Corporate Governance Litigation
As part of Wilson Sonsini's multi-discipline approach, the firm's comprehensive corporate governance practice also encompasses litigation—representing companies, corporate officers, boards of directors, special board committees, and financial institutions and investors—in complex contested governance matters including M&A litigation, corporate control disputes, shareholder litigation demands, and derivative lawsuits. Wilson Sonsini also has an experienced team that represents special litigation and demand committees in conducting investigations of alleged misconduct and breaches of fiduciary duty.
M&A Litigation
Wilson Sonsini's governance litigation team represents companies, officers, directors, and other third parties involved in mergers and acquisitions confronted by shareholder claims and other legal maneuvers aimed at preventing or enforcing transactions. Our team works closely with clients—companies (both as acquirors and targets), investors, private equity firms, hedge funds and other stakeholders—throughout the course of a transaction.
Representation at All Deal Stages
At different stages of a given transaction, we advise clients on best practices for process-based issues that often arise in litigation, including on potential conflicts of interest, change-of-control obligations, disclosure requirements, and other key steps or milestones. The team's experience in contested matters and deal-related litigation includes, for example:
- "Busted-deal" disputes
- Corporate takeover-related disputes
- Going-private transactions
- Fiduciary duty claims
- Poison pill and other defensive-measures
- Post-deal earnout disputes
- Proxy battles
Key Delaware Expertise
Wilson Sonsini also has a recognized and renowned team of Delaware law experts, which gives our clients an important and strategic advantage for three key reasons: (a) the sheer number of companies incorporated under Delaware law; (b) Delaware law governs the fiduciary duties of boards of directors of those companies; and (c) Delaware law influences corporate law in numerous other states in which we also represent clients involved in deal-related litigation.
Also of strategic importance to our clients is our team's proven track record of achieving favorable resolutions in M&A disputes litigated in the Delaware Court of Chancery and throughout the U.S. , including both state and federal jurisdictions.
Though the majority of our experience involves publicly held corporations, Wilson Sonsini's M&A litigators also represent clients in contested matters arising out of private company deals.
Special Litigation and Demand Committees
With the increase in derivative litigation in recent years, boards of directors are increasingly looking to independent committees formed to consider stockholder litigation demands and derivative litigation. Wilson Sonsini has deep experience advising demand review committees (formed to consider litigation demands made on the company) and special litigation committees (formed where derivative litigation has been filed and the board is deemed interested).
The Heightened Value of our Experience
Wilson Sonsini advises demand review committees (formed to consider litigation demands made on the company) and special litigation committees (formed where derivative litigation has been filed and the board is deemed interested).
Our experienced team stays abreast of the key issues and case law related to special litigation and demand committees, which allows us to provide ongoing, immediate, and business-forward advice to clients. Also, because Delaware courts have continued to define and develop specific procedures and preferences for addressing litigation involving special committees, our team’s experience positions us to represent clients where, as well as when, clients need us.
In matter after matter, our team has applied its high level of experience to quickly assess underlying facts, help clients address complicated fiduciary duty issues, and follow a process that is the best interest of the corporation—and one that can withstand rigorous judicial review. See the above tab for a list of select matters.
A Team Anchored by Seasoned Litigators and Former Jurists
Wilson Sonsini's experienced team includes proven litigators and former jurists who have represented clients in disputes involving complicated and potentially business-threatening claims brought by shareholder activists, serial plaintiff counsel firms, and other aggressive parties. For example, our team includes William (Bill) B. Chandler, III, the former Chancellor on the Court of Chancery, and Joseph R. Slights III, the former Vice Chancellor on the Court of Chancery, who bring their wealth of knowledge from their time on the bench to these matters. The team also includes Katherine Henderson and Brad Sorrels—both of whom lead the firm's corporate goverance litigation practice. To view the complete team, click here.
Overview
As part of Wilson Sonsini's multi-discipline approach, the firm's comprehensive corporate governance practice also encompasses litigation—representing companies, corporate officers, boards of directors, special board committees, and financial institutions and investors—in complex contested governance matters including M&A litigation, corporate control disputes, shareholder litigation demands, and derivative lawsuits. Wilson Sonsini also has an experienced team that represents special litigation and demand committees in conducting investigations of alleged misconduct and breaches of fiduciary duty.
