Justia Delaware Supreme Court Opinion Summaries

Shari Redstone exercised control over National Amusements Incorporated, which in turn held a majority of the voting shares of Paramount Global, giving her control over Paramount. In 2023 and 2024, media outlets reported on efforts to sell National Amusements and possible bids for Paramount itself. Some reports suggested that Redstone, acting as Paramount’s controller, blocked a sale of the entire company in favor of selling only National Amusements’ controlling stake. The Employees’ Retirement System of Rhode Island, a Paramount shareholder, made a demand under Section 220 of the Delaware General Corporation Law to inspect Paramount’s books and records for evidence of potential corporate wrongdoing, specifically the possible usurpation of a corporate opportunity and breaches of fiduciary duty by Redstone and National Amusements. Paramount rejected the demand, leading Rhode Island to file a complaint to compel inspection.A trial was held before a Magistrate in Chancery, who declined to consider evidence arising after the demand and found that Rhode Island lacked a credible basis to infer wrongdoing, recommending judgment for Paramount. Rhode Island took exceptions to this report. The Vice Chancellor, conducting a de novo review, considered both pre- and post-demand evidence, including confidentially sourced news reports, and found Rhode Island had established a credible basis to infer possible wrongdoing. The court ordered the matter remanded for a hearing on the scope of production and later certified two questions for interlocutory appeal.The Supreme Court of the State of Delaware affirmed the Vice Chancellor’s decision. It held that, while generally stockholders are limited to pre-demand evidence in Section 220 actions, courts may, in exceptional circumstances and at their discretion, consider post-demand evidence that is material and not prejudicial. The court also determined that reliable hearsay from reputable news outlets can be considered in the credible basis inquiry. The judgment was affirmed and remanded for further proceedings. View "Paramount Global v. State of Rhode Island Office of the General Treasurer" on Justia Law

A former high-level employee left her position at a company after receiving incentive equity agreements that included non-compete, non-solicitation, and confidentiality provisions. She subsequently joined a competitor. The company alleged that she breached those provisions by working for the competitor and that, in the short time since her move, at least five important clients had also moved to the competitor, an unusual loss rate for the business. The employee’s role at her former employer was not confined to a single region, and she was involved in high-level strategic decisions affecting company operations nationwide. The restrictive covenants at issue included an 18-month, nationwide non-compete and were supported by incentive units that would vest over time or upon sale of the company.After the company filed suit, the Court of Chancery of the State of Delaware denied a temporary restraining order but expedited proceedings. The defendants moved to dismiss. The company amended its complaint with more detailed allegations. The Court of Chancery granted the motion to dismiss, holding that the non-compete was unenforceable due to its breadth and the minimal value of the consideration provided, and that the allegations of breach of the non-solicitation and confidentiality provisions were conclusory. It also dismissed related tortious interference claims.On appeal, the Supreme Court of the State of Delaware reviewed the dismissal de novo. The Supreme Court held that the Court of Chancery improperly drew inferences against the employer at the pleading stage and failed to credit factual allegations supporting the claims. The Supreme Court found it was reasonably conceivable that the non-compete, non-solicitation, and confidentiality provisions could be enforceable, and that the complaint sufficiently alleged breaches. The Supreme Court reversed and remanded for further proceedings, limiting its holding to the adequacy of the pleadings and expressing no view on ultimate enforceability. View "Payscale Inc. v. Norman" on Justia Law

