Insights: The Delaware Edition

Skadden Publication

This issue covers important, developing areas of Delaware corporation law and deal litigation, including the evolving law on attorney-client privilege for emails on noncompany servers, recent Chancery Court Caremark decisions indicating closer judicial scrutiny and potential increased traction for oversight claims, a Delaware Supreme Court decision upholding a waiver of appraisal rights and Delaware court rulings on which affiliates are bound by restrictive covenants.

Law Governing Attorney-Client Privilege for Emails Hosted on Noncompany Servers Continues To Evolve in Delaware
Directors and employees must carefully consider the email service provider they are using when communicating with counsel to avoid the risk of waiving the privilege and being required to produce such communications in discovery.

The Risk of Overlooking Oversight: Recent Caremark Decisions From the Court of Chancery Suggest Potential Increased Traction for Such Claims
A string of recent Delaware cases may increase plaintiffs’ ability to plead oversight claims, despite long-standing precedent making it extremely difficult to successfully plead a case alleging that directors failed to exercise oversight.

Waiver of Appraisal Rights Upheld by Split Delaware Supreme Court
A stockholders’ agreement to forgo appraisal rights if the company was sold was upheld in a case emphasizing the presence of sophisticated stockholders. But a dissent argued that Delaware corporation law bars such a waiver.

Which Affiliates Are Bound by Restrictive Covenants Hinges on the Language the Parties Chose, Recent Rulings Stress
Two recent Delaware cases reached different results where the issue was which “affiliates” were bound by contract restrictions. But both courts stressed that the language and context of the parties’ agreements dictated the outcome.