Law360 Reports on Delaware Supreme Court Case to Protect DGCL and Shareholder Rights

Law360 (subscription required) reported on oral arguments heard by the Delaware Supreme Court concerning two 2024 summary judgment decisions from the Delaware Court of Chancery rulings in West Palm Beach Firefighters Pension Fund v. Moelis & Co., C.A. No. 2023-0309-JTL. Although portions of the Court of Chancery’s rulings had been overturned by the Delaware General Assembly in June 2024 when it passed legislation allowing corporations to cede some governance rights to stockholders in exchange for consideration, the Moelis Defendants nonetheless appealed both rulings, which the statutory changes did not moot. After four law professors filed an amicus brief in support of Moelis (the “Appellants’ Amici”), Olshan submitted a friend-of-the-court brief by fourteen law professors supporting the stockholder challenge (“Appellees’ Amici”) that argued in part the Appellants’ Amici sought an “advisory opinion that would radically redefine Delaware’s ripeness doctrine and largely foreclose the Court of Chancery from playing its historical role in interpreting and enforcing Delaware law.” The brief from Appellees’ Amici also said that Appellants’ Amici brief, "would have Delaware shut down meritorious stockholder lawsuits, insulating companies and their advisors from judicial scrutiny, even when they get Delaware law wrong. This is bad law and worse policy.” Moreover, Appellants’ Amici ask the Delaware Supreme Court to establish explicit guidelines that would hold that stockholder challenges to defensive entrenching measures taken by boards of directors, including adoption of advance notice bylaws (“ANBs”), would only be actionable if raised by a stockholder that is directly impacted by such defensive actions, beyond the impact of interference with the stockholder franchise. If the Delaware Supreme Court accepts this assertion, ANBs will only ever be subject to challenge by a stockholder who has chosen to nominate, rather than stockholders deterred from nomination by the burdensome and preclusive ANBs. Olshan Chair of Litigation Lori Marks-Esterman and counsel Jacqueline Ma represent the Amici Curiae in support of the Plaintiff/Appellee in this matter.