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In March 2016, soon after The Fresh Market (the “Company”) announced plans to go private, the Company publicly filed certain required disclosures under the federal securities laws. Given that the transaction involved a tender offer, the required disclosures included a Solicitation/Recommendation Statement on Schedule 14D-9 (together with amendments, the “14D-9”), which articulated the Board’s reasons for recommending that stockholders accept the tender offer—from an entity controlled by private equity firm Apollo Global Management LLC (“Apollo”). The 14D-9 incorporated certain required schedules by reference. After reading these disclosures, as the tender offer was still pending, stockholder-plaintiff Elizabeth Morrison suspected the Company’s directors had breached their fiduciary duties in the course of the sale process, and she sought Company books and records pursuant to Section 220 of the Delaware General Corporation Law. The Company denied her request, and the tender offer closed as scheduled. Litigation over the Section 220 demand ensued, and Plaintiff obtained several key documents, such as board minutes and a crucial e-mail from Ray Berry’s counsel to the Company’s lawyers. Plaintiff then filed this action, including a breach of fiduciary duty claim against all ten of the Company’s directors, including Ray Berry, and a claim for aiding and abetting the breach against Ray Berry’s son, Brett Berry, who did not serve on the Board. The thrust of Plaintiff’s breach of fiduciary duty claim was that Ray and Brett Berry teamed up with Apollo to buy The Fresh Market at a discount by deceiving the Board and inducing the directors to put the Company up for sale through a process that “allowed the Berrys and Apollo to maintain an improper bidding advantage” and “predictably emerge[] as the sole bidder for Fresh Market” at a price below fair value. Plaintiff also alleged the Board and the stockholders were misled into believing that Ray Berry would openmindedly consider partnering with any private equity firm willing to outbid Apollo, but, instead, “[t]he reality of the situation was that Ray Berry (a) had already formed the belief that Apollo was uniquely well situated to buy Fresh Market; (b) had already entered into an undisclosed agreement with Apollo; and (c) was incentivized not to create price competition for Apollo.” In moving to dismiss, Defendants argued that Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304, 312 (Del. 2015) applied. The Court of Chancery stated that this matter “presents an exemplary case of the utility of th[e] ratification doctrine, as set forth in Corwin and [In re Volcano Corp. S’holder Litig., 143 A.3d 727 (Del. Ch. 2016)].” The Delaware Supreme Court disagreed, finding defendants did not show under Corwin, that the vote was fully informed. Thus, “the business judgment rule is not invoked.” The Supreme Court reversed the Court of Chancery’s decision and remanded for further proceedings. View "Morrison, et al. v. Berry, et al." on Justia Law

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This was a “take-home” asbestos case in which an employee’s now-deceased wife sued the companies who supplied asbestos products to her husband’s employer. Her husband’s employer caused him to work with those products, and the asbestos in them came home on his clothes. The wife’s theory of recovery against the asbestos product manufacturers was under section 388 of the Restatement (Second) of Torts, an asbestos product manufacturer has a duty to warn foreseeable users of the dangers of its products, to the extent the asbestos product manufacturer has actual or constructive knowledge of that danger, and when it is unlikely that the user will discover the dangerous condition.2 The legal question underlying this appeal reduced to whether the spouse of an employee harmed by take-home asbestos exposure could sue an asbestos product manufacturer and recover if it failed to provide warnings and safe laundering instructions to her spouse’s employer, so he could protect himself or whoever laundered his clothes. "When applying section 388, the mundane realities of life make the spouses of employees who launder asbestos-covered clothes foreseeable plaintiffs to whom the manufacturers can be held liable. Taking into account, though, the argument that the asbestos product manufacturers are not in a position to warn employees directly, much less the other people who might launder employees’ clothes," the Delaware Supreme Court reversed the grant of summary judgment in favor of the defendant-manufacturers. "If, as the Manufacturers suggest, claims from plaintiffs with more momentary exposure to and tenuous relationship to an exposed employee are filed in the future, the answer is to address those cases then in a reasoned way that takes into account the practicalities that must inform our common law. But, the answer is not to ignore the equity due to the plaintiff before us, and the plaintiffs like her, who base their claims on a clearly foreseeable consequence of common, and necessary, human conduct: workers often have family members who launder their work clothes, and if those work clothes are covered in asbestos dust, those family members can suffer serious injury and even death." View "Ramsey v. Georgia Southern University Advanced Development Ctr" on Justia Law

