‘A big black box’?: What to expect now that the DGCL has been amended

Delaware Business Court Insider

Amendments to the Delaware General Corporation Law approved by the legislature and Gov. John Carney become effective Aug. 1, generally addressing three areas of corporate governance in response to three Court of Chancery decisions issued within the past year.

The latest batch of changes has seen less unanimous support from the corporate bar than the amendment process usually does, with one area in particular drawing criticism: In response to Moelis & Co. shareholder litigation decided in February, Section 122 will now allow corporate boards to use their discretion to sign agreements giving governance rights to shareholders they previously could not have under Section 141(a).

Continue reading here.

The next generation of potential judges is losing interest in state supreme courts. Here’s why

Law.com

On average, jurists who serve on the highest state courts in the country are paid a little more than $200,000 per year.

That’s at the low end of what the biggest firms are currently paying their first-year associates, according to a report on National Law Journal 500 firms.

Those who have served on their states’ courts of last resort say that while judges have always known the move into a public service role from other positions in the legal field comes with a pay cut, they’re worried that that gap is widening to the point of turning away attorneys who have the potential to serve their state well and decreasing retention on the bench.

Continue reading here.

Administrators express hope that admission changes will fill need for Delaware attorneys

Delaware Business Court Insider

A judicial report was recently released detailing steps that have been taken in the past two years to increase diversity on Delaware’s bench and bar, the bulk of which involve creating a pipeline of future Delaware attorneys through increased access to education and bar admission.

That has included lowering the bar cut score by two points, cutting back on essay questions, reducing the length of clerkships required, narrowing the checklist of legal proceedings prospective attorneys need to sit in on and lowering late application fees.

Those involved with the bar admissions process say more time is needed to say for sure whether the changes will lead to more attorneys practicing in Delaware, but that early signs have been promising.

Continue reading here.

‘Match’ opinion stresses Delaware courts’ focus on investors, scrutiny of controlling shareholders

Delaware Business Court Insider

Delaware courts are not making it easier to get the business judgment rule applied in corporate transaction cases.

On top of more specific guidance about what exactly makes a director committee independent in the context of Kahn v. M&F Worldwide Cleansing cleansing, that’s been the corporate bar’s big takeaway from the Supreme Court’s ruling on Match Group Inc. shareholder litigation.

Continue reading here.

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.

Continue reading here.

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.

Continue reading here.

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.

Continue reading here.

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.

Continue reading here.

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.

Continue reading here.

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

Delaware Business Court Insider

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.

Continue reading here.