M&A Litigation
Wilson Sonsini's governance litigation team represents companies, officers, directors, and other third parties involved in mergers and acquisitions confronted by shareholder claims and other legal maneuvers aimed at preventing or enforcing transactions. Our team works closely with clients—companies (both as acquirors and targets), investors, private equity firms, hedge funds and other stakeholders—throughout the course of a transaction.
Representation at All Deal Stages
At different stages of a given transaction, we advise clients on best practices for process-based issues that often arise in litigation, including on potential conflicts of interest, change-of-control obligations, disclosure requirements, and other key steps or milestones. The team's experience in contested matters and deal-related litigation includes, for example:
- "Busted-deal" disputes
- Corporate takeover-related disputes
- Going-private transactions
- Fiduciary duty claims
- Poison pill and other defensive-measures
- Post-deal earnout disputes
- Proxy battles
Key Delaware Expertise
Wilson Sonsini also has a recognized and renowned team of Delaware law experts, which gives our clients an important and strategic advantage for three key reasons: (a) the sheer number of companies incorporated under Delaware law; (b) Delaware law governs the fiduciary duties of boards of directors of those companies; and (c) Delaware law influences corporate law in numerous other states in which we also represent clients involved in deal-related litigation.
Also of strategic importance to our clients is our team's proven track record of achieving favorable resolutions in M&A disputes litigated in the Delaware Court of Chancery and throughout the U.S. , including both state and federal jurisdictions.
Though the majority of our experience involves publicly held corporations, Wilson Sonsini's M&A litigators also represent clients in contested matters arising out of private company deals.
Special Litigation and Demand Committees
With the increase in derivative litigation in recent years, boards of directors are increasingly looking to independent committees formed to consider stockholder litigation demands and derivative litigation. Wilson Sonsini has deep experience advising demand review committees (formed to consider litigation demands made on the company) and special litigation committees (formed where derivative litigation has been filed and the board is deemed interested).
The Heightened Value of our Experience
Wilson Sonsini advises demand review committees (formed to consider litigation demands made on the company) and special litigation committees (formed where derivative litigation has been filed and the board is deemed interested).
Our experienced team stays abreast of the key issues and case law related to special litigation and demand committees, which allows us to provide ongoing, immediate, and business-forward advice to clients. Also, because Delaware courts have continued to define and develop specific procedures and preferences for addressing litigation involving special committees, our team’s experience positions us to represent clients where, as well as when, clients need us.
In matter after matter, our team has applied its high level of experience to quickly assess underlying facts, help clients address complicated fiduciary duty issues, and follow a process that is the best interest of the corporation—and one that can withstand rigorous judicial review. See the above tab for a list of select matters.
A Team Anchored by Seasoned Litigators and Former Jurists
Wilson Sonsini's experienced team includes proven litigators and former jurists who have represented clients in disputes involving complicated and potentially business-threatening claims brought by shareholder activists, serial plaintiff counsel firms, and other aggressive parties. For example, our team includes William (Bill) B. Chandler, III, the former Chancellor on the Court of Chancery, and Joseph R. Slights III, the former Vice Chancellor on the Court of Chancery, who bring their wealth of knowledge from their time on the bench to these matters. The team also includes Katherine Henderson and Brad Sorrels—both of whom lead the firm's corporate goverance litigation practice. To view the complete team, click here.
Alerts
Significant Amendments to the Delaware General Corporation Law Are Set to Become Effective
On August 1, 2024, an extensive and important set of amendments to the Delaware General Corporation Law (the DGCL) will become effective. The amendments, which will apply both prospectively and retrospectively, were largely intended to address several recent Delaware Court of Chancery decisions that many practitioners considered inconsistent with prevailing market practice. Our previous client alert detailing the proposal of these DGCL amendments is available here. The most pertinent information about the new amendments is described below.
Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
Alerts
Recent Delaware Law Developments and Proposed Legislative Responses
The last several months have marked an extremely busy time in Delaware corporate law, with regard to decisions out of the Delaware courts, proposed legislative responses, and shifting market practices. In recent weeks in particular, the Delaware Supreme Court issued a much-anticipated ruling addressing controlling stockholder conflicts of interest that is important for companies with significant stockholders. The Council of the Corporation Law Section of the Delaware State Bar Association (the DSBA) has also proposed an extensive set of amendments to the Delaware General Corporation Law (the DGCL) that address several recent cases, particularly relating to mergers and acquisitions and stockholder agreements. Those amendments still must be adopted by the Executive Committee of the DSBA, enacted by the Delaware legislature, and signed by the Delaware Governor before they become law. This alert is designed to provide an overview of the most pertinent information about these developments.
