Justia Delaware Supreme Court Opinion Summaries

The United States Court of Appeals for the Third Circuit certified a question of Delaware law to the Delaware Supreme Court. The plaintiff-appellants worked on banana plantations in Costa Rica, Ecuador, and Panama at various times in the 1970s and 1980s. The defendants-appellees included United States corporations that manufactured and distributed a pesticide called dibromochloropropane (“DBCP”), and other United States corporations that owned and operated the banana plantations. The plaintiffs alleged they suffered adverse health consequences from exposure to DBCP while working on the banana plantations. In 1993, a putative class action lawsuit was filed in state court in Texas; all plaintiffs to this suit were members of the putative class. Before a decision was made on class certification, defendants impleaded a company partially owned by the State of Israel ​and used its joinder as a basis to remove the case to federal court under the Foreign Sovereign Immunities Act (FSIA). After removal, the case was consolidated with other DBCP-related class actions in the United States District Court for the Southern District of Texas. The cases were consolidated. The Texas District Court granted defendants' motion to dismiss for forum non conveniens. The certified question to the Delaware Court centered on whether a class action's tolling ended when a federal district court dismisses a matter for forum non conveniens and, consequently, denies as moot “all pending motions,” which included the motion for class certification, even where the dismissal incorporated a return jurisdiction clause stating that “the court will resume jurisdiction over the action as if the case had never been dismissed for f.n.c.” If it did not end at that time, when did it end based on the facts specific to this case? The Delaware Court responded the federal district court dismissal in 1995 on grounds of forum non conveniens and consequent denial as moot of “all pending motions,” including the motion for class certification, did not end class action tolling. Class action tolling ended when class action certification was denied in Texas state court on June 3, 2010. View "Marquinez, et al. v. Dow Chemical Company, et al." on Justia Law

Two 16-year-old high school students got into a shouting match in the girls' bathroom. Things turned physical when Tracy Cannon threw Alcee Johnson-Franklin to the ground and started throwing punches. Alcee tried to protect herself from the blows, and the two ended up on the floor of the bathroom, grappling and kicking at each other. It was over in less than a minute, but within two hours of the assault, Alcee was pronounced dead, not from blunt-force trauma, but from a rare heart condition that even Alcee did not know she had. This tragic result prompted the State to charge Tracy with criminally negligent homicide, and, after a five-day bench trial in Family Court, she was adjudicated delinquent. Tracy appealed, arguing no reasonable factfinder could have found that she acted with criminal negligence or, even if she did, that it would be just to blame her for Alcee’s death given how unforeseeable it was that her attack would cause a 16-year-old to die from cardiac arrest. The Delaware Supreme Court agreed: a defendant cannot be held responsible for criminally negligent homicide unless there was a risk of death of such a nature and degree that her failure to see it was a gross deviation from what a reasonable person would have understood, and no reasonable factfinder could conclude that Tracy’s attack - which inflicted only minor physical injuries - posed a risk of death so great that Tracy was grossly deviant for not recognizing it. View "Cannon v. Delaware" on Justia Law

Diamond Resorts International’s board of directors recommended to its stockholders that they sell their shares to a private equity buyer, Apollo Global Management, for cash in a two-step merger transaction involving a front-end tender offer followed by a back-end merger. The proxy statement had a detailed recitation of the background leading to the merger, and the reasons for and against it. But notably absent from that recitation was that the company’s founder, largest stockholder, and Chairman, had abstained from supporting the procession of the merger discussions, and from ultimately approving the deal, because he was "disappointed with the price and the Company’s management for not having run the business in a manner that would command a higher price, and that in his view, it was not the right time to sell the Company." On a motion to dismiss, the Court of Chancery held that the complaint challenging the merger should have been dismissed because the stockholders’ acceptance of the first-step tender offer was fully informed, rejecting the plaintiffs’ argument that the omission of the Chairman’s reasons for abstaining rendered the proxy statement materially misleading. The issue this case presented for the Delaware Supreme Court's review was whether that ruling was correct. The Supreme Court agreed with the plaintiffs that it was not, and that the defendants’ argument that the reasons for a dissenting or abstaining board member’s vote can never be material was incorrect. "Precisely because Delaware law gives important effect to an informed stockholder decision, Delaware law also requires that the disclosures the board makes to stockholders contain the material facts and not describe events in a materially misleading way." Here, the Court found the founder and Chairman’s views regarding the wisdom of selling the company were ones that reasonable stockholders would have found material in deciding whether to vote for the merger or seek appraisal, and the failure to disclose them rendered the facts that were disclosed misleadingly incomplete. View "Appel v. Berkman, et al." on Justia Law

