Articles and Memos Archive

This article addresses recent developments in appraisal litigation in the Delaware Courts following the landscape-shifting decisions in DFC Global, Dell, and Aruba Networks.

This article discusses some of the important takeaways from the Delaware Supreme Court decision in the Aruba Networks appraisal action, and contemplates the future use of market efficiency in stockholder litigation.

Stockholders must ordinarily make a demand on their board of directors before initiating litigation on the corporation’s behalf. But the litigation consequences of a stockholder demand—a binding concession of the board’s ability to impartially consider a demand—are so harsh in the ensuing litigation that stockholders rarely choose that path. The demand requirement is thus falling short of its promise as an internal dispute resolution mechanism. If, as we suggest, stockholders typically avoid making a demand and instead prefer to initiate litigation and raise demand futility arguments, no matter how weak, they deprive independent boards of the opportunity to consider the merits of potential litigation outside the courtroom. We propose a private-ordering solution, in which stockholders and boards can agree, if they choose, to reserve rights on demand futility arguments while a demand review process is undertaken. This would allow boards to engage with stockholders in the review process, and would replace some demand futility litigation with boardroom deliberation, thereby restoring the internal dispute resolution function to the demand requirement.

This article explores the use of Section 220 demands for books and records by stockholders seeking to challenge mergers and acquisitions.

This article analyzes the Supreme Court's decision in the Dell appraisal matter, identifies significant changes in the law, and draws implications for future public company appraisal actions.