fiduciary exception in Delaware

2017Given this obligation, “it is the duty of directors to pursue the best interests of the corporation and its common stockholders, if that can be done faithfully with the contractual promises owed to the preferred.” LC Capital, 990 A.2d at 452 . [T]he board owes no fiduciary duty to maximize the value of the preferred or to favor in any way the preferred over the common, except when contractually required.

2017Given this obligation, “it is the duty of directors to pursue the best interests of the corporation and its common stockholders, if that can be done faithfully with the contractual promises owed to the preferred.” LC Capital, 990 A.2d at 452 . [T]he board owes no fiduciary duty to maximize the value of the preferred or to favor in any way the preferred over the common, except when contractually required.

2017Garner lists the following factors: (1) the number of shareholders and the percentage of stock they represent; (2) the bona fides of the shareholders; (3) the nature of the shareholders' claim and whether it is obviously colorable; (4) the apparent necessity or desirability of the shareholders having the information and the availability of it from other sources; (5) whether, if the shareholders' claim is of wrongful action by the corporation, it is of action criminal, or illegal but not criminal, or of doubtful legality; (6) whether the communication related to past or to prospective actions;

2015June 19, 1987)). 69 Wal-Mart II, 95 A.3d at 1276 n.32 (citing Garner, 430 F.2d at 1104 ). 70 Def.‘s Sur-reply Ltr. 7 n.4. 27 stockholder has the burden of showing ―good cause,‖71 and that the fiduciary exception ―is narrow, exacting, and intended to be very difficult to satisfy.‖72 2.

2015June 19, 1987)). 69 Wal-Mart II, 95 A.3d at 1276 n.32 (citing Garner, 430 F.2d at 1104 ). 70 Def.‘s Sur-reply Ltr. 7 n.4. 27 stockholder has the burden of showing ―good cause,‖71 and that the fiduciary exception ―is narrow, exacting, and intended to be very difficult to satisfy.‖72 2.

2015The Nicholas Email and the WSJ Email Chain fall more in the latter category and, therefore, are more likely to be subject to the fiduciary exception. 92 Garner, 430 F.2d at 1101 . 36 was respectful of the importance of protecting the attorney-client privilege, but also cognizant of an important precept of corporate law, which is that ―when all is said and done management is not managing for itself.‖93 Thus, while Garner and Wal-Mart II enumerate a ―panoply of factors‖94 that courts should consider in determining whether stockholder plaintiffs have ―good cause‖ to set aside attorney-client priv

1958Peyton Corp., 23 Del.Ch. 321 , 7 A.2d 737 , 123 A.L.R. 1482 , is inapplicable under the present facts.

1958Peyton Corp., 23 Del.Ch. 321 , 7 A.2d 737 , 123 A.L.R. 1482 , is inapplicable under the present facts.

2026The fifth line of reasoning was that to support a fiduciary claim, the challenged conduct must involve fiduciary powers exclusively and cannot arise from powers that “any midlevel manager” might hold (the “powers” argument).133 Last, the court reasoned that treating sexual harassment as a basis for fiduciary violations would be detrimental to survivors of sexual abuse and thus against public policy (the “policy” argument). i. The Expansion Argument To build the argument that McDonald’s constituted an expansion of Delaware law, Credit Glory reduced the holding of McDonald’s to a syllogism: “[B]

2026The fifth line of reasoning was that to support a fiduciary claim, the challenged conduct must involve fiduciary powers exclusively and cannot arise from powers that “any midlevel manager” might hold (the “powers” argument).133 Last, the court reasoned that treating sexual harassment as a basis for fiduciary violations would be detrimental to survivors of sexual abuse and thus against public policy (the “policy” argument). i. The Expansion Argument To build the argument that McDonald’s constituted an expansion of Delaware law, Credit Glory reduced the holding of McDonald’s to a syllogism: “[B]

2026The fifth line of reasoning was that to support a fiduciary claim, the challenged conduct must involve fiduciary powers exclusively and cannot arise from powers that “any midlevel manager” might hold (the “powers” argument).133 Last, the court reasoned that treating sexual harassment as a basis for fiduciary violations would be detrimental to survivors of sexual abuse and thus against public policy (the “policy” argument). i. The Expansion Argument To build the argument that McDonald’s constituted an expansion of Delaware law, Credit Glory reduced the holding of McDonald’s to a syllogism: “[B]

2026R. 8(e). 34 See In re GGP, Inc. S’holder Litig., 282 A.3d 37, 54 (Del. 2022); Winshall v. Viacom Int’l, Inc., 76 A.3d 808, 813 n.12 (Del. 2013); Cent.