Defendant Darius Harden argued he suffered prejudice because his attorney did not represent him effectively at his sentencing hearing. As originally charged, Harden faced potential convictions for Home Invasion, Assault Second Degree, Terroristic Threatening, Theft, Offensive Touching, and Endangering the Welfare of a Child. Eventually, he pled guilty to Assault Second Degree and Endangering the Welfare of a Child, and the State agreed to cap its sentencing recommendation to 15 years. This agreement was important because Harden, due to his habitual offender status, faced a potential maximum sentence of life imprisonment for the crimes to which he pled guilty. Before his sentencing hearing, Harden’s trial counsel from the Public Defender’s Office changed jobs. Rather than seek a continuance to prepare for sentencing with Harden and develop a sound strategy, Harden’s new sentencing counsel proceeded to the sentencing hearing after, at best, a fleeting discussion with Harden on the day of the hearing either in lock-up or in the courtroom itself. Sentencing counsel did not prepare Harden for allocution or make any effort to discuss with him whether there was mitigating evidence that might support a more lenient sentence. Instead, Harden’s new counsel acted on the supposed strategy of seeking less than the 15 years that the State agreed not to exceed in its recommendation. Harden did not appeal his conviction. After his pro se motion for a sentence reduction was denied, Harden brought a Rule 61 petition alleging that his counsel’s performance in the sentencing phase was ineffective and prejudiced him. In addressing Harden’s petition, the Superior Court assumed that Harden’s counsel had performed unreasonably, but held that there was no prejudice because the record supporting a sentence of 18 years was so strong. The Delaware Supreme Court reversed: “When a defendant’s counsel fails to prepare himself or his client, and the sentencing decision itself reflects the negative effects of that failure, prejudice under Strickland [v. Washington, 466 U.S. 668 (1984)] exists. For these reasons, we reverse and remand for resentencing before a different judge.” View "Harden v. Delaware" on Justia Law

Prior to “Rauf v. Delaware,” Craig Zebroski was convicted of two counts of first-degree murder and sentenced to death. After the Delaware Supreme Court held in “Powell v. Delaware” that Rauf was retroactive, his death sentence was vacated and he was resentenced to a mandatory term of life without parole. Zebroski contended that this sentence was unconstitutional in light of both Rauf and the United States Constitution. He contended Rauf invalidated not just Delaware’s capital sentencing scheme, but all of 11 Del. C. 4209, the statute that specifies the penalties for first-degree murder, which was where the capital sentencing procedures are codified. Under Zebroski’s reading, Rauf invalidated the entirety of section 4209, and thus the statute’s life-without-parole alternative could not be enforced and he should have instead been sentenced to the residual punishment prescribed by statute for all other class A felonies: a term of years ranging from fifteen years to life. In the alternative, Zebroski argued if Rauf did not strike down all of section 4209, it should have, because the life-without-parole alternative was not severable from the rest of the statute. The Delaware Supreme Court held Rauf did not invalidate the entirety of section 4209, and, as the Court held in Powell, the statute’s life-without-parole alternative was the correct sentence to impose on a defendant whose death sentence is vacated. And the Court found no constitutional fault in imposing that sentence on him. View "Zebroski v. Delaware" on Justia Law

The Court of Chancery initially found that Wal-Mart stockholders who were attempting to prosecute derivative claims in Delaware could no longer do so because a federal court in Arkansas had reached a final judgment on the issue of demand futility first, and the stockholders were adequately represented in that action. But the derivative plaintiffs in Delaware asserted that applying issue preclusion in this context violated their Due Process rights. The Delaware Supreme Court surmised this dispute implicated complex questions regarding the relationship among competing derivative plaintiffs (and whether they may be said to be in “privity” with one another); whether failure to seek board-level company documents renders a derivative plaintiff’s representation inadequate; policies underlying issue preclusion; and Delaware courts’ obligation to respect the judgments of other jurisdictions. The Delaware Chancellor reiterated that, under the present state of the law, the subsequent plaintiffs’ Due Process rights were not violated. Nevertheless, the Chancellor suggested that the Delaware Supreme Court adopt a rule that a judgment in a derivative action could not bind a corporation or other stockholders until the suit has survived a Rule 23.1 motion to dismiss The Chancellor reasoned that such a rule would better protect derivative plaintiffs’ Due Process rights, even when they were adequately represented in the first action. The Delaware Supreme Court declined to adopt the Chancellor’s recommendation and instead, affirmed the Original Opinion granting Defendants’ motion to dismiss because, under the governing federal law, there was no Due Process violation. View "California State Teachers' Retirement System, et al. v. Alvarez, et al." on Justia Law

