgment rule and finding that Plaintiffs’ claims were unsupported and insufficient to undermine “the cleansing effect of the MFW conditions.”

DELAWARE COURT OF CHANCERY DENIES MOTIONS TO DISMISS CLAIMS ALLEGING BREACHES OF FIDUCIARY DUTY IN ALLEGED CONTROLLING STOCKHOLDER TENDER OFFER

Nov 03 2020

By: David Forney and Caitlin Velasco

In In Re Coty Inc. Stockholder Litigation, C.A. No. 2019-0336-AGB (Del. Ch. Aug. 17, 2020), the Delaware Court of Chancery (the “Court”) denied a Rule 12(b)(6) motion to dismiss claims brought by stockholders (the “Plaintiffs”) of Coty Inc. (“Coty”) against its directors and de facto controlling stockholder, JAB Holding Company S.à.r.l. and its affiliates (“JAB”), over JAB’s 2019 partial tender offer, whereby it increased its ownership stake in Coty from 40% to 60%. The Plaintiffs alleged that JAB opportunistically timed and priced the tender offer so that it undervalued Coty and structured the tender offer in a coercive manner.

CHANCERY COURT CLARIFIES MFW PROTECTIONS MUST BE IMPLEMENTED PRIOR TO ANY SUBSTANTIVE ECONOMIC NEGOTIATIONS

Sep 30 2020

By: David Forney and Claire Suni

In In re HomeFed Corporation Stockholder Litigation, C.A. No. 2019-0592-AGB (Del. Ch. July 13, 2020), the Delaware Court of Chancery (the “Court”) found that the controlling stockholder of HomeFed Corporation undertook substantive economic negotiations with its minority stockholders in connection with a proposed squeeze-out merger transaction prior to implementing the procedural protections set forth in Kahn v. M&F Worldwide Corp. (“MFW”). As a result, the Court ruled that the appropriate standard of review for the plaintiff’s claims of breach of fiduciary duty against the controlling stockholder and the board of directors was entire fairness, and not business judgment. The Court further found that two of the company’s directors were not independent and therefore could not avail themselves of exculpatory language in the company’s certificate of incorporation. The Court denied in full the defendants’ motion to dismiss under Rule 12(b)(6) for failure to state a claim for relief.

Delaware Court of Chancery Rejects Business Judgment Rule Protection for Stockholder-Negotiated Redemption

Aug 04 2020

By: Joanna A. Diakos Kordalis and Monica Romero

In In re Dell Tech. Inc. Class V. Stockholders Litig., Consol. C.A. No. 2018-0816-JTL (Del. Ch. Jun. 11, 2020), the Delaware Court of Chancery denied defendants’ motion to dismiss the breach of fiduciary duty claim asserted against them finding that the complaint alleged facts that made it “reasonably conceivable” that the safe harbor established by Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014), would not apply and defendants would not get the benefit of the business judgment rule.

Court of Chancery Sides with Papa John’s Founder on Books and Records Inspection Demand

May 08 2019

By Scott Waxman and Will Grossenbacher

John Schnatter’s falling-out with Papa John’s, the company he founded in the back of his father’s bar in Louisville, Kentucky, has been highly publicized since the dispute began in late 2017. Now, the Delaware Court of Chancery has waded into the fray. In John Schnatter v. Papa John’s International, Inc., C.A. No. 2018-0542-AGB (Del. Ch. Jan. 15, 2019), the Court ruled in favor of Schnatter, granting his demand to inspect four categories of the Company’s books and records, subject to certain limitations and exclusions.

Tag:Special Committee