• In High River Limited Partnership v. Forest Laboratories, Inc., Civil Action No. 7663-ML (Del. Ch. February 5, 2013), Master LeGrow of the Delaware Chancery Court denied investors’ motion to modify its conclusions on an inspection demand. There was no manifest injustice in the ruling, though the defendant had used the denied documents in a proxy contest. The contest mooted some of the reasons for demand. A modification would require a new demand, new reasons, and was best suited to a new case.
• In TR Investors, LLC v. Genger, C.A. No. 6697-CS (Del. Ch. Feb. 18, 2013), the Court of Chancery explained in exhaustive and exhausting detail the lengthy history of the multiple court decisions in two states involving overlapping issues. The bottom line on a practical level for most readers, regarding why this decision meritted a post on this blog, was that this opinion discussed principles with wide application on at few useful points of law.
• In New Jersey Carpenters Pension Fund v. infoGROUP, Inc., C.A. No. 5334-VCN (Del. Ch. Feb. 13, 2013), New Jersey Carpenters Pension Fund, a former stockholder of infoGROUP, Inc. asserted claims arising from the merger agreement involving infoGROUP and CCMP Capital Advisors LLC for $8.00 per share. The Complaint alleges that the defendants breached their fiduciary duty of loyalty and good faith by selling the company at an unfair price after conducting a flawed process so that defendant-director Vinod Gupta could liquidate his interest in the company. The plaintiffs argued that “the director [d]efendants abdicated their fiduciary duty in the face of relentless harassment and pressure from Gupta to sell the [c]ompany.” Suit was filed three days after the merger was announced. Plaintiff moved for class certification and defendants opposed the motion as well as the class representatives (the Fund and Robert Kistner) and sought to narrow the scope of the proposed class to exclude, in particular, shareholders who purchased their shares after the Merger was announced.
• In In re Puda Coal, Inc. Stockholders Litigation, C.A. No. 6476-CS (Del. Ch. Feb. 6, 2013), in a shareholders’ derivative lawsuit involving Puda Coal, a Delaware corporation with significant operations in China, the parties at the hearing conceded that one of the Chinese members of the board –and at the time of the hearing, the sole remaining board director – had, in the words of Chancellor Strine “stolen” significant assets from the company, and that the “theft” had gone undetected for an extended period of time. (Further background regarding these events can be found here.) After the misappropriation of corporate assets was discovered (apparently by an online analyst) and after the two outside company directors who were represented at the hearing were unable to get answers to their questions, the two individual directors had resigned.
• In In re Freeport-McMoRan Copper & Gold Inc. Derivative Litig., C.A. No. 8145-VCN (Del. Ch. Feb. 14, 2013), the Court of Chancery granted a motion to intervene by certain shareholders (the “Proposed Intervenors”) of Freeport-McMoRan Copper & Gold Inc. (“Freeport”) and approved the Proposed Intervenors’ application to certify an interlocutory appeal of the Court’s previous decision establishing a plaintiffs’ management structure for the derivative action.
• In Jepsco, Ltd. V. B.F. Rich Co., Inc., C.A. No. 7343-VCP (Del. Ch. Feb. 14, 2013) (Parsons, V.C.), the Delaware Court of Chancery held that claims for breach of statutory and fiduciary duties against a custodian appointed under Section 226 of the Delaware General Corporation Law (“DGCL”) failed as a matter of law because the custodian was entitled to judicial immunity as to certain alleged wrongdoings and because the doctrine of laches barred the plaintiff’s claims on the remaining alleged wrongdoings. In dicta, the Court suggested that custodians appointed pursuant to Section 226 of the DGCL who take actions outside the express terms of a court order could potentially be governed by a “business judgment” standard of conduct similar to that governing directors and officers of a Delaware corporation.
• In In re BJ’s Wholesale Club, Inc. S’holders Litig., C.A. No. 6623-VCN (Del. Ch. Jan. 31, 2013), the Delaware Chancery Court dismissed a direct shareholder class action brought against the former directors (the “directors” or the “Board”) of BJ’s Wholesale Club, Inc. for alleged breaches of fiduciary duty in connection with the September 2011 buyout of BJ’s (the ”Buyout”) by affiliates of Leonard Green & Partners, L.P. (“LGP”) and funds advised by CVC Capital Partners (together, the “Buyout Group”). In re BJ’s Wholesale Club, Inc. S’holders Litig., 2013 WL 396202 (Del. Ch. Jan. 31, 2013) (Noble, V.C.). The court concluded that “the Board’s decision to sell the [c]ompany at a 38% premium to its unaffected stock price and after a lengthy sales process was not ‘so far beyond the bounds of reasonable judgment that it seems essentially inexplicable on any ground other than bad faith.’” The court also dismissed the plaintiffs’ aiding and abetting breach of fiduciary duty claim against the Buyout Group.
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