Q1 2023 Quarterly Corporate / M&A decisions updates

Delaware Supreme Court reverses US$690 million judgment in Boardwalk Pipeline Partners

In Boardwalk Pipeline Partners, L.P. v. Bandera Master Fund, LP, 288 A.3d 1083 (Del. 2022), the Delaware Supreme Court reversed a Delaware Court of Chancery decision that had awarded nearly US$690 million to plaintiffs. Emphasizing the “maximum flexibility” of drafting partnership agreements under Delaware law, the court found that the General Partner of a Master Limited Partnership was entitled to a conclusive presumption of good faith when exercising a call right to acquire all the public units to the detriment of minority unitholders. The Supreme Court rejected the Court of Chancery’s construction of the partnership documents, which had found “ambiguity” in the Partnership Agreement and would have required a ”protective check” on the General Partner’s discretion. Instead, the Supreme Court sought to harmonize all of partnership organizational documents when concluding that they “unambiguous[ly]” supported proper exercise of the call right.

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In re Mindbody Inc., Stockholder Litigation: Court finds unfair sale process

In re Mindbody Inc., Stockholder Litigation, C.A. No. 2019-0442-KSJM (Del. Ch. Mar. 15, 2023), the Delaware Court of Chancery held that a CEO breached his fiduciary duties by taking steps the court found tilted a merger sale process in favor of his preferred buyer and by making incomplete, misleading or false disclosures regarding the sale process and his interactions with the buyer. The court also found the buyer liable for aiding and abetting the CEO’s breaches and held the buyer and the CEO jointly and severally liable for damages of US$1 per share, which the court found reflected the difference between the purchase price and the amount the buyer would have had to pay to acquire the company but for the misconduct.

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Mere disagreement with merger decision not a cognizable claim under Delaware law

The Delaware Court of Chancery, in Teamsters Local 677 Health Services & Insurance Plan v. Martell, C.A. No. 2021-1075-NAC (Del. Ch. January 31, 2023), granted the defendant’s motion to dismiss under Corwin. The court found that the board materials and the proxy statement unambiguously contradicted the disclosure violation and breach of fiduciary duty claims brought in connection with the acquisition of CoreLogic, Inc. As the complaint relied primarily on an article paraphrasing the words of the CEO of the losing bidder in the acquisition, the court classified such claims as conclusory and found that the complaint insufficiently alleged facts to support the claims therein.

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Authored by Allison, Wuertz, David R. Michaeli, Jordan Teti, Ann Kim, Sue Ahn, Jason Chohonis, and Jocelyn Hassel.