Tag Archives: Delaware

Delaware Supreme Court: What is a “Securities Claim”?

Most public company D&O insurance policies provide coverage for the corporate entity only for “Securities Claims.” But what constitutes a “Securities Claim”? That is the question the Delaware Supreme Court addressed in a recent appeal of an insurance coverage dispute in which a bankruptcy trustee had sued Verizon for breach of fiduciary duty, unlawful payment … Continue Reading

Third Circuit Finds Major Shareholder Exclusion Ambiguous

D&O insurance policies sometimes contain Major Shareholder Exclusions, precluding coverage for claims brought by shareholders’ with ownership percentages above a certain specified ownership threshold. But when is the shareholder’s ownership percentage to be determined – at the time of policy inception or at the time of the claim? This issue was among the D&O insurance … Continue Reading

Caremark Duties Include Duty Not Only to Establish Oversight Processes but Also to Monitor Them

Earlier this year, in Marchand v. Barnhill, the Delaware Supreme Court underscored that boards that fail to establish oversight procedures for their company’s mission critical functions can be held liable for breach of their Caremark duties. In an October 1, 2019 decision in the Clovis Oncology Derivative Litigation, the Delaware Chancery Court provided further perspective … Continue Reading

A Critique of the Delaware Chancery Court Decision on Federal Forum Provisions

After the U.S. Supreme Court’s March 2018 decision in the Cyan case that state courts retain concurrent jurisdiction for ’33 Act liability actions, one idea that circulated was that companies could avoid securities class action lawsuits in state court by adopting a charter provision designating a federal forum for these kinds of suits. Unfortunately, in … Continue Reading

Guest Post: No Choice of Law in Delaware Coverage Disputes?

In the following guest post, Jeremy Salzman and Kylie Tomas of Sompo International and Ommid Farashahi and Jonathan Cipriani of BatesCarey LLP discuss a recent series of Delaware court decisions in which the courts applied Delaware law in addressing insurance coverage disputes. In their article, the authors question Delaware law appropriately should have been the … Continue Reading

Delaware Federal Court Rejects Merger Objection Plaintiffs’ Mootness Fee Request

As discussed in prior posts, after the Delaware courts evinced their distaste for the type of disclosure-only settlements that had until then typically resolved merger objection lawsuits, the plaintiffs’ lawyers changed their game. They began filing their merger objection lawsuits in federal court rather than in state court, and then rather than settling the cases, … Continue Reading

D&O Insurance: Specific Litigation Exclusion Does Not Preclude Coverage for Subsequent Securities Suit

In a recent decision, the Delaware Superior Court, applying Delaware law, held that two of Pfizer’s excess D&O insurers are on the hook for their portion of costs the company incurred in defending and settling a securities class action lawsuit, despite the excess insurers’ arguments that the claim was interrelated with an earlier securities suit … Continue Reading

Cornerstone Research: After Years of Increases, Number of Delaware Appraisal Actions Decline

Between 2010 and 2016, the number of shareholder appraisal actions filed in Delaware courts increased every year, but in 2017 and again in 2018, the number of appraisal actions declined, according to a recent report from Cornerstone Research. The decline arguably is a result of recent Delaware Supreme Court decisions in which the court reversed … Continue Reading

Guest Post: Section 11 Claims May Remain in State Court; How Will Companies and D&O Carriers Respond?

As I noted at the time (here), on December 19, 2018, Delaware Vice Chancellor Later held that under Delaware law, a corporate charter provision specifying that liability actions under Section 11 of the Securities Act of 1934 must be brought in federal court are invalid and ineffective. A copy of Laster’s opinion in Sciabacucchi v. … Continue Reading

Delaware Court Holds Charter Provision Designating a Federal Forum for Section 11 Claims is Invalid

One idea circulating since the U.S. Supreme Court held in Cyan that state court Section 11 actions are not removable to federal court is that companies could avoid state court actions by adopting a federal forum bylaw or charter provision. Indeed, a number of companies recently have adopted these provisions prior to going public. Late … Continue Reading

D&O Insurance: No Coverage for Alleged Misconduct Not Undertaken in an Insured Capacity