Two neighboring landowners in Middletown, Delaware, disputed whether a cross-easement existed that would allow one parcel (Reybold’s) to use a highway entrance situated on the other parcel (Summit’s). The properties were originally subdivided from a larger tract owned by Viola Carter. During the subdivision and rezoning process in the 1980s, the developer’s engineer, at the request of government agencies, included a note on the record plan stating that “a cross-easement is hereby established” between the parcels for vehicular and pedestrian access. Carter signed the record plan, certifying her ownership and intent to develop according to the plan. The record plan was recorded, and both properties were subsequently sold to new owners, with deeds referencing the plan.Years later, after Reybold purchased one parcel, it sought to enforce the cross-easement to gain more valuable access to the main road. Summit, the owner of the adjoining shopping center parcel, refused to recognize the easement. Reybold sued Summit in the Court of Chancery. A Magistrate in Chancery found that an express cross-easement had been created and could be enforced by Reybold. However, the Vice Chancellor, on de novo review, disagreed, holding that the record plan note was a “notation” under the County Code, which only the County could enforce, and that there was insufficient evidence of the original owner’s intention to create a private easement.The Supreme Court of the State of Delaware reversed the Court of Chancery. It held that the landowner’s signature and certification on a recorded plan containing a note establishing a cross-easement were sufficient to create an enforceable express easement appurtenant. The Court ruled that Summit, as a subsequent purchaser, is bound by this easement, and entered judgment for Reybold. View "Reybold Venture Group IX, LLC v. Summit Plaza Shopping Center, LLC" on Justia Law

A dispute arose between an investment banker and the firm where he was employed regarding his status and compensation. Initially, the banker joined the firm under an employment offer letter that set out specific compensation terms. Over time, both sides attempted to negotiate changes to this arrangement, exchanging draft agreements and addenda. They met to discuss these terms but left with differing understandings. The banker believed an oral partnership agreement had been reached, while the firm contended only his compensation as an employee was modified. When the banker later made a demand for access to certain records, the firm denied his request, asserting he was not a partner.The case was first addressed by the Court of Chancery of the State of Delaware, which found after trial that no oral partnership agreement had been formed, meaning the banker was not a partner entitled to records access under Delaware law. The court also noted that questions about the banker’s compensation as an employee would be determined in a separate, subsequent action. Following this, the banker filed counterclaims in the ongoing plenary action seeking relief based on his employment letter, but the Court of Chancery dismissed most of these counterclaims. It held that they were barred by collateral estoppel because they relied on facts the court had found against the banker in the earlier proceeding.On appeal, the Supreme Court of the State of Delaware reviewed whether collateral estoppel properly barred the banker’s counterclaims about his compensation. The Supreme Court concluded that the earlier factual findings about the banker’s compensation were not essential to the judgment that he was not a partner. The Supreme Court reversed the Court of Chancery’s dismissal of the banker’s counterclaims relating to his compensation as an employee and remanded the case for further proceedings. View "Handler v. Centerview Partners Holdings LP" on Justia Law

The case concerned Jeffrin Cabrera, who was convicted by a jury of three counts of first-degree rape, two counts of first-degree burglary, one count of attempted first-degree rape, and one count of terroristic threatening. The events leading to these charges involved Cabrera’s repeated threats and coercion against Flor Munoz Coto, with whom he had previously been in a relationship. Cabrera followed, threatened, and extorted Munoz for money, and ultimately sexually assaulted her multiple times between August 20 and August 23, 2023. Forensic evidence, including DNA analysis, corroborated Munoz’s testimony about the assaults.The Superior Court of the State of Delaware presided over Cabrera’s trial. During jury selection, the court did not question prospective jurors about potential bias against individuals with limited English proficiency. The court later instructed the jury that such bias was impermissible. Cabrera did not testify. The jury convicted him on all counts, and the court sentenced him to 72 years in prison. Cabrera appealed, raising two issues for the first time: the adequacy of the jury instruction about the mens rea required for kidnapping (a predicate felony for two of the rape counts), and the absence of voir dire regarding juror bias against non-English speakers.The Supreme Court of the State of Delaware reviewed the case under the plain error standard, since neither issue had been raised below. The court found that, although the kidnapping instruction omitted the statutory definition of “intentionally,” it did not constitute plain error, given the evidence and context. The court further held that the failure to conduct voir dire regarding language bias was not plain error, especially in light of the jury instructions given and the absence of a request by defense counsel. The Supreme Court affirmed Cabrera’s convictions. View "Cabrera v. State" on Justia Law