The State appealed the Superior Court’s dismissal of an indictment under Superior Court Criminal Rule 48(b) for unnecessary delay in bringing the defendant to trial. The Superior Court relied upon Delaware v. Pruitt, 805 A.2d 177 (Del. 2002) in deciding to dismiss the indictment. After review, the Delaware Supreme Court found that "Pruitt" was distinguishable and that dismissal of this case was made in error. View "Delaware v. Hazelton" on Justia Law

Plaintiff-appellant Michael Laine slipped and fell on ice near a gas pump on the premises of a convenience store-gasoline station operated by the defendant-appellee, Speedway, LLC (“Speedway”). He was the driver of a Modern Maturity Center shuttle bus and slipped when he stepped off the shuttle to fill its tank with gasoline. The fall caused him to sustain serious physical injuries. The ice was caused by a light, freezing rain which was then falling. Laine filed suit against Speedway, alleging that negligence on Speedway’s part was the proximate cause of his injuries. The Superior Court granted summary judgment for Speedway, holding that under the “continuing storm” doctrine, Speedway was permitted to wait until the freezing rain had ended and a reasonable time thereafter before clearing ice from its gasoline station surface. This appeal raised two questions for the Delaware Supreme Court’s review: (1) should the Court continue to recognize the “continuing storm” doctrine; and (2) whether the doctrine applied to the facts of this case. After review, the Supreme Court concluded the continuing storm doctrine should continue to be recognized and that it did apply to the facts of this case. Therefore, the Court affirmed the Superior Court’s judgment. View "Laine v. Speedway, LLC" on Justia Law

In this appeal, the issue before the Delaware Supreme Court was the limits of the stockholder ratification defense when directors make equity awards to themselves under the general parameters of an equity incentive plan. In the absence of stockholder approval, if a stockholder properly challenges equity incentive plan awards the directors grant to themselves, the directors must prove that the awards are entirely fair to the corporation. But, when the stockholders have approved an equity incentive plan, the affirmative defense of stockholder ratification comes into play. Here, the Equity Incentive Plan (“EIP”) approved by the stockholders left it to the discretion of the directors to allocate up to 30% of all option or restricted stock shares available as awards to themselves. The plaintiffs alleged facts leading to a pleading-stage reasonable inference that the directors breached their fiduciary duties by awarding excessive equity awards to themselves under the EIP. Thus, a stockholder ratification defense was not available to dismiss the case, and the directors had to demonstrate the fairness of the awards to the Company. The Supreme Court reversed the Court of Chancery’s decision dismissing the complaint and remanded for further proceedings. View "In Re Investors Bancorp, Inc. Stockholder Litigation" on Justia Law

When Exelon Generation Acquisitions purchased Deere & Company’s wind energy business, it agreed to make earn-out payments to Deere if it reached certain milestones in the development of three wind farms that were underway at the time of the sale. Included in the sale was a binding power purchase agreement Deere secured from a local utility to purchase energy from the wind farm once it became operational. One of the three projects at issue in this appeal, the Blissfield Wind Project (in Lenawee County, Michigan) could not come to fruition because of civic opposition. Exelon managed to acquire another nascent wind farm from a different developer (Gratiot County, Michigan). Exelon managed to persuade the local utility to transfer the power purchase agreement there. The Gratiot County site was successful. Deere learned of Exelon’s success with the new site (and use of the power purchase agreement) and sue to recover the earn-out payment. Deere argued the earn-out payment obligation traveled from the Lenawee County farm to the Gratiot County farm. Exelon denied that it relocated the project, instead, it was prevented from developing the Blissfield farm by forces beyond its control. The Superior Court sided with Deere’s interpretation of the power purchase agreement, and ordered Exelon to pay the earn-out. The Delaware Supreme Court disagreed with this interpretation of the purchase agreement and reversed. View "Exelon Generation Acquisitions, LLC v. Deere & Company" on Justia Law