Lazard Technology Partners v. Qinetiq North America Operations LLC

The issue this case presented for the Supreme Court's review arose from a business merger. Appellant, Lazard Technology Partners, LLC, represents former stockholders of Cyveillance, Inc. (the seller). Appellee Qinetiq North America Operations, LLC paid $40 million up-front money to the company and promised to pay up to another $40 million if the company's revenues reached a certain level. When the earn-out period ended, the revenues had not reached the level required to generate an earn-out. The seller filed suit in the Court of Chancery, arguing that the buyer breached the merger agreement. The seller also argued that the buyer violated the merger agreement‟s implied covenant of good faith and fair dealing by failing to take certain actions that the seller contended would have resulted in the achievement of revenue sufficient to generate an earn-out. After review, the Court of Chancery found that the seller had not proven that any business decision of the buyer was motivated by a desire to avoid an earn-out payment. Further, the Court found that the merger agreement's express terms were supplemented by an implied covenant. But as to whether conduct not prohibited under the contract was precluded because it might result in a reduced or no earn-out payment, the Court of Chancery held that, consistent with the language of implicated section of the merger agreement, the buyer had a duty to refrain from that conduct only if it was taken with the intent to reduce or avoid an earn-out altogether. On appeal, the seller argued the Court of Chancery misinterpreted the merger agreement. Finding no misinterpretation, the Supreme Court affirmed. View "Lazard Technology Partners v. Qinetiq North America Operations LLC" on Justia Law