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Recent Delaware Corporate Law Updates

March 8, 2018

Developments in Statutory Appraisal: DFC Global, Dell and More
The Delaware courts have decided a number of statutory appraisal cases recently.  Most prominently, the Delaware Supreme Court reversed two post-trial appraisal decisions of the Court of Chancery, in DFC Global Corp. v. Muirfield Value Partners, L.P., 172 A.3d 346 (Del. Aug. 1, 2017), and Dell Inc. v. Magnetar Global Event Driven Master Fund Ltd., 177 A.3d 1 (Del. Dec. 14, 2017).  
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IRA Trust FBO Bobbie Ahmed Ex. rel. of Class A Stockholders of NRG Yield, Inc. v. Crane: Court of Chancery Suggests Dual Class Reclassification Confers Unique Benefit on Controller
In IRA Trust FBO Bobbie Ahmed Ex. rel. Class A Stockholders of NRG Yield, Inc. v. Crane, 2017 WL 6335912 (Del. Ch. Dec. 11, 2017), as revised (Jan. 26, 2018), the Court of Chancery granted the defendants’ motion to dismiss breach of fiduciary duty claims against NRG Energy, Inc. (“NRG”), the controlling stockholder of NRG Yield, Inc. (“Yield”), and the Yield directors in connection with a reclassification of Yield’s shares.
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California State Teachers’ Retirement System v. Alvarez: Delaware Supreme Court Finds Dismissal of Derivative Action for Failure to Plead Demand Futility Ordinarily Has Preclusive Effect on Other Derivative Plaintiffs     
In California State Teachers’ Retirement System v. Alvarez, --- A.3d ---, 2018 WL 547768 (Del. Jan. 25, 2018), the Delaware Supreme Court declined to adopt a proposed rule from the Court of Chancery that, as a matter of due process, a judgment in a derivative action cannot bind a corporation or other stockholders until the suit has survived a motion to dismiss for failure to plead demand futility.  
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In re Massey Energy Co. Derivative & Class Action Litigation; Sciabacucchi v. Liberty Broadband Corp.; Lavin v. West Corp.: Recent Court of Chancery Decisions Define Limitations of Corwin Defense
Since the Delaware Supreme Court decision in Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015), the Delaware courts have grappled with the effect of the so-called Corwin defense (i.e., that fully informed, uncoerced approval of a transaction by the disinterested stockholders will restore business judgment review) in a variety of different circumstances.  In three recent decisions, the Delaware Court of Chancery has imposed limitations on the applicability of the Corwin defense.  
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In re Investors Bancorp, Inc. Shareholder Litigation: Stockholder Ratification of Equity Incentive Plan Does Not Foreclose Fiduciary Review of Discretionary Grants under the Plan
In In re Investors Bancorp, Inc. Shareholder Litigation, 2017 WL 6374741 (Del. Dec. 13, 2017, revised Dec. 19, 2017), the Delaware Supreme Court recently considered “the limits of the stockholder ratification defense” in actions challenging directors’ compensation where stockholders have approved the compensation plan, and the Court provided guidance regarding when that defense may apply based on the level of discretion retained by the directors under the plan.  
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Oklahoma Firefighters Pension & Retirement System v. Corbat: Court of Chancery Highlights Difficulty of Successfully Alleging Caremark Claims
In Oklahoma Firefighters Pension & Retirement System v. Corbat, 2017 WL 5484125 (Del. Ch. Nov. 15, 2017), the Delaware Court of Chancery dismissed a claim against current and former directors of Citigroup, Inc. for failing to exercise appropriate oversight with regard to the corporation’s operations, which allegedly resulted in violations of law by employees and large fines and penalties being assessed against Citigroup.  
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Sarissa Capital Domestic Fund LP v. Innoviva, Inc.: Court of Chancery Enforces Oral Contract to Settle Proxy Fight by Requiring the Seating of Two Insurgent Directors
In Sarissa Capital Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597 (Del. Ch. Dec. 8, 2017), the Delaware Court of Chancery, in a fact-intensive, post-trial memorandum opinion, specifically enforced an oral agreement to settle a proxy contest between Innoviva, Inc. (“Innoviva”) and Sarissa Capital Domestic Fund LP (“Sarissa”).  In so doing, the Court ordered Innoviva to expand the size of its board of directors and seat two of Sarissa’s director nominees.  
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Chicago Bridge & Iron Co. N.V. v. Westinghouse Elec. Co.: Delaware Supreme Court Reverses Trial Court Decision Construing Post-Purchase Adjustment Provision
In Chicago Bridge & Iron Co. N.V. v. Westinghouse Electric Co., 166 A.3d 912 (Del. 2017), the Delaware Supreme Court reversed the Delaware Court of Chancery’s grant of judgment on the pleadings.    
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Nguyen v. View, Inc.: The Court of Chancery Discusses the Contours of Ratification of Defective Corporate Acts under Section 204
In Nguyen v. View, Inc., 2017 WL 2439074 (Del. Ch. June 6, 2017), the Delaware Court of Chancery held in a proceeding brought under Section 205 of the General Corporation Law of the State of Delaware (the “DGCL”) that Section 204 of the DGCL (“Section 204”) may not be used to ratify a “deliberately unauthorized corporate act” in order to “undo a stockholder vote rejecting a transaction proposed by the company’s board of directors.”  
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