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Jane D.W. Doe, the deceased plaintiff whose estate was the appellant, was validly arrested by a Delaware State Police Officer for shoplifting, and “was subject to an outstanding capias.” Doe alleged that, rather than properly processing her arrest, the Officer instead told her that if she performed oral sex on him, he would take her home and she could just turn herself in on the capias the next day. If she refused, he would “take her to court, where bail would be set, and . . . she would have to spend the weekend in jail.” The Officer originally denied that the oral sex occurred, but after DNA evidence of the oral sex was found on Doe’s jacket. The State charged the Officer with multiple crimes, including: (1) “intentionally compel[ling] or induc[ing] [Doe] to engage in sexual penetration/intercourse;” and (2) “solicit[ing] a personal benefit from [Doe] for having violated his duty” to bring her in on her capias. What was disputed in this appeal was whether the jury verdict finding that the State was not responsible in tort as the officer’s employer for this misconduct should have been affirmed. The Delaware Supreme Court agreed with Doe that the jury verdict should have been vacated, finding that the jury was improperly asked to decide whether the employer of a police officer who received oral sex from an arrestee for his own personal gratification, and with no purpose to serve his employer, was acting within the scope of his employment. This question was submitted to the jury because the Supreme Court found in its initial decision (“Doe I”) that the jury should have decided the issue. In a second decision (“Doe II”), the Supreme Court adhered to the law of the case and did not revisit that earlier ruling. In this decision, the Court admitted it erred in leaving this issue of law to the jury, and for leaving the superior court in "the impossible position of crafting sensible jury instructions to implement a mandate that was not well-thought-out." The Court held, as a matter of law, if a police officer makes a valid arrest and then uses that leverage to obtain sex from his arrestee, his misconduct need not fall within the scope of his employment under section 228 of the Restatement (Second) of Agency to trigger his employer’s liability. In so finding, the Supreme Court took into account the unique, coercive authority entrusted in police under Delaware law, and the reality that when an arrestee is under an officer’s authority, she cannot resist that authority without committing a crime. The Court vacated the jury verdict in this case and remanded for entry of a judgment in Doe's favor on the issue of liability, with a jury trial to follow on the issue of damages. View "Sherman v. Dept of Public Safety" on Justia Law

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Russell Grimes was accused of participating in a bank robbery. He was indicted for first-degree robbery, aggravated menacing, and other related charges. At trial, the jury convicted him of first-degree robbery, but acquitted him of aggravated menacing. He appealed, and based on an error that occurred during jury selection, the Delaware Supreme Court vacated his first-degree robbery conviction and remanded for a new trial. A jury again convicted him of first-degree robbery. The question this case presented for the Supreme Court's review: if a defendant is convicted by a jury of one offense, but acquitted - in the same verdict - of a lesser-included offense, and the conviction on the greater offense is vacated on appeal, does the acquittal on the lesser offense prevent the State, under the Double Jeopardy Clause, from retrying the defendant for the greater offense? The Court concluded it did not. View "Grimes v. Delaware" on Justia Law

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In this appeal, at issue before the Delaware Supreme Court was whether stipulated court orders agreed to in 2005 by a property owner and the Town of Cheswold prevented the Town from enacting new ordinances affecting the property. Applying res judicata, the Superior Court found that they did, and entered a judgment prohibiting the Town from enacting any ordinance impairing the property owner’s existing development rights. The Supreme Court reversed, holding that the 2005 stipulated orders did not prohibit the Town from enacting future ordinances affecting the property. "If the Town eventually adopts a new ordinance, any future litigation over the property owner’s vested rights should be resolved by applying the balancing test in In re 244.5 Acres of Land, 808 A.2d 753 (Del. 2002)." View "Town of Cheswold v. Central Delaware Business Park" on Justia Law

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Defendant-appellant, Terrance Everett accepted a Facebook friend request from a detective who was using a fictitious profile. The detective then used information gained from such monitoring to obtain a search warrant for Everett’s house, where officers discovered evidence that prosecutors subsequently used to convict him. Everett asked the trial court to determine whether the detective knowingly and intentionally, or with reckless disregard for the truth, omitted information from the affidavit- namely, information concerning the detective’s covert Facebook monitoring - that was material to the magistrate’s finding of probable cause. Everett argued that, if he made this showing by a preponderance of the evidence at such a hearing, then the evidence obtained via this warrant should have been suppressed. The Superior Court denied Everett’s motion. The Delaware Supreme Court affirmed the superior court's denial of Everett's motion, finding the Fourth Amendment does not protect a defendant who exposes incriminating evidence to an undercover police officer after he voluntarily "friended" the officer on Facebook. View "Everett v. Delaware" on Justia Law

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After months of negotiations, the parties in this case signed versions of two transaction agreements: a limited liability company agreement, and a contribution and assignment agreement. However, a serious question existed as to whether the parties intended to be bound by these signed documents. And whether there exists a valid, binding contract implicated the other main issue raised on appeal—namely, whether the Delaware Supreme Court could exercise jurisdiction over the defendant. If at least one of these transaction documents was a valid, independently enforceable contract, then the Supreme Court had jurisdiction via a forum selection clause favoring Delaware. If neither document was independently enforceable, and if earlier agreements did not provide another means of exercising jurisdiction over the defendant, then Delaware courts lacked personal jurisdiction over the defendant, and the plaintiffs’ claims for breach of contract, unjust enrichment, and other causes of action against the defendant were properly dismissed. The Court of Chancery determined that neither transaction document was enforceable, and dismissed the case for lack of personal jurisdiction, even after finding one of the parties in contempt of its status quo order. In this case, the Supreme Court found evidence within the four corners of the documents and other powerful, contemporaneous evidence, including the execution of the agreements, that suggested the parties intended to be bound. "But we acknowledge that there is also evidence that cuts the other way. Given that this is a question of fact, we remand to the Court of Chancery to make such a finding." If either document is enforceable, then the forum selection provisions were also enforceable. The Court of Chancery erred in finding that its jurisdiction to enforce the previously issued contempt order depended on the enforceability of the transaction documents. It had jurisdiction to enforce its order regardless of the transaction documents’ enforceability. View "Eagle Force Holdings, LLC, et al. v. Campbell" on Justia Law

