Why corporate attorneys say Delaware courts aren’t pushing away their clients

Delaware Business Court Insider

Elements of Delaware law that affect large swaths of corporate litigation are in flux: Delaware’s application of entire fairness is evolving, as is how it defines conflict and control in transactions. The Court of Chancery has reviewed and invalidated advance notice bylaws, and lawyers have asked for guidance on just how much say shareholders get in converting out of Delaware.

All of those issues have raised questions that attorneys are waiting for the Delaware Supreme Court to address, which could mean guidance corporate lawyers give their clients in the interim may need to be revisited later. Litigators—especially those on the defense side—have expressed frustration, and some say Delaware now stands in shareholder-friendly opposition to Nevada’s deference to corporations.

But behind the scenes, corporate practitioners say, there’s been no signs that there will be any significant corporate exodus from Delaware in the near future, and it’s a concern that’s being closely watched but is rarely being mentioned in the boardroom, indicating companies like Tesla, TransPerfect and TripAdvisor are in the minority despite their conversions to Texas and Nevada grabbing attention.

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Here’s how Elon Musk’s $56B executive comp loss could reverberate

Delaware Business Court Insider

Shortly after Chancellor Kathaleen St. J. McCormick issued her post-trial opinion finding Elon Musk’s $56 billion compensation agreement with Tesla should be rescinded, Musk posted on his X (formerly Twitter) app one possible takeaway: “Never incorporate your company in the state of Delaware.”

For litigators who practice in the Court of Chancery or otherwise represent Delaware corporations or their shareholder, there may be more nuanced guidance that the opinion may offer for future litigation or how to avoid it.

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Four lessons from Delaware corporate litigation you should have learned in 2023

Delaware Business Court Insider

While another year in the Delaware courts has gotten sporadic attention from one-off appearances of household names and national political controversies, the litigation events of 2023 that will likely have the most impact moving forward are, as usual, the ones that garner attention from the small bar that litigates the world’s biggest business deals.

The Court of Chancery and Delaware Supreme Court hammered home these points multiple times throughout 2023, signaling to litigators that they may want to keep them in mind as they head into the new year.

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How may US judges vet experts for jurors? The new evidence rule set to take effect is sparking debate

Delaware Law Weekly

An upcoming change to a federal evidence rule has garnered support from those who say judges have not been consistently stringent in evaluating expert testimony post-Daubert, but critics say it’s a push for an unfair defense bar advantage billed as a crackdown on junk science at trial.

The update to Rule 702, set to go into effect officially on Dec. 1, has raised the issue of whether it’s a long overdue way to hold judges to an evidentiary standard they should have been following for decades or if it encourages them to cross over into the jurors’ domain.

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SCOTUS’ Purdue Pharma position could shake up Boy Scout settlement, objectors say

Delaware Business Court Insider

The U.S. Supreme Court has only agreed to consider one Chapter 11 bankruptcy plan that includes billions in settlement funds and contested release terms, but its decision—affecting the opioid settlement—has the potential to make or break a second mass tort resolution, lawyers said.

Both Purdue Pharma and the Boy Scouts of America have approved plans that release the claims of third parties without requiring those parties’ consent. In both cases, objectors say bankruptcy courts don’t have the authority to approve plans that include that type of release.

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What’s fair enough is fair: Entire fairness decisions show M&A perfection not required

Delaware Business Court Insider, Uncategorized

Several recent decisions of the Delaware Court of Chancery—and the state Supreme Court’s response to them—have signaled that for corporate defendants, the threat of having the entire fairness standard applied doesn’t mean all hope is lost when defending a transaction challenged by shareholders.

In a little less than 18 months, two Chancery cases have followed a similar path: entire fairness applied in a case where a party had connections to companies on both sides of a deal. The case survived the motion to dismiss stage and went to trial. The court found that neither the conflicted party’s involvement in the negotiation process nor the price the acquiring corporation ultimately agreed to pay made for a deal unfair enough to overturn. And as of this summer, the Supreme Court agreed.

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‘An astounding admission’: Risk of Murdoch testimony, High threshold for Dominion said to spur settlement

Delaware Law Weekly

Trial attorneys said Wednesday that the $787.5 million settlement between Dominion and Fox was likely motivated more by odds that stacked up in Dominion’s favor over time than any last-minute development.

The settlement was reached Tuesday afternoon, after a jury had been selected in the Delaware Superior Court case. The staggering settlement amount, attorneys who have been following the case say, signals Fox in particular was trying to avoid a trial, possibly because of what might come out when Fox News leadership and hosts took the stand.

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Evidence against Fox News in Del. case may support strongest-ever argument for actual malice

Delaware Law Weekly

Less than two weeks out from trial, those following Dominion Voting Systems’ defamation case generally agree: the odds of avoiding a finding of actual malice aren’t looking good for Fox News.

Whether or not Fox News executives acted with actual malice is the main issue a jury is expected to address in the case, with Superior Court Judge Eric M. Davis already settling the question of falsity in Dominion’s favor in an opinion. 

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FTX attorneys’ billing far outpaces hourly rates seen in 2008 mega bankruptcies

Delaware Business Court Insider

Attorneys and consultants involved in the FTX bankruptcy have asked the District of Delaware bankruptcy court to approve billed hours and expenses totaling just under $37 million for the first six weeks of Chapter 11 proceedings.

Those proposed fee applications, the last of which was filed Feb. 27, cover both the FTX debtor entities and the committee representing creditors, with the largest segment by far being the $25.1 million billed by FTX lead counsel Sullivan & Cromwell across two filings. Those fees haven’t been approved or denied and could end up differing from the amount attorneys actually are paid.

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Delaware bar leaders: Admission changes remove obstacles, maintain high standards

Delaware Law Weekly

Attorneys are expressing hope that a series of changes to Delaware’s bar exam and admission process will remove unnecessary obstacles to practicing law in the state while keeping intact the high admission standards it’s known for.

Lowering the exam cut score by two points, offering the exam twice a year and cutting back the essay section and its possible topics significantly are overall positive, leaders in Delaware’s legal education community said, but they may be the first of many changes in a more dramatic overhaul of the country’s most exclusive bar.

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