In 2025, the Delaware General Assembly amended the Delaware General Corporation Law to add new “safe harbor” provisions for transactions involving a corporation and its controlling stockholder. These amendments, enacted as Senate Bill 21, allowed certain transactions to avoid equitable relief or damages if approved either by a committee of disinterested directors or by a majority of disinterested stockholders, and applied these changes retroactively to acts and transactions occurring before their adoption. Shortly after enactment, a stockholder of a Delaware corporation brought a derivative action alleging that the corporation’s CEO and majority stockholder breached their fiduciary duties by causing the company to overpay for an asset. The plaintiff also challenged the constitutionality of SB 21, arguing that it impermissibly deprived the Delaware Court of Chancery of its equity jurisdiction and retroactively extinguished accrued or vested causes of action.The Court of Chancery, recognizing the importance and novelty of the constitutional issues, certified two questions of law to the Delaware Supreme Court: whether the safe harbor provisions unconstitutionally divested the Court of Chancery of its equity jurisdiction, and whether applying them to past transactions violated due process by eliminating vested claims.The Supreme Court of Delaware reviewed the certified questions de novo. It held that the statutory amendments did not violate Article IV, § 10 of the Delaware Constitution because they did not remove the Court of Chancery’s ability to hear equitable claims, but instead established substantive standards for when relief may be granted. The Court also ruled that retroactive application of the safe harbor provisions under Section 3 of SB 21 did not violate Article I, § 9, since the changes did not extinguish a vested property right or accrued cause of action, but merely altered the applicable standard of review. The Court answered both certified questions in the negative, upholding the constitutionality of the challenged amendments. View "Rutledge v. Clearway Energy Group LLC" on Justia Law

A delivery driver employed by a large package delivery company fell from her work vehicle on February 3, 2022, resulting in injuries to her neck and back. She initially received conservative medical treatments, including physical therapy, pain management, and multiple injections, but her condition worsened. By mid-2023, her treating physician recommended and performed two surgeries. The physician continued to restrict her from working following these procedures. The parties agreed the initial injury was compensable but disputed whether the surgeries were caused by the 2022 accident or by a subsequent event in 2023, and whether her total-disability status ended in December 2023.The Industrial Accident Board first found that the surgeries were related to the 2022 accident and that her total disability ended in December 2023. After a motion for clarification, the Board reversed its finding on the disability end date, concluding that, under Delaware law, a claimant remains totally disabled if instructed not to work by a treating physician, regardless of physical improvement. The employer appealed, arguing the Board improperly construed witness testimony and exceeded its authority by revisiting its prior decision. The Superior Court of the State of Delaware reviewed the Board’s actions, found both of the employer’s arguments unpersuasive, held that substantial evidence supported the Board’s findings, and affirmed the Board’s decision and order.On further appeal, the Supreme Court of the State of Delaware affirmed the Superior Court’s judgment. The Supreme Court held that the Board’s finding that only one work-related accident occurred was supported by substantial evidence, and that the Board acted within its authority in correcting its legal error regarding the duration of the claimant’s total disability. The Supreme Court confirmed that, under controlling precedent, a claimant remains totally disabled while following a treating physician’s order not to work. View "United Parcel Service v. Smith" on Justia Law

A life insurance policy was taken out on Norman Frank, then later sold to an investor unconnected to him. After Frank’s death in 2018, the insurer paid over $5 million in death benefits to the policy’s beneficiary. In 2023, Frank’s estate filed suit in the Superior Court of the State of Delaware to recover those proceeds, alleging that the policy was procured as part of a “stranger originated life insurance” (STOLI) scheme, in violation of Delaware’s statutory prohibition on life insurance contracts lacking an insurable interest.The defendants removed the case to the United States District Court for the District of Delaware. That court dismissed one defendant, Wells Fargo, leaving GWG DLP Master Trust as the sole defendant. The Trust moved to dismiss, arguing the estate’s claim under 18 Del. C. § 2704(b) was barred by Delaware’s general three-year statute of limitations for actions “based on a statute” (10 Del. C. § 8106(a)), since the death benefits were paid in 2019 and the suit was not filed until 2023. The estate argued that either no limitations period applied due to public policy, or that the claim accrued later when the executor was appointed. The District Court certified the question of what limitations period, if any, applies to the Delaware Supreme Court.The Supreme Court of Delaware held that claims under 18 Del. C. § 2704(b) are subject to the three-year statute of limitations in 10 Del. C. § 8106(a). The court reasoned that § 2704(b) created a new statutory right for estates to recover death benefits paid on policies lacking an insurable interest, which falls within the scope of actions “based on a statute.” The court rejected the estate’s argument that strong public policy against STOLI contracts precluded a limitations defense, and clarified that the limitations period may be subject to tolling doctrines in cases of concealment or fraud. View "GWG DLP Master Trust Dated 03/01/06 v. Estate of Frank" on Justia Law