One of the basic requirements in order for coverage to be triggered under a directors’ and officers’ liability insurance policy is that the misconduct alleged must have been undertaken by insured individuals in an “insured capacity” – that is, in their capacities as directors or officers of the insured entity. In a recent insurance coverage … Continue Reading

Delaware Law and Mandatory Shareholder Claim Arbitration Provisions

One idea that resurfaces from time to time is the suggestion that companies ought to adopt bylaw or charter provisions mandating the arbitration of shareholder claims, including claims under the federal securities laws. The current SEC Chair, Jay Clayton, has said that he does not consider the issue to be a top priority, seemingly shelving … Continue Reading

Guest Post: Back to Basics: Board and Special Litigation Committee Investigations in Shareholder Derivative Litigation

In the following guest post, Marc Casarino, a partner in the White & Williams law firm, and Doug Greene, the National Practice Leader of BakerHostetler’s Securities and Governance Litigation Team, take a look at the special litigation committee process and examine the ways in which the SLC process can be “robust, successful and efficient.” I … Continue Reading

Limits on Indemnification and Advancement for Delaware Corporations

Among the most crucial issues in the world of directors and officers liability are the related questions of indemnification and advancement. Since so many companies are incorporated in Delaware, the laws of indemnification and advancement in Delaware are particularly important with respect to scope of protection available for directors and officers. In the following guest … Continue Reading

Guest Post: From Corwin to Dell: Implications for Investors and Corporate Acquirers

As discussed in a guest post on this site last week (here), on December 14, 2018 the Delaware Supreme Court published its opinion in Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd. (here). In the following guest post, Mark Lebovitch, Christopher J. Orrico and Alla Zayenchik of the Bernstein Litowitz Berger & Grossman … Continue Reading

D&O Insurance: When Is a Claim a “Securities Claim”?

Public company D&O insurance policies typically provide coverage for the corporate entity only for “Securities Claims.” A recent case in the Delaware Superior Court involved the question of whether a bankruptcy trustee’s claim related to Verizon’s multi-billion dollar spinoff of its electronic directories business was a “Securities Claim.” In an interesting and detailed opinion dated … Continue Reading

A “Tidal Wave of Change” in Merger Objection Litigation

In response to concerns that virtually every merger transaction was attracting at least one lawsuit, Delaware’s legislature and judiciary acted to try to cut down on the merger objection litigation in the state’s courts. In 2015, Delaware’s legislature adopted a provision expressly allowing corporations organized under the state’s law to adopt bylaw provisions designating Delaware’s … Continue Reading

Guest Post: The Importance of the Business Judgment Rule

The business judgment rule is one of the important principles involved when questions of board and director liability are raised. In the following guest post, Bernard Sharfman, an associate fellow of the R Street Institute and a member of the Journal of Corporation Law’s editorial advisory board, takes a look at the way that the … Continue Reading

Del. Court Pans Fee-Shifting Portion of Forum Selection Bylaw

Many readers will recall that just a short time ago companies were actively experimenting to try to incorporate litigation management measures into their corporate bylaws. These efforts led to decisions by Delaware courts upholding both forum selection bylaws (about which refer here) and fee-shifting bylaws (refer here). Delaware’s legislature ultimately addressed these bylaw experimentation efforts … Continue Reading

Delaware Court Rejects Challenge to Litigation Funding Arrangement

Both inside and outside the United States, litigation financing has become an increasingly important part of the litigation environment. But litigation financing remains controversial, at least in certain quarters, and questions continue to be asked about whether or not it is proper or even appropriate. In a recent decision in a Delaware lawsuit between Charge … Continue Reading

Delaware Chancellor Rejects Disclosure-Only Settlement, Signals What’s Next for Merger Objection Suits

In a January 22, 2016 Delaware Court of Chancery decision that likely will prove to be significant because of the light it sheds on the future of disclosure-only settlements in merger objection lawsuits in Delaware, Chancellor Andre Bouchard rejected the proposed settlement in the litigation arising out of Zillow’s acquisition of Trulia, saying that because … Continue Reading
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