Posted in: Business Law, Contracts

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David Buckham was convicted at trial of assault in the first degree and related charges in connection with a shooting. His appeal presented two questions of criminal procedure for the Delaware Supreme Court’s consideration: (1) the propriety of the trial court’s decision to call a recess at the State’s request so that one of the State’s witnesses, who was in the middle of testifying (and in the middle of recanting a statement he had given to investigators before trial) could consult with his lawyer; and (2) whether it was plain error for the trial court to uphold a warrant that authorized a search of “[a]ny and all store[d] data” on Buckham’s cell phone for any evidence of any kind that might link him to the shooting. Buckham was forbidden by the trial court from cross-examining the witness about what transpired during the consultation. He argued it was reversible error to allow it and a violation of his confrontation rights to bar him from cross-examining the witness about it. The trial court sustained the warrant despite recognizing that the only nexus the warrant application established between his phone and the shooting was that the phone might have contained GPS data that might have been useful to investigators. The search instead turned up some arguably incriminating Facebook messages Buckham contended should have been suppressed. The Supreme Court agreed the trial court’s decision to allow the State’s witness a midtestimony consultation with counsel was reversible error, and that the decision to uphold the warrant and admit the Facebook messages was plain error. The Court therefore reversed Buckham’s convictions and remanded for a new trial. View "Buckham v. Delaware" on Justia Law

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This appeal involved a single-vehicle accident that occurred on Omar Road in Sussex County, Delaware. Ashlee Reed was the driver; Jacqueline Pavik was her passenger. Reed was injured in the accident. Pavik died from injuries she received. At the time, Omar Road was undergoing reconstruction. The accident occurred on a Sunday night when no construction was taking place and the road was open to the public. Reed and Pavik’s parents alleged that the accident was caused by an unsafe road condition known as raveling, which caused Reed to lose control of her vehicle and crash into trees off the roadway. George & Lynch, Inc. (George & Lynch) was the general contractor in charge of construction. Reed and Pavik’s parents brought suit against a number of entities, but this appeal involved only George & Lynch. Among other things, the parents claimed George & Lynch was negligent for failing to place adequate temporary traffic control signs or devices warning the public of road conditions. The Superior Court granted summary judgment in favor of George & Lynch, holding that it had no duty to post temporary traffic control signs or devices warning about the condition of the road on the weekend the accident occurred, regardless of whether it anticipated that raveling would occur because of a predicted storm over the upcoming weekend. The Superior Court also held that certain repair work that the Delaware Department of Transportation (DelDOT) performed on Omar Road on the day of the accident broke any causal link between George & Lynch’s alleged negligence and the accident. The question before the Delaware Supreme Court was whether the Superior Court’s summary judgment analysis was legally correct. The Supreme Court concluded it was not and that the judgment of the Superior Court had to be reversed. View "Pavik v. George & Lynch, Inc." on Justia Law

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According to the allegations of the complaint, the plaintiffs were adult and minor Argentinean citizens. The defendants, Philip Morris USA Inc. (“PM USA”) and Philip Morris Global Brands, Inc. (“PM Global”), owned Massalin Particulares, S.A., a tobacco production company. In 1984, Massalin created a brokerage company, Tabacos Nortes, to purchase tobacco from small, family-owned farms in Misiones, Argentina. The plaintiffs owned and live on these farms, raising livestock and growing produce for their own consumption adjacent to the tobacco plants. Tabacos Nortes required the farmers to purchase and use herbicides and pesticides, which it sold to the farmers on credit. Monsanto Company developed, marketed, and supplied the herbicide “Roundup,” which, according to the complaint, contained chemical ingredients and toxins capable of causing “genetic, teratogenic, and/or developmental injury to humans.” The plaintiffs mixed chemicals like Roundup and sprayed the tobacco crops by hand with chemicals from containers on their backs. As alleged in the complaint, the defendants knew that the plaintiffs’ personal crops, livestock, and water would be contaminated with the herbicides and pesticides. The plaintiffs further alleged the defendants never recommended protective measures, but knew the plaintiffs lacked protective equipment and the knowledge required for safe use of the chemicals. In consolidated appeals the issue before the Delaware Supreme Court was whether a trial court must first determine that an available alternative forum existed before dismissing a case for forum non conveniens. The Supreme Court held that an available alternative forum should be considered as part of the forum non conveniens analysis, but was not a threshold requirement. Because the Superior Court considered the availability of an alternative forum as a factor in its forum non conveniens analysis, its judgment was affirmed. View "Aranda, et al. v. Philip Morris USA Inc., et al." on Justia Law