2024E.g., Perlman v. Feldmann, 219 F.2d 173 , 176–78 (2d Cir. 1955) (holding that the President and Chairman of the board of directors of Newport Steel Corporation, who also controlled 33% of its voting power, breached his fiduciary duties by selling his shares at a premium such that the corporation was entitled to damages equal to the difference between the price paid for the shares with the control premium and the value of shares “without the appurtenant control”); Honigman v. Green Giant Co., 208 F. Supp. 754 , 757–58, 762 (D.

2024On the facts presented, the high court agreed with Chancellor Allen that the employment agreement with the CEO did not create a Section 141(a) issue. 38 The Company also relies on Coinmint, where this court observed that “voidable breaches of LLC agreements are subject to equitable defenses, including waiver, estoppel, and laches.” 39 That precedent is inapposite because this case does not involve an LLC agreement, and LLCs are sufficiently different from corporations that 36 Abercrombie v. Davies, 123 A.2d 893 (Del.

2024E.g., Perlman v. Feldmann, 219 F.2d 173 , 176–78 (2d Cir. 1955) (holding that the President and Chairman of the board of directors of Newport Steel Corporation, who also controlled 33% of its voting power, breached his fiduciary duties by selling his shares at a premium such that the corporation was entitled to damages equal to the difference between the price paid for the shares with the control premium and the value of shares “without the appurtenant control”); Honigman v. Green Giant Co., 208 F. Supp. 754 , 757–58, 762 (D.

2023The Delaware Supreme Court held that the contractual right preempted the fiduciary claim.134 Other decisions likewise hold that a claim for breach of contract occupies the field and preempts overlapping claims for breach of duty against corporate fiduciaries.135 For 133 Id. at 1125 . 134 Id. at 1128–29. 135 See In re WeWork Litig., 2020 WL 6375438 , at *12 (Del.

2023The Delaware Supreme Court held that the contractual right preempted the fiduciary claim.134 Other decisions likewise hold that a claim for breach of contract occupies the field and preempts overlapping claims for breach of duty against corporate fiduciaries.135 For 133 Id. at 1125 . 134 Id. at 1128–29. 135 See In re WeWork Litig., 2020 WL 6375438 , at *12 (Del.

2022Contemporary Delaware decisions have brought waste within the fiduciary framework of the business judgment rule by re-conceiving waste as a means of pleading that a fiduciary acted in bad faith.28 A court may find that a fiduciary acted in bad faith “where the fiduciary intentionally acts with a purpose other than that of advancing the best interests of the [entity].”29 “The waste test is one way of establishing irrational, bad faith conduct.” 28 See, e.g., White v. Panic, 783 A.2d 543 , 554 n.36 (Del. 2001) (“To prevail on a waste claim or a bad faith claim, the plaintiff must overcome the ge

2022“In examining the provisions of a certificate of incorporation, courts apply the rules of contract interpretation.”216 This is because certificates of incorporation and by-laws are 215 As Vice Chancellor Laster noted in Trados, 73 A.3d at 56 n.32, Section 141(a) of the DGCL could be construed as leaving open the possibility that a charter provision could provide a mechanism for tailoring or realigning fiduciary obligations in a manner that alters the traditional fiduciary analysis.

2021Accordingly, Defendants’ Motion is denied as to Count II. 83 Id. ¶ (B)(3). 84 Carlton Invs. v. TLC Beatrice Int’l Hldgs., Inc., 1996 WL 189435 , at *4 (Del.

2019When applying the fiduciary exception, the Riggs court also noted the absence of any claim “then pending or threatened” against the trustee. 355 A.2d at 711 .

2019Item (2) in the synopsis notes that the amendments “clarify” when the fiduciary exception “does not apply.” Id. (emphasis added).

2019Item (2) in the synopsis notes that the amendments “clarify” when the fiduciary exception “does not apply.” Id. (emphasis added).

2015The Supreme Court in Wal-Mart II adopted and applied that analysis, identifying the following as relevant factors:68 actions, including Grimes v. DSC Communications Corp., 724 A.2d 561 (Del.

2015Under Garner, courts have found that privileged documents are not necessary and essential if the stockholder has the underlying information.79 For example, in Saito v. McKesson, the company announced shortly after a merger that it had to make certain 77 Wal-Mart II, 95 A.3d at 1271 (quoting Espinoza II, 32 A.3d at 371–72). 78 Garner, 430 F.2d at 1104 . 79 Espinoza I, at 25 (finding that the stockholder had failed to show that the information from the investigative report detailing the CEO‘s sexual harassment was unavailable from another source when he already had the documents and information

1986However, the United States Supreme Court took the contrary position nearly sixty years ago in Board of Public Utility Comm’rs v. New York Telephone Co., 271 U.S. 23 , 46 S.Ct. 363 , 70 L.Ed. 808 (1926).

1986However, the United States Supreme Court took the contrary position nearly sixty years ago in Board of Public Utility Comm’rs v. New York Telephone Co., 271 U.S. 23 , 46 S.Ct. 363 , 70 L.Ed. 808 (1926).