Justia Corporate Compliance Opinion SummariesArticles Posted in Delaware Court of Chancery
In re Ness Technologies, Inc. Shareholders Litigation
Plaintiffs, shareholders of Ness Technologies, Inc. (Ness), moved to expedite proceedings in this putative class action, which they filed to enjoin a proposed transaction through which Ness's largest shareholder, Citi Venture Capital International (CVCI), would, through a wholly owned subsidiary, acquire Ness in a cash transaction at $7.75 per share (Proposed Transaction). Plaintiffs contended that the Proposed Transaction was the product of a flawed sales process and that the members of the Board, aided and abetted by CVCI, breached their fiduciary duties to plaintiffs and the class by approving the transaction. Plaintiffs asserted both price and process claims and claims that the Board's disclosures regarding the Proposed Transaction were inadequate. The court held that plaintiffs' Motion for Expedited Proceedings was granted only to the extent that they could take expedited, but necessarily limited and focused, discovery regarding the question of whether either the Board's or the Special Committee's financial advisors were conflicted because of their relationships with CVCI. The motion was denied in all other aspects. View "In re Ness Technologies, Inc. Shareholders Litigation" on Justia Law
Roseton Ol, LLC, et al. v. Dynegy Holdings Inc.
This case arose out of a sale-leaseback transaction that occurred in 2001. On July 10, 2011, the seller-lessees' parent company announced plans for a proposed transaction whereby it would seek a new credit facility and undergo an internal reorganization. As part of a subsequent reorganization, substantially all of its profitable power generating facilities would be transferred from existing subsidiaries to new "bankruptcy remote" subsidiaries, except for two financially weakened power plants. On July, 22, 2011, plaintiffs brought this action seeking to temporarily restrain the closing of the proposed transaction on the grounds that it violated the successor obligor provisions of the guaranties and would constitute a fraudulent transfer. The court found it more appropriate to analyze plaintiffs' motion for a temporary restraining order under the heightened standard for a preliminary injunction. Having considered the record, the court held that plaintiffs have failed to show either a probability of success on the merits of their breach of contract and fraudulent transfer claims or the existence of imminent irreparable harm if the transaction was not enjoined. Therefore, the court denied plaintiffs' application for injunctive relief. View "Roseton Ol, LLC, et al. v. Dynegy Holdings Inc." on Justia Law
Frank v. Elgamal
Plaintiff brought this lawsuit to challenge the approximately $42.5 million acquisition of American Surgical Holdings, Inc. (American Surgical) by AH Holdings, Inc. Now before the court was plaintiff's interim application for an award of attorneys' fees and expenses where plaintiff contended that an award of $450,000 was appropriate under Delaware law and would compensate his attorneys for bringing this action, which he argued resulted in American Surgical's corrective disclosures in its definitive proxy statement. The court denied plaintiff's Interim Application for an Award of Attorneys' Fees and Expenses as it was premature where the amount of $450,000 was interim in nature because plaintiff's price and process claims remained viable. The court held that it would reconsider the application once plaintiff's remaining claims have been litigated. View "Frank v. Elgamal" on Justia Law
Petroplast Petrofisa Plasticos S.A. v. Ameron Int’l Corp.
This action arose from a technology-sharing relationship between plaintiffs and defendant where plaintiffs brought suit against defendant in January 2009 for, among other things, breach of contract based on defendant's alleged failure to perform its end of a bargain the parties had struck. Both parties filed cross motions for summary judgment. Having considered the parties' extensive submissions and their presentations at the argument held on March 1, 2011, the court decided to deny both motions because numerous issues of material fact remained in dispute. Nonetheless, the court made several summary judgment findings pursuant to Federal Rule of Civil Procedure 56(d) regarding certain discrete issues where the facts were without substantial controversy. View "Petroplast Petrofisa Plasticos S.A. v. Ameron Int'l Corp." on Justia Law
Kinexus Representative LLC v. Advent Software, Inc.