Alerts
Delaware Court of Chancery Addresses Validity of Stockholder Agreement-Based Restrictions over Corporate Governance Matters
On February 23, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a decision concluding that some provisions of a stockholder agreement purporting to give a large stockholder various governance rights—here, in the public company and investment bank Moelis—violated the Delaware statute by infringing upon the authority of the board of directors and were therefore invalid.1 The decision will receive attention going forward, with regard to both preexisting governance arrangements that involve similar issues and structuring such arrangements in the future.
Alerts
Delaware Court of Chancery Addresses Fiduciary Duty Claims Arising from Reincorporation to Nevada
On February 20, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued an opinion refusing to dismiss stockholder claims challenging the reincorporation of TripAdvisor from Delaware to Nevada and determining that the entire fairness standard of judicial review, rather than the business judgment rule, applied to the decision to reincorporate. The essence of the court’s determination was that the purpose of the reincorporation was to reduce stockholder litigation risks for its fiduciaries and that a reduction in the litigation rights of stockholders in a controlled company creates a non-ratable benefit for the controller. Accordingly, the standard of review governing the transaction is entire fairness unless the company uses some type of procedural protections, such as approval by an independent board committee and/or minority stockholders, to lower the standard of review by simulating an arm’s-length negotiation. Because no such steps were taken here, the court denied the defendants’ motion to dismiss and allowed the case to proceed under the entire fairness standard.
Newsletters
2023 Delaware Corporate Law and Litigation Year in Review
Wilson Sonsini is pleased to present the 2023 Delaware Corporate Law and Litigation Year In Review. In 2023, the Delaware courts issued many decisions addressing an array of important topics, including director and officer oversight obligations, the role of boards in navigating environmental, social, and governance issues, dual-class stock structures and controlling stockholder conflicts of interests, structuring and process considerations for mergers and acquisitions, the enforceability of advance notice bylaws in the face of stockholder activism, and governance matters in the venture-backed company context. The Delaware General Corporation Law was also updated in certain significant ways.
Insights
Alerts
Significant Amendments to the Delaware General Corporation Law Are Set to Become Effective
On August 1, 2024, an extensive and important set of amendments to the Delaware General Corporation Law (the DGCL) will become effective. The amendments, which will apply both prospectively and retrospectively, were largely intended to address several recent Delaware Court of Chancery decisions that many practitioners considered inconsistent with prevailing market practice. Our previous client alert detailing the proposal of these DGCL amendments is available here. The most pertinent information about the new amendments is described below.
Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
Alerts
Recent Delaware Law Developments and Proposed Legislative Responses
The last several months have marked an extremely busy time in Delaware corporate law, with regard to decisions out of the Delaware courts, proposed legislative responses, and shifting market practices. In recent weeks in particular, the Delaware Supreme Court issued a much-anticipated ruling addressing controlling stockholder conflicts of interest that is important for companies with significant stockholders. The Council of the Corporation Law Section of the Delaware State Bar Association (the DSBA) has also proposed an extensive set of amendments to the Delaware General Corporation Law (the DGCL) that address several recent cases, particularly relating to mergers and acquisitions and stockholder agreements. Those amendments still must be adopted by the Executive Committee of the DSBA, enacted by the Delaware legislature, and signed by the Delaware Governor before they become law. This alert is designed to provide an overview of the most pertinent information about these developments.
Alerts
Delaware Court of Chancery Addresses Validity of Stockholder Agreement-Based Restrictions over Corporate Governance Matters
On February 23, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a decision concluding that some provisions of a stockholder agreement purporting to give a large stockholder various governance rights—here, in the public company and investment bank Moelis—violated the Delaware statute by infringing upon the authority of the board of directors and were therefore invalid.1 The decision will receive attention going forward, with regard to both preexisting governance arrangements that involve similar issues and structuring such arrangements in the future.
Alerts
Delaware Court of Chancery Addresses Fiduciary Duty Claims Arising from Reincorporation to Nevada
On February 20, 2024, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued an opinion refusing to dismiss stockholder claims challenging the reincorporation of TripAdvisor from Delaware to Nevada and determining that the entire fairness standard of judicial review, rather than the business judgment rule, applied to the decision to reincorporate. The essence of the court’s determination was that the purpose of the reincorporation was to reduce stockholder litigation risks for its fiduciaries and that a reduction in the litigation rights of stockholders in a controlled company creates a non-ratable benefit for the controller. Accordingly, the standard of review governing the transaction is entire fairness unless the company uses some type of procedural protections, such as approval by an independent board committee and/or minority stockholders, to lower the standard of review by simulating an arm’s-length negotiation. Because no such steps were taken here, the court denied the defendants’ motion to dismiss and allowed the case to proceed under the entire fairness standard.
