Fiduciary Duties

Delaware Supreme Court Declines to Hold that Default Fiduciary Duties are Owed in LLCs

By Fox Rothschild LLP on December 30, 2012

The issue of whether default fiduciary duties apply to Delaware LLCs when the LLC agreement is silent on the matter is an open issue in Delaware…

In the recent case of Gatz Properties LLC v. Auriga Capital Corp., No. 148, 2012 (Del. Nov. 7, 2012), the Delaware Supreme Court affirmed the decision of

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Jurisdiction Over Manager Of Delaware Limited Liability Partnership Denied–Lack Of Statutory Authority

By Sheldon Rennie on November 30, 2012

It is doubtless troubling to New Media that Delaware law provides no statutory basis for exercising jurisdiction over the manager of a Delaware limited liability partnership for breaches of fiduciary duty in the course of his work for the partnership, absent acts taken in Delaware itself in furtherance of the alleged wrongdoing. But this is

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Delaware Supreme Court Affirms Substantial Judgment and Hundreds of Millions of Dollars in Fees for Breach of Fiduciary Duty

By Fox Rothschild LLP on August 31, 2012

On August 27, 2012, the Delaware Supreme Court, in a lengthy, 110 page opinion, affirmed the Court of Chancery’s judgment of over $2 billion in damages in connection with a breach of fiduciary duty claim relating to the sale of a company. The Supreme Court also affirmed the award of attorneys’ fees totaling $300 million. …

Delaware LLC Controlling Member Held Liable for Fiduciary Breaches

By Sheldon Rennie on February 29, 2012

In the case of Auriga Capital Corporation v. Gatz Properties, LLC, C.A. No. 4390-CS (Del. Ch. Jan. 27, 2012), the Court of Chancery reinforced the notion that a majority and managing member of a limited liability company can be held liable for breach of fiduciary duty in connection with the member’s management and…

Appraisal Actions Must Be Instituted Separately From Claims of Wrongdoing Against Directors and Officers, With One Exception

By Sheldon Rennie on February 29, 2012

It is not uncommon for shareholders who seek appraisal of their shares, pursuant to Section 262 of the Delaware General Code (“DGCL”) in objection to a merger, to also pursue claims of wrongdoing against the directors or officers of the merging corporation (i.e. claims for breach of fiduciary duty, fraud, etc.). This post will address…

Court Reinforces Principle that in Most Circumstances Appraisal is the Exclusive Remedy in Connection With a Short Form Merger

By Sheldon Rennie on January 31, 2012

On January 10, 2012, in the case of In Re Appraisal of the Aristotle Corporation, the Delaware Court of Chancery addressed an issue of first impression with respect to the standing of stockholders, who dissented to a short form merger under Section 253 of the Delaware General Corporation Law (“DGCL”) and perfected their appraisal…

Interclick, Inc.’s Board of Directors Sued in Class Action Complaint

By Fox Rothschild LLP on November 30, 2011

In the case of Siamak “Sam” Elghanian v. Interclick, Inc., et al., C.A. No. 7066 (Del. Ch. 2011), the shareholders of interclick, Inc. (“interclick”) filed a class action complaint arising out of a decision of Interclick’s board of directors to facilitate a sale of interclick to Yahoo! Inc. For a copy of the verified…

Andatee China Marine Fuel Services Corporation’s Shareholders Assert Class Action Complaint

By Fox Rothschild LLP on November 30, 2011

In the case of George Durgin v. Andatee China Marine Fuel Services Corporation, et al., C.A. No. 7074 (Del. Ch. 2011), the shareholders of Andatee China Marine Fuel Services Corporation (“Andatee”) filed a class action complaint to enjoin the going private takeover of Andatee by the Company’s Chief Executive Officer and majority shareholder, An…

Pharmasset, Inc.’s Board of Directors Sued in Class Action Complaint

By Sheldon Rennie on November 30, 2011

On November 29, 2011, the shareholders of Pharmasset, Inc. filed a class action complaint against the company’s board of directors for alleged breach of fiduciary duties arising out of the board’s attempt to sell the company to Gilead Sciences, Inc. The counts alleged are: (i) breach of fiduciary duties against all individual defendants; and (ii)…

Challenges to Director Elections, Appointments, Removals or Resignations Under Section 225 of the DGCL

By Sheldon Rennie on July 26, 2011

Section 225 of the Delaware General Corporation Law (“DGCL”) provides a mechanism through which shareholders, directors or officers of a corporation can challenge the appointment, removal or resignation of any director or officer of a corporation. Proceedings under 8 Del. C. § 225 (“Section 225”) are summary in nature, and typically such actions address whether…

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