Plaintiffs, former shareholders and the representative and attorney-in-fact for all shareholders of Kinexus Corporation (Kinexus), commenced this action asserting claims against Advent Software, Inc. (Advent) for breach of contract and unjust enrichment arising out of a December 31, 2001 agreement entered into by Advent to acquire Kinexus. Advent subsequently moved to dismiss the action because of Kinexus' failure to prosecute and Advent argued that dismissal with prejudice was appropriate under Court of Chancery Rules 41(b) and 41(e). The court held that Advent's motion to dismiss for failure to prosecute was denied where the court was not convinced that these circumstances necessitated dismissal because of the court's preference for resolving cases on the merits and because Kinexus appeared to have renewed their efforts to diligently prosecute the matter. Accordingly, counsel were requested to confer and to promptly submit a case scheduling order so that discovery could be completed and a trial date could be established. View "Kinexus Representative LLC v. Advent Software, Inc." on Justia Law
In re Del Monte Foods Co. Shareholders Litigation
This case arose when Del Monte Foods Company announced that it had agreed to be acquired by a consortium of Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners, and Centerview Partners (collectively, Sponsors). A number of familiar entrepreneurial plaintiffs' firms filed putative class actions challenging the merger. Plaintiffs subsequently sought an interim award of attorneys' fees and expenses for causing defendants to issue supplemental disclosures and obtaining a preliminary injunction. The court held that the application for an interim fee award was granted with respect to benefits conferred by the Proxy Supplement. For those benefits, Lead Counsel was awarded fees and expenses of $2.75 million. Therefore, the court held that the application was otherwise denied without prejudice and could be renewed at a later time. View "In re Del Monte Foods Co. Shareholders Litigation" on Justia Law
Hartsel, et al. v. The Vanguard Group, Inc., et al.
This case involved a stockholder challenge to the decision of two funds within the Vanguard mutual fund complex to purchase shares of allegedly illegal foreign online gambling businesses that were publicly traded in overseas capital markets. Plaintiffs' complaint asserted both derivative and direct claims based on their allegations that defendants' actions constituted a violation of their fiduciary duties, negligence, and waste. Defendants moved to dismiss the complaint on the grounds that the court could not assert personal jurisdiction over the individual defendants named in the complaint; all plaintiffs' claims were derivative in nature and therefore, the complaint must be dismissed for plaintiffs' failure to make demand on the board of trustees or demonstrate why a demand would be futile; and the complaint failed to state a claim. The court granted defendants' motions and dismissed with prejudice all of the claims in the complaint based on the first two grounds. Consequently, the court did not address defendants' additional argument that the complaint failed to state a claim.
In Re K-Sea Transp. Partners L.P. Unitholders Litigation
This action was before the court on a motion to expedite regarding a transaction in which a Delaware limited partnership was to be acquired for either cash or a combination of cash and the acquirer's stock. Plaintiff-unitholders of the target claim that the process undertaken by the conflicts committee was deficient and therefore, legally ineffective because it failed to consider the fairness of payments made to certain conflicted parties and the independence of the conflicts committee members was tainted by a grant of unvested phantom units they received shortly before merger discussion began. Plaintiffs also contended that the directors failed to provide adequate disclosures to enable the unitholders to make an informed decision as to whether to vote for the transaction. Plaintiffs also asserted that they will suffer irreparable harm if prompt equitable relief was not granted because the general partner of the target was controlled by three allegedly single-purpose entities whose sole assets were their interests in the general partner. As a result, plaintiffs asserted that these entities would become empty shells unless they were prevented from distributing the consideration they received in the transaction. The court held that plaintiffs have shown that at least one of their claims was colorable but plaintiffs' allegations were simply to speculative to support the required showing of irreparable harm. Accordingly, the court denied plaintiffs' motion to expedite.
In re Cencom Cable Income Partners, L.P.
Plaintiffs, limited partners of Cencom Cable Income Partnership, L.P. ("Partnership"), sued defendants over the appraisal and sale of nine cable systems. In this post-trial memorandum opinion, the court addressed not only the import of the disclosures that a certain law firm, which had been retained to assure that plaintiffs' rights would be protected, had been retained to assure that the process would be "fair" to plaintiffs, but also plaintiffs' other challenges, including primarily whether the general partner manipulated to its benefit the process by which the partnership assets were valued and sold and whether approval by the limited partners of the sales process, which established a price and provided for interest on that amount following a date certain until distribution of the sales proceeds, acted to deprive plaintiffs of the right to any quarterly distributions following the start of the period during which interest would be paid. The court held that the appraisal and sale process did not deny plaintiffs the benefit of their bargain. Under the circumstances, it was fair and, to the extent that certain obligations were not precisely met, plaintiffs were not damaged. Accordingly, the court held that defendants were entitled to the entry of judgment in their favor and the dismissal of the action.
In Re Massey Energy Co.
Plaintiffs, stockholders in Massey Energy Company ("Massey"), a coal mining corporation with a controversial reputation, sought a preliminary injunction against a Merger Agreement with a mining company, with a good reputation and track record for miner safety and regulatory compliance, because the Massey Board did not negotiate to have the pending "Derivative Claims" transferred into a litigation trust for the exclusive benefit of Massey stockholders. The court held that plaintiffs had not proven that the Merger's consummation presented them with a threat of irreparable harm and therefore, denied plaintiffs' motion for preliminary injunction.