Newsletters
2023 Delaware Corporate Law and Litigation Year in Review
Wilson Sonsini is pleased to present the 2023 Delaware Corporate Law and Litigation Year In Review. In 2023, the Delaware courts issued many decisions addressing an array of important topics, including director and officer oversight obligations, the role of boards in navigating environmental, social, and governance issues, dual-class stock structures and controlling stockholder conflicts of interests, structuring and process considerations for mergers and acquisitions, the enforceability of advance notice bylaws in the face of stockholder activism, and governance matters in the venture-backed company context. The Delaware General Corporation Law was also updated in certain significant ways.
Affiliated Programs
Association of Corporate Counsel San Francisco Bay Area — Deal or No Deal
Wilson Sonsini is proud to sponsor the Association of Corporate Counsel San Francisco Bay Area’s biggest event of the year — Deal or No Deal. The day includes 6 hours of CLE programs on topics focused on contracts, transactions, and related case law, as well as numerous networking opportunities. All in-house counsel are welcome to attend.
Affiliated Programs
29th Annual Stanford Directors’ College
Wilson Sonsini is proud to support the 29th Annual Directors’ College from June 24–26. This conference is the nation’s premier executive education program for directors and C-level executives of publicly traded firms. The program addresses a broad range of problems that confront modern boards, including the board’s role in setting business strategy, CEO and board succession, crisis management, techniques for controlling legal liability, challenges posed by activist investors, boardroom dynamics, international trade issues, the global economy, and cybersecurity threats.
Affiliated Programs
BYU Law Winter Deals Conference
Wilson Sonsini is proud to sponsor BYU Law School’s Winter Deals Conference. The conference brings leading scholars and practitioners to Park City to present state of the art research on the legal institutions supporting contemporary markets. Andy Cordo will serve as a panelist on the Keynote Panel with Vice Chancellor Morgan Zurn (Delaware Court of Chancery) on March 14 at 5:55 p.m.
Affiliated Programs
Virginia Society of CPAs (VSCPA): Anti-Corruption Day of Learning
In 2003, the U.N. Assembly designated December 9 as International Anti-Corruption Day to raise awareness about corruption. Wilson Sonsini is pleased to support the Virginia Society of CPAs in hosting its second annual virtual Anti-Corruption Day of Learning. The conference includes five separate hour long sessions on an array of relevant anti-corruption topics, including enforcement updates, the use of data analytics in anti-corruption compliance, and lessons learned from recent cases. The speakers include an array of leading practitioners, in-house counsel, and representatives from the SEC and DOJ.
Affiliated Programs
Securities Enforcement Forum 2023
Securities Enforcement Forum 2023 is a unique, one-day conference that brings together hundreds of current and former senior SEC officials, securities enforcement and white-collar attorneys, in-house counsel and compliance executives, and other top professionals in the field. This year’s conference will be held on Wednesday, October 25, 2023, at the Mayflower Hotel in Washington, D.C., and will also be available for attendees to view live online.
Events
Affiliated Programs
Association of Corporate Counsel San Francisco Bay Area — Deal or No Deal
Wilson Sonsini is proud to sponsor the Association of Corporate Counsel San Francisco Bay Area’s biggest event of the year — Deal or No Deal. The day includes 6 hours of CLE programs on topics focused on contracts, transactions, and related case law, as well as numerous networking opportunities. All in-house counsel are welcome to attend.
Affiliated Programs
29th Annual Stanford Directors’ College
Wilson Sonsini is proud to support the 29th Annual Directors’ College from June 24–26. This conference is the nation’s premier executive education program for directors and C-level executives of publicly traded firms. The program addresses a broad range of problems that confront modern boards, including the board’s role in setting business strategy, CEO and board succession, crisis management, techniques for controlling legal liability, challenges posed by activist investors, boardroom dynamics, international trade issues, the global economy, and cybersecurity threats.
