Justia Delaware Supreme Court Opinion Summaries

Alexion Pharmaceuticals, Inc. develops therapies for rare disorders and was insured under two director and officer liability insurance programs covering different periods. The first program provided $85 million of coverage for claims made between June 27, 2014, and June 27, 2015 (Tower 1). The second program provided $105 million of coverage for claims made between June 27, 2015, and June 27, 2017 (Tower 2). In 2015, the SEC issued a formal investigation order against Alexion, which led to a subpoena seeking information related to Alexion’s grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA). Alexion disclosed this investigation to its Tower 1 insurers.The Superior Court of Delaware found that the SEC investigation and a later securities class action against Alexion were unrelated, placing the securities class action coverage in Tower 2. The court applied the “meaningful linkage” standard and concluded that the connection between the SEC investigation and the securities class action was insufficient to make them related.The Supreme Court of Delaware reviewed the case and disagreed with the Superior Court’s conclusion. The Supreme Court found that the securities class action was meaningfully linked to the wrongful acts disclosed in Alexion’s 2015 notice to its Tower 1 insurers. Both the SEC investigation and the securities class action involved the same underlying wrongful acts, including Alexion’s grant-making activities and compliance with the FCPA. The Supreme Court held that the securities class action claim should be deemed to have been first made during the Tower 1 coverage period, and therefore, coverage should be under Tower 1. The judgment of the Superior Court was reversed. View "In re Alexion Pharmaceuticals, Inc. Insurance Appeals" on Justia Law

The case involves a dispute over the decision by the directors, officers, and stockholders of Tripadvisor, Inc. and Liberty TripAdvisor Holdings, Inc. to change their corporate domiciles from Delaware to Nevada. Plaintiffs, who are stockholders, argue that the Conversions would provide non-ratable benefits to the Defendants, particularly in the form of reduced liability exposure, and thus should be reviewed under the entire fairness standard. Defendants argue that the business judgment rule applies.The Court of Chancery denied Defendants' motion to dismiss, holding that Plaintiffs had adequately alleged that Defendants would receive a non-ratable benefit from the Conversions, thus triggering entire fairness review. The court found that the Conversions could provide a material benefit to the Defendants by reducing their litigation risk and that the Complaint supported a reasonable inference that the Conversions were not entirely fair.On appeal, the Supreme Court of Delaware reversed the Court of Chancery's decision. The Supreme Court held that the business judgment rule, not the entire fairness standard, applies to the Conversions. The Court reasoned that the alleged benefits of reduced liability exposure under Nevada law were too speculative and not material enough to constitute a non-ratable benefit. The Court emphasized the importance of temporality in determining materiality, noting that the absence of any existing or threatened litigation weighed heavily against finding a material, non-ratable benefit. The Court also highlighted the principles of comity and the policy of allowing directors flexibility in determining an entity's state of incorporation. View "Maffei v. Palkon" on Justia Law

Conduent State Healthcare, LLC (Conduent) was hired by the State of Texas to administer its Medicaid program. In 2012, Texas began investigating Conduent for allegedly helping orthodontics offices overbill for services. Texas sued several orthodontic providers in 2014, and the providers sued Conduent. Texas terminated its contract with Conduent and sued Conduent under the Texas Medicaid Fraud Prevention Act. Conduent was insured by AIG Specialty Insurance Company, ACE American Insurance Company, and Lexington Insurance Company, among others. The insurers provided defense coverage for the provider actions but denied coverage for the state action, claiming it involved fraudulent conduct excluded by the policies.The Superior Court of Delaware found that the insurers breached their duty to defend Conduent in the state action. The court also ruled that Conduent was relieved of its duties to cooperate and seek consent before settling with Texas due to the insurers' breach. The jury found that Conduent acted in bad faith and fraudulently arranged the settlement but did not collude with Texas or settle unreasonably. The Superior Court granted a new trial due to evidentiary issues and the jury's inconsistent verdicts.The Supreme Court of Delaware affirmed the Superior Court's rulings. It held that the insurers' breach of their duty to defend excused Conduent from its duties to cooperate and seek consent. The court also ruled that the policy's fraud exclusion did not bar indemnity coverage because the settlement was allocated to breach of contract damages. The court found that the evidentiary issues and the jury's inconsistent verdicts justified a new trial to prevent manifest injustice. View "AIG Specialty Insurance Company v. Conduent State Healthcare, LLC" on Justia Law

