This Week in Chancery Court: Lordstown, Curaleaf, Activision (2024)

A settlement hearing in a case challenging Lordstown Motors’ 2020 merger will be held Tuesday at the Delaware Chancery Court.

Here’s more from the Chancery Court calendar:

Monday: Blackwell Onshore LLC v. The Walt Disney Co., Del. Ch., No. 2024-0321, trial 6/24/24.

At issue: Blackwells Capital LLC wants Walt Disney Co. to hand over records about its relationship with activist investor ValueAct Capital Management and the role it played in a fight over the makeup of the entertainment giant’s board of directors. Blackwells alleges that Disney didn’t properly disclose financial ties to ValueAct before ValueAct backed Disney’s director candidates in an ongoing proxy fight, according to a pre-trial brief. Disney argues in its own pre-trial brief that “Blackwells’ theories of wrongdoing are invented out of whole cloth, unsupported by any evidence or logic, and cannot support any inspection.”

Court action: Magistrate Selena Molina will preside over a one-day trial in Wilmington, Del.

Blackwells Sues Disney Over Ties to ValueAct in Proxy Fight (2)

Monday: TH Fund I LLC v. Curaleaf Inc., Del. Ch., No. 2023-1123, bench ruling 6/24/24.

At issue: A bench ruling is expected on former Reef Dispensaries owners’ lawsuit against Curaleaf Holdings Inc., accusing the cannabis operator of breaching parts of a sale agreement to buy the smaller chain. Curaleaf and the sellers asked Chancellor Kathaleen St. Jude McCormick to rule on the pleadings during oral argument in March. Reef Dispensaries claims the sale agreement required Curaleaf to document $13 million in post-closing price adjustments, allowing both sides to submit any dispute to an independent accountant. Curaleaf argues the lawsuit is a tactic to delay paying the post-closing price reductions.

Court action: Chancellor Kathaleen St. Jude McCormick will deliver a bench ruling by phone.

Curaleaf Defends Adjustments to Reef Dispensaries Acquisition

Tuesday: ARxIUM Inc. v. Parata Sys. LLC, Del. Ch., No. 2023-0012, oral arguments 6/25/24.

At issue: Frazier Healthcare Partners LLC faces claims that it repeatedly feigned interest in acquiring ARxIUM Inc.'s pharmacy technology company OptiFill as part of a scheme to build a $1.5 billion business by poaching employees and stealing trade secrets. The defendants argue ARxIUM’s complaint illustrates the principle that “it is more time-consuming to clean up the pizza thrown at a wall than it is to throw it,” in a brief supporting their motion to dismiss. ARxIUM said in an answering brief that the “fact pattern is the exact worst-case scenario that a business worries about when engaging in acquisition discussions with a competitor.”

Court action: Oral arguments on the motion to dismiss will be heard in Wilmington, Del before Vice Chancellor Nathan A. Cook .

Frazier Healthcare Raided Talent, Stole Trade Secrets, Suit Says

Tuesday: City of Warren Gen. Emp. Ret. Sys. v. Alkire, Del. Ch., No. 2022-0207, settlement hearing 6/25/24.

At issue: Vice Chancellor J. Travis Laster will hold a settlement hearing in a pension fund’s lawsuit against Premier Inc.‘s board. The health care company is accused of overpaying insiders by $224.5 million in a transaction terminating an agreement related when the company went public using an “up-C” structure. The parties filed an agreement to settle the case for $71 million in February, with Premier’s board denying any breach of fiduciary duty to investors.

Court action: A settlement hearing will be held in Wilmington, Del.

Premier Inc. Board Sued Over $474 Million Payout to Insiders (2)

Tuesday: In re Lordstown Motors Corp. S’holders Litig., Del. Ch., No. 2021-1066, settlement hearing 6/25/24.

At issue: Electric vehicle maker Lordstown Motors Corp. and investors will meet for a settlement hearing after they filed an agreement in March to resolve the case over its merger with a special purpose acquisition company. Lordstown has agreed to pay $15.5 million to bring to an end shareholder litigation related to its 2020 merger with DiamondPeak Holdings Corp.

Court action: A settlement hearing will be held in Wilmington, Del. before Vice Chancellor Lori W. Will.

Lordstown Motors SPAC Merger Challenge Settles for $15.5 Million

Tuesday: Sjunde AP-Fonden v. Activision Blizzard Inc., Del. Ch., No. 2022-1001, motion to compel hearing 6/25/24.

At issue: A Swedish pension fund wants McCormick to compel Microsoft Corp. and Activision Blizzard Inc. to produce documents in a lawsuit alleging their merger violated Delaware law. The pension fund asked the court in May to require Activision and Microsoft to send documents related to the merger agreement, accusing the companies of withholding relevant materials and excluding metadata on the documents they did send.

Court action: A motion to compel hearing will be held by phone.

Microsoft, Activision Ordered to Face Lawsuit Over Merger (1)

Wednesday: Siegel v. Morse, Del. Ch., No. 2024-0628, motion to expedite hearing 6/26/24.

At issue: Shareholders in energy company AES Corp. want expedited discovery and a prompt trial in their lawsuit brought against the company’s board. AES is defending itself against claims that it chilled shareholder activism by demanding the disclosure of private equity carried interest, a fee fund managers receive for successful investments. The company is asking the court to pause the case until the Delaware Supreme Court decides a case relevant to the shareholders’ allegations, Kellner v. AIM ImmunoTech Inc.

Court action: A motion to expedite hearing will be held by phone.

AES Board Sued Over Bylaw Requiring Confidential Investment Info

Thursday: Roth v. Sotera Health Co., Del. Ch., No. 2022-1192, oral arguments 6/27/24.

At issue: A former top executive sued Sotera Health Co., claiming CEO Michael Petras led a “malicious, self-serving” scheme to push him out and steal millions worth of his company stock. Kurt Roth accuses Petras of forcing him to choose between forfeiting his equity or accepting a demotion and pay cut: when Roth resigned instead, Petras allegedly relied on a misinterpretation of his pay package to declare his stock unvested and seize it. Sotera argues in a brief that “it is indisputable, based on the plain terms of unambiguous contracts, that Mr. Roth forfeited his right to both his equity and severance benefits upon his resignation and refusal to sign a release thereafter.”

Court action: Oral arguments on a combined motion for summary judgment and motion for judgment on the pleadings will be heard in Wilmington, Del before Will.

Sotera Health Sued by Ousted Exec Over Alleged Stock Theft (1)

Thursday: Chordia v. Lee, Del. Ch., 2023-0382, hearing 6/27/24.

At issue: Cook ruled in January that two of ad tech firm Alphonso Inc.’s founders shouldn’t have been terminated under the terms of an agreement with an LG Electronics Inc. affiliate that acquired it. The founders’ attorneys now seek nearly $25 million for legal fees and expenses, according to a brief. The LG affiliate objects, saying in an answering brief that while “Ashish Chordia and his allies may have succeeded in installing him back on the Board, that does not justify Alphonso paying the $25 million that Plaintiffs spent to get him there.”

Court action: A hearing on the attorneys’ fee application will be held in Wilmington, Del.

LG Breached Contract in Firing Founders of Startup It Acquired