Affiliated Programs
BYU Law Winter Deals Conference
Wilson Sonsini is proud to sponsor BYU Law School’s Winter Deals Conference. The conference brings leading scholars and practitioners to Park City to present state of the art research on the legal institutions supporting contemporary markets. Andy Cordo will serve as a panelist on the Keynote Panel with Vice Chancellor Morgan Zurn (Delaware Court of Chancery) on March 14 at 5:55 p.m.
Affiliated Programs
Virginia Society of CPAs (VSCPA): Anti-Corruption Day of Learning
In 2003, the U.N. Assembly designated December 9 as International Anti-Corruption Day to raise awareness about corruption. Wilson Sonsini is pleased to support the Virginia Society of CPAs in hosting its second annual virtual Anti-Corruption Day of Learning. The conference includes five separate hour long sessions on an array of relevant anti-corruption topics, including enforcement updates, the use of data analytics in anti-corruption compliance, and lessons learned from recent cases. The speakers include an array of leading practitioners, in-house counsel, and representatives from the SEC and DOJ.
Affiliated Programs
Securities Enforcement Forum 2023
Securities Enforcement Forum 2023 is a unique, one-day conference that brings together hundreds of current and former senior SEC officials, securities enforcement and white-collar attorneys, in-house counsel and compliance executives, and other top professionals in the field. This year’s conference will be held on Wednesday, October 25, 2023, at the Mayflower Hotel in Washington, D.C., and will also be available for attendees to view live online.
David J. Berger
Partner
David is an expert in and leader of the corporate governance and shareholder activism practices.
William B. Chandler III
Partner
Mr. Chandler represents clients in governance matters, committee assignments, internal investigations, and transactional matters.
Andrew D. Cordo
Partner
Andrew (Andy) Cordo is a partner in the litigation practice at Wilson Sonsini Goodrich & Rosati’s Wilmington, Delaware, office.
Ben Crosson
Partner
Ben represents clients in complex litigation matters and advises them in conjunction with government and internal investigations.
Keith E. Eggleton
Partner
Keith Eggleton is a partner at Wilson Sonsini, where he has been a lawyer for over 30 years. He litigates a wide variety of matters, including securities fraud, corporate governance disputes, government actions (SEC and DOJ), consumer fraud, and false advertising claims. He also counsels public and private companies, boards of directors, and executives on corporate governance, disclosure, and compliance issues.
John P. Flynn
Partner
John is a veteran trial lawyer with 30 years of experience in high-stakes, enterprise-threatening corporate and commercial litigation.
Shannon E. German
Partner
Shannon German is a partner in the Wilmington office of Wilson Sonsini Goodrich & Rosati. Her practice focuses on corporate governance litigation and counseling, navigation of corporate fiduciary duties, and representation of companies and their officers and directors in stockholder class actions, derivative suits, and complex commercial litigation in the Delaware Court of Chancery and the Delaware Supreme Court. She also represents clients in stockholder class actions, derivative suits, and securities actions in the state and federal courts throughout the country.
Caz Hashemi
Partner
Caz is head of the litigation department at Wilson Sonsini and has represented companies and boards in more than 100 SEC, government, and internal investigations matters.
Katherine L. Henderson
Partner
Katherine represents companies and their officers and directors in stockholder class actions, derivative suits, and complex commercial litigation.
Deno Himonas
Partner
Justice Constandinos "Deno" Himonas is a partner in the Salt Lake City office of Wilson Sonsini Goodrich & Rosati, where he advises companies on complex governance and regulatory issues.
People
David J. Berger
Partner
David is an expert in and leader of the corporate governance and shareholder activism practices.
William B. Chandler III
Partner
Mr. Chandler represents clients in governance matters, committee assignments, internal investigations, and transactional matters.
Andrew D. Cordo
Partner
Andrew (Andy) Cordo is a partner in the litigation practice at Wilson Sonsini Goodrich & Rosati’s Wilmington, Delaware, office.
Ben Crosson
Partner
Ben represents clients in complex litigation matters and advises them in conjunction with government and internal investigations.
Keith E. Eggleton
Partner
Keith Eggleton is a partner at Wilson Sonsini, where he has been a lawyer for over 30 years. He litigates a wide variety of matters, including securities fraud, corporate governance disputes, government actions (SEC and DOJ), consumer fraud, and false advertising claims. He also counsels public and private companies, boards of directors, and executives on corporate governance, disclosure, and compliance issues.
John P. Flynn
Partner
John is a veteran trial lawyer with 30 years of experience in high-stakes, enterprise-threatening corporate and commercial litigation.