A father appealed a Family Court order terminating his parental rights. The Department of Services for Children, Youth and their Families (DFS) took custody of the father's son shortly after birth due to the father's mental health issues, substance abuse, unstable housing, employment status, previous involvement with DFS, history of domestic violence, and failure to plan for the child. DFS moved to be excused from case planning with the father under 13 Del. C. § 1103(d), arguing that grounds for termination existed under 13 Del. C. § 1103(a)(7) because the father's parental rights to another child had been involuntarily terminated in an earlier proceeding. The Family Court granted the motion and later terminated the father's parental rights after finding clear and convincing evidence that termination was in the best interests of the child.The father argued on appeal that Section 1103(d) is unconstitutional. The Supreme Court of Delaware reviewed the case and concluded that Section 1103(d) is not unconstitutional as applied to the father. The court found that the Family Court's analysis under Sections 1103(a)(7) and 1103(d) was supported by the record and that termination of the father's parental rights was in the best interests of the child. The court also rejected the father's argument that the "least restrictive means" standard should be applied, instead following the due process framework established by the U.S. Supreme Court in Mathews v. Eldridge.The Supreme Court of Delaware affirmed the Family Court's judgment, holding that the statutory grounds for termination were met and that the termination was in the best interests of the child. The court found that the father received sufficient process before the termination of his parental rights and that the Family Court's findings were supported by clear and convincing evidence. View "Schnell v. Department of Services for Children, Youth and their Families" on Justia Law

A borrower misrepresented his authority to act on behalf of two corporations he intended to acquire, providing false documents to a lender. Despite having documents contradicting the borrower's claims, the lender proceeded with a $7 million loan, including a confession-of-judgment affidavit naming the corporations as additional borrowers. When the borrower defaulted, the lender sought a confessed judgment against all borrowers, including the corporations, whose true officers were unaware of the transaction until served with notice of the judgment.The Superior Court of Delaware conducted a hearing and entered judgment in favor of the lender, finding that the borrower had apparent authority to bind the corporations. The court focused on the borrower's conduct and representations, concluding that they created the impression of authority sufficient to warrant the entry of a confessed judgment against the corporations.The Supreme Court of Delaware reviewed the case and found that the Superior Court's formulation of the test for apparent authority was flawed. The Supreme Court emphasized that apparent authority must be based on the principal's manifestations, not solely on the agent's conduct. The evidence did not support a finding that the corporations acted in a way that created a reasonable belief in the lender that the borrower was authorized to bind them. Consequently, the Supreme Court reversed and vacated the Superior Court's judgment, concluding that the borrower lacked apparent authority and that the corporations did not effectively waive their due process rights. View "Caribbean Sun Airlines Inc. v. Halevi Enterprises LLC" on Justia Law

Jason Terrell, M.D., provided consulting services and served on the board of directors of Kiromic Biopharma, Inc. between December 2014 and May 2021. During this period, Kiromic awarded Terrell stock options through three separate agreements. The first agreement granted Terrell an option to purchase 500,000 shares at $0.50 per share for consulting services. The second agreement, made when Terrell joined the board, granted him an option to purchase 500,004 shares at $0.17 per share. The third agreement, which included a waiver clause, granted him an option to purchase 500,004 shares at $0.19 per share. After Terrell resigned from the board in September 2019, Kiromic refused to honor the options from the first two agreements, claiming that Terrell waived his rights to those options in the third agreement.The Court of Chancery dismissed Terrell’s complaint seeking specific performance of the first two option grants, finding that the waiver clause in the third agreement unambiguously extinguished Terrell’s rights to the previous option awards. The court held that the language in the waiver clause, which stated that Terrell had no other rights to any other options or securities of the company, was clear and that the carveout for "securities issued" did not include unexercised options.The Supreme Court of the State of Delaware reviewed the case and found that the waiver language was susceptible to more than one reasonable interpretation. The court noted that the term "securities" could reasonably include options and that the parties' use of the word "issued" did not exclusively refer to shares. Therefore, the court concluded that the waiver clause was ambiguous and that the case should not have been dismissed at the pleadings stage. The Supreme Court reversed the Court of Chancery’s dismissal of the complaint and remanded the case for further proceedings. View "Terrell v. Kiromic Biopharma, Inc." on Justia Law

Oracle Corporation acquired NetSuite Inc. in 2016. Following the acquisition, Oracle stockholders filed a derivative suit against Oracle directors and others, alleging that Lawrence Ellison, a co-founder and substantial equity holder in both companies, forced Oracle to overpay for NetSuite. After the Court of Chancery denied the defendants’ motion to dismiss, the Oracle board formed a special litigation committee (SLC) to review the plaintiffs’ derivative claims. The SLC investigated and tried to settle the suit but eventually returned the case to the plaintiffs to pursue. The parties litigated over five years, and the Court of Chancery held a ten-day trial, ultimately entering judgment for the remaining defendants.The Court of Chancery found that the special committee negotiated the NetSuite transaction untainted by Ellison’s or Oracle management’s influence. The court concluded that Ellison did not exercise general control over Oracle or specific control over the transaction. The court also found that neither Ellison nor Catz withheld material information or misled the Oracle board and special committee.On appeal, the stockholders contended that the court erred by allowing the SLC to withhold its interview memos, applying business judgment review to a transaction involving an alleged controlling stockholder, employing the wrong legal standard when evaluating whether Ellison misled the special committee, and finding that Ellison’s alleged undisclosed future operational plans were immaterial.The Supreme Court of Delaware affirmed the Court of Chancery’s judgment. The court held that the SLC did not waive work product protection during mediation and that the plaintiffs did not demonstrate substantial need or undue hardship for the interview memos. The court also affirmed the application of business judgment review, finding that Ellison did not exercise actual control over Oracle or the transaction. Finally, the court agreed that Ellison’s undisclosed post-closing plans were immaterial to the special committee’s evaluation and negotiation of the transaction. View "In re Oracle Corporation Derivative Litigation" on Justia Law