A software company that provides donor management and data hosting services for nonprofit and educational entities experienced a significant ransomware attack. Hackers accessed and exfiltrated sensitive client data over several months, leading to widespread concern among the company’s clients about the adequacy of the company’s response. Rather than conducting a thorough investigation and remediation itself, the company provided clients with a toolkit for self-investigation and remediation. Dissatisfied, the clients undertook their own investigations and incurred expenses for legal counsel, notifications, credit monitoring, and other remedial measures. Insurance carriers that had issued policies covering such cyber incidents paid out claims for these losses, then sought to recover from the software company as subrogees and assignees of their insured clients.The Superior Court of the State of Delaware initially dismissed the insurers’ complaints for failing to state a claim and, after amended complaints were filed, dismissed them with prejudice. The Superior Court reasoned that the insurers failed to provide sufficient factual support for each insured’s claim by pleading in the aggregate, and further found that proximate cause had not been adequately alleged, as the complaints did not link the damages to any specific contractual obligation.On appeal, the Supreme Court of the State of Delaware reviewed the Superior Court’s decision de novo. The Supreme Court held that the insurers, as subrogees/assignees, adequately pled a breach of contract claim under New York law, which governed the agreements, and that Delaware’s notice pleading standard was satisfied. The Court found that the amended complaints sufficiently alleged the existence of contracts, performance by the insureds, breach by the company, and resulting damages, and that proximate cause was properly pled. The Supreme Court reversed the Superior Court’s dismissal and remanded for further proceedings. View "Travelers Casualty and Surety Company of America v. Blackbaud, Inc." on Justia Law

A dispute arose following the acquisition of an online video game company, where the buyer agreed to pay a base purchase price with the possibility of an additional earnout payment if certain financial targets were met. The merger agreement included a provision requiring disputes over the calculation of this earnout to be resolved by a mutually agreed-upon accounting firm acting as an arbitrator. After closing, the seller representative alleged that the buyer acted in bad faith to reduce the earnout, failed to provide required information and access, and breached both express and implied contractual obligations. The buyer responded by invoking the alternative dispute resolution (ADR) clause and moved to compel arbitration.The Court of Chancery of the State of Delaware granted the buyer’s motion, finding that the seller’s claims—including those alleging bad-faith conduct and denial of information access—were fundamentally disputes over the earnout calculation and thus fell within the scope of the ADR provision. The court held that questions about information access and related procedural matters were for the arbitrator to decide. The seller’s complaint was dismissed with prejudice, and the dispute proceeded to arbitration, where the arbitrator ruled in favor of the buyer. The Court of Chancery later confirmed the arbitrator’s award, rejecting the seller’s arguments regarding undisclosed conflicts of interest.The Supreme Court of the State of Delaware reviewed the case. It affirmed the Court of Chancery’s judgment, holding that the bad-faith breach claims and the information-access claim were properly subject to arbitration under the agreement. The court found no error in the lower court’s refusal to vacate the arbitration award, concluding that the seller failed to demonstrate an undisclosed relationship that would indicate evident partiality. The Court of Chancery’s decisions to compel arbitration and to confirm the award were affirmed. View "Fortis Advisors LLC vs. Stillfront Midco AB" on Justia Law