Shannon E. German
Partner
Shannon German is a partner in the Wilmington office of Wilson Sonsini Goodrich & Rosati. Her practice focuses on corporate governance litigation and counseling, navigation of corporate fiduciary duties, and representation of companies and their officers and directors in stockholder class actions, derivative suits, and complex commercial litigation in the Delaware Court of Chancery and the Delaware Supreme Court. She also represents clients in stockholder class actions, derivative suits, and securities actions in the state and federal courts throughout the country.
Caz Hashemi
Partner
Caz is head of the litigation department at Wilson Sonsini and has represented companies and boards in more than 100 SEC, government, and internal investigations matters.
Katherine L. Henderson
Partner
Katherine represents companies and their officers and directors in stockholder class actions, derivative suits, and complex commercial litigation.
Deno Himonas
Partner
Justice Constandinos "Deno" Himonas is a partner in the Salt Lake City office of Wilson Sonsini Goodrich & Rosati, where he advises companies on complex governance and regulatory issues.
- Tornetta v. Maffei, et al (Delaware Court of Chancery) — represented independent directors of Pandora in shareholder litigation seeking post-closing damages for alleged breaches of fiduciary duty
- Colmenares v. ESI, Inc. et al (Oregon) — represented ESI and its directors in shareholder litigation
- City of Daytona Beach Police and Fire Pension Fund v. ExamWorks Group, Inc., et al (Delaware Court of Chancery) — represented ExamWorks and its directors and officers in shareholder litigation seeking post-closing damages for alleged breaches of fiduciary duty
- Barracuda merger litigation (Northern District of California) — represented Barracuda and its directors in shareholder litigation
- Gandlemen re Rofin et al (Michigan Circuit Court) — represented Coherent in litigation concerning its acquisition of Rofin
- In re Advanced Analogic Technologies, Inc. (Arbitration in the Delaware Court of Chancery) — represented Advanced Analogic Technologies in busted deal litigation
- Polycom, Inc. v. Sun Capital Partners V, L.P., et al. (Delaware Court of Chancery) — represented Polycom in busted deal litigation
- In re Tibco Software, Inc. Stockholders Litigation (Delaware Court of Chancery) — represented TIBCO Software and its directors in shareholder litigation
- In re Riverbed Technology, Inc. Stockholders Litigation (Delaware Court of Chancery, Northern District of California, San Francisco Superior Court) — represented Riverbed Technology and its directors in shareholder litigation
- In re Informatica Stockholder Litigation (Delaware Court of Chancery) — represented Informatica and its directors in shareholder litigation
- In re Audience, Inc. Shareholder Litigation (Santa Clara Superior Court) — represented Audience and its directors in shareholder litigation
- Hyer, et al. v. Rally Software Development Corp., et al., (Delaware Court of Chancery) — represented CA Technologies in shareholder litigation
- In re Genentech/Roche Shareholder Litigation (San Mateo Superior Court, Delaware Court of Chancery) — represented Genentech and its directors in shareholder litigation
- Carrigan v. Solectron Corporation, et al. (Santa Clara Superior Court) — represented Solectron and its directors in shareholder litigation
- Burns v. Sosnoff, et al. (Illinois Chancery Court) — represented TD Ameritrade in shareholder litigation
- Staehr v. Cash Systems, Inc., et al. (Nevada District Court) — represented Cash Systems and its directors in shareholder litigation
- In re Pervasive Software Inc. Shareholder Litigation (Travis County, Texas District Court, Delaware Court of Chancery) — represented Pervasive and its directors in shareholder litigation
- Simon, et al. v. Stang, et al. (Santa Clara Superior Court) — represented Solta Medical and its former directors in shareholder litigation
- Vivint Solar, Inc. v. SunEdison, Inc., C.A. No. 12088-VCL (Del. Ch.) — representing Vivint Solar and its directors in shareholder litigation and related litigation seeking damages for breaches of a merger agreement
- In re Aruba Networks Inc. Stockholders Litigation, Consol. C.A. No. 10765-VCL (Del. Ch.) — representing Aruba Networks and its directors in shareholder litigation
Select Merger-Related Litigation Matters
- Tornetta v. Maffei, et al (Delaware Court of Chancery) — represented independent directors of Pandora in shareholder litigation seeking post-closing damages for alleged breaches of fiduciary duty
- Colmenares v. ESI, Inc. et al (Oregon) — represented ESI and its directors in shareholder litigation
- City of Daytona Beach Police and Fire Pension Fund v. ExamWorks Group, Inc., et al (Delaware Court of Chancery) — represented ExamWorks and its directors and officers in shareholder litigation seeking post-closing damages for alleged breaches of fiduciary duty
- Barracuda merger litigation (Northern District of California) — represented Barracuda and its directors in shareholder litigation
- Gandlemen re Rofin et al (Michigan Circuit Court) — represented Coherent in litigation concerning its acquisition of Rofin
- In re Advanced Analogic Technologies, Inc. (Arbitration in the Delaware Court of Chancery) — represented Advanced Analogic Technologies in busted deal litigation
- Polycom, Inc. v. Sun Capital Partners V, L.P., et al. (Delaware Court of Chancery) — represented Polycom in busted deal litigation
- In re Tibco Software, Inc. Stockholders Litigation (Delaware Court of Chancery) — represented TIBCO Software and its directors in shareholder litigation
- In re Riverbed Technology, Inc. Stockholders Litigation (Delaware Court of Chancery, Northern District of California, San Francisco Superior Court) — represented Riverbed Technology and its directors in shareholder litigation
- In re Informatica Stockholder Litigation (Delaware Court of Chancery) — represented Informatica and its directors in shareholder litigation
- In re Audience, Inc. Shareholder Litigation (Santa Clara Superior Court) — represented Audience and its directors in shareholder litigation
- Hyer, et al. v. Rally Software Development Corp., et al., (Delaware Court of Chancery) — represented CA Technologies in shareholder litigation
- In re Genentech/Roche Shareholder Litigation (San Mateo Superior Court, Delaware Court of Chancery) — represented Genentech and its directors in shareholder litigation
- Carrigan v. Solectron Corporation, et al. (Santa Clara Superior Court) — represented Solectron and its directors in shareholder litigation
- Burns v. Sosnoff, et al. (Illinois Chancery Court) — represented TD Ameritrade in shareholder litigation
- Staehr v. Cash Systems, Inc., et al. (Nevada District Court) — represented Cash Systems and its directors in shareholder litigation
- In re Pervasive Software Inc. Shareholder Litigation (Travis County, Texas District Court, Delaware Court of Chancery) — represented Pervasive and its directors in shareholder litigation
- Simon, et al. v. Stang, et al. (Santa Clara Superior Court) — represented Solta Medical and its former directors in shareholder litigation
- Vivint Solar, Inc. v. SunEdison, Inc., C.A. No. 12088-VCL (Del. Ch.) — representing Vivint Solar and its directors in shareholder litigation and related litigation seeking damages for breaches of a merger agreement
- In re Aruba Networks Inc. Stockholders Litigation, Consol. C.A. No. 10765-VCL (Del. Ch.) — representing Aruba Networks and its directors in shareholder litigation
- Representing Special Litigation Committee of the Board of Directors of Expedia in connection with its investigation into claims surrounding Expedia’s merger with Liberty Expedia Holdings and related transactions.
- Represented evaluation committee of the Board of Directors of E.I. du Pont de Nemours and Company. Board’s decision to reject shareholder demand on the basis of Wilson Sonsini's investigation was upheld by the Delaware Supreme Court following stockholder challenge.
- Represented subcommittee of the Board of Directors of Simon Property Group in connection with stockholder demand related to CEO’s compensation. Board rejected demand based on Wilson Sonsini's investigation and stockholders did not challenge decision to reject demand.
- Represented the Special Committee of McKesson after $150 million settlement with DEA. Board rejected stockholder demand based upon Wilson Sonsini's investigation. Stockholder did not file litigation.
- Representing Special Litigation Committee of the Insys Board of Directors in connection with claims related to the Company’s marketing of opioids.
- Represented Hewlett-Packard in a variety of corporate governance issues; including representing HP and individual members of management in connection with multiple derivative actions in which the Board of Directors had appointed a demand review committee; represented company in a Section 220 books and records action where plaintiffs sought access to a report in connection with a previous investigation and which had been relied upon by the demand review committee.
- Represented Board of Directors of Starbucks Corporation in connection with shareholder litigation demand alleging directors and officers breached their fiduciary duties with respect to the company’s alleged underpayment of taxes in the European Union. Wilson Sonsini also successfully defended the wrongful refusal lawsuit.
Select Special Litigation and Demand Committee Matters
- Representing Special Litigation Committee of the Board of Directors of Expedia in connection with its investigation into claims surrounding Expedia’s merger with Liberty Expedia Holdings and related transactions.
- Represented evaluation committee of the Board of Directors of E.I. du Pont de Nemours and Company. Board’s decision to reject shareholder demand on the basis of Wilson Sonsini's investigation was upheld by the Delaware Supreme Court following stockholder challenge.
- Represented subcommittee of the Board of Directors of Simon Property Group in connection with stockholder demand related to CEO’s compensation. Board rejected demand based on Wilson Sonsini's investigation and stockholders did not challenge decision to reject demand.
- Represented the Special Committee of McKesson after $150 million settlement with DEA. Board rejected stockholder demand based upon Wilson Sonsini's investigation. Stockholder did not file litigation.
- Representing Special Litigation Committee of the Insys Board of Directors in connection with claims related to the Company’s marketing of opioids.
- Represented Hewlett-Packard in a variety of corporate governance issues; including representing HP and individual members of management in connection with multiple derivative actions in which the Board of Directors had appointed a demand review committee; represented company in a Section 220 books and records action where plaintiffs sought access to a report in connection with a previous investigation and which had been relied upon by the demand review committee.
- Represented Board of Directors of Starbucks Corporation in connection with shareholder litigation demand alleging directors and officers breached their fiduciary duties with respect to the company’s alleged underpayment of taxes in the European Union. Wilson Sonsini also successfully defended the wrongful refusal lawsuit.
Recent Insights
Alerts
Significant Amendments to the Delaware General Corporation Law Are Set to Become Effective
On August 1, 2024, an extensive and important set of amendments to the Delaware General Corporation Law (the DGCL) will become effective. The amendments, which will apply both prospectively and retrospectively, were largely intended to address several recent Delaware Court of Chancery decisions that many practitioners considered inconsistent with prevailing market practice. Our previous client alert detailing the proposal of these DGCL amendments is available here. The most pertinent information about the new amendments is described below.
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Client Advisories
Delaware's Status as the Favored Corporate Home: Reflections and Considerations
In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they should remain in Delaware or choose Delaware as the state of incorporation for their new ventures. In this discussion, we provide our reflections on that question and various factors that entrepreneurs, investors, and companies should consider when weighing incorporation in Delaware against incorporation in another state.
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
The Reliance on Delaware Compared to Other States
The sheer number of entities formed in Delaware reflects its dominance in this area. In 2022, more than 313,650 entities were formed in the state of Delaware, resulting in more than 1.9 million entities total in Delaware.[1] Delaware also continues to be the state of incorporation for nearly 68.2 percent of the Fortune 500, 65 percent of the S&P 500,[2] and approximately 79 percent of all U.S. initial public offerings in calendar-year 2022.[3] Of course, those numbers reflect that a substantial portion of entities are incorporated elsewhere, both within and outside of the United States. The Chief Justice of Delaware’s Supreme Court has noted that business entities indirectly or directly generate about a third of the state’s revenue.[4]
It also bears noting that Delaware has not always held the distinction as the favored destination for incorporations. Prior to the early 1900s, New Jersey had been the most significant state for incorporations.[5] Aware of New Jersey’s early success and in an effort to encourage corporations to domicile in Delaware, Delaware amended its constitution in 1897 to permit incorporation under general law instead of by special legislative mandate, and in 1899 adopted a general corporation law modeled largely after New Jersey’s approach.[6] These developments, in addition to the written opinions issued by Delaware’s Court of Chancery, helped make Delaware a natural home for corporations looking to leave New Jersey after that state adopted more restrictive laws related to corporations and trusts in 1913.[7]
A corporation’s state of incorporation is significant because that state’s laws govern the corporation’s internal corporate governance and inform how judges will review the conduct of directors and officers in stockholder litigation. As will be discussed in greater detail below, there are a number of factors that have made Delaware a favored state of incorporation for over a century.[8]
Why Is Delaware in Question?
Of course, it is critical to understand why some have called Delaware’s dominance into question. Some of the doubt has come from famous sources, such as Elon Musk’s much-publicized X (formerly Twitter) post stating, “Never incorporate your company in the state of Delaware” after the Delaware Court of Chancery rescinded his compensation package at Tesla.[9] Tesla’s stockholders are now expected to vote on the conversion of Tesla from a Delaware corporation to a Texas corporation at the company’s annual stockholder meeting on June 13, 2024.[10] In the conversations that we have had with clients, businesspeople, and others in the corporate bar, we have heard the following reasons given for reconsidering incorporation in Delaware:