The defendant, while under the influence of illegal drugs, killed a police officer and assaulted several others. He claimed that his behavior was due to someone substituting bath salts for his methamphetamine, and sought to use a statutory involuntary intoxication defense. The Superior Court granted a motion in limine, preventing the presentation of this defense and deemed the defendant’s evidence inadmissible.The Superior Court of Delaware reviewed the case. The court examined whether a person who knowingly introduces an unlawful intoxicating substance into their body can present an involuntary intoxication defense if the substance or its effects differ from what was anticipated. The court concluded that under Title 11, Section 423 of the Delaware Code, a person who knowingly introduces an unlawful intoxicating substance into their body is precluded from presenting an involuntary intoxication defense unless certain statutory exceptions apply.The Delaware Supreme Court affirmed the Superior Court’s decision. The court held that the statutory language was unambiguous and that a person who knowingly introduces an unlawful intoxicating substance into their body cannot claim involuntary intoxication unless specific statutory exceptions are met. The court did not address the admissibility of the defendant’s evidence under Rule 702 and 11 Del. C. § 303, as the defense was unavailable as a matter of law. The court also found that precluding the defense did not violate the defendant’s constitutional right to present a complete defense. View "Wilkerson v. State" on Justia Law

In 2005, James E. Cooke, Jr. was convicted of the rape and murder of Lindsey Bonistall, a University of Delaware student. Cooke's first conviction was overturned in 2009 due to his defense counsel's strategy, which conflicted with Cooke's plea of not guilty. Cooke was retried in 2012, where he represented himself initially but was later replaced by standby counsel due to his disruptive behavior. He was again convicted and sentenced to death, which was affirmed by the Delaware Supreme Court in 2014.Cooke filed a motion for postconviction relief in 2015, claiming ineffective assistance of counsel and other errors. The Superior Court denied his motion, leading to this appeal. Cooke argued that his second-trial counsel failed to explore his competency to stand trial, did not adequately investigate the case, and failed to object to the State's peremptory challenges during jury selection. He also claimed cumulative errors and procedural issues with the court's denial of his continuance requests and discovery limitations.The Delaware Supreme Court reviewed the claims and found that Cooke's counsel acted reasonably given Cooke's insistence on testifying and his refusal to cooperate with mental health evaluations. The court also found that Cooke was competent to stand trial, and his counsel's decisions were within the bounds of reasonable professional assistance. The court held that Cooke's claims of cumulative error and procedural issues were without merit and affirmed the Superior Court's denial of postconviction relief. View "Cooke v. State" on Justia Law

Police were surveilling a known drug dealer in a high-crime area. The dealer arrived at a Wawa convenience store in a car driven by his girlfriend. The dealer exited the car and stood near the gas pump. The defendant approached the dealer on foot, and they conversed briefly. The dealer then had his girlfriend exit the car, sat in the driver’s seat, reached under it for several seconds, and returned to the defendant. They engaged in a brief hand-to-hand exchange and then departed. Believing they had witnessed a drug transaction, police stopped the defendant, who informed them he had a firearm in his bag. Police found the firearm but no drugs, and the defendant was arrested for illegally possessing the gun.The defendant was charged with carrying a concealed deadly weapon and possession of a firearm with an altered serial number. He moved to suppress the evidence, arguing that police lacked reasonable articulable suspicion to stop him. The Superior Court of Delaware denied the motion, finding that police had reasonable articulable suspicion based on their belief that the defendant and the drug dealer had engaged in a hand-to-hand drug transaction. The defendant was found guilty on both counts and appealed the denial of his suppression motion.The Supreme Court of Delaware reviewed the case and affirmed the Superior Court’s decision. The court found that the trial court’s factual findings were supported by sufficient evidence. It held that, based on the totality of the circumstances and the experienced officers’ interpretation of the facts, police had reasonable articulable suspicion to stop the defendant. The court concluded that the stop was justified, and the evidence obtained was admissible. View "Register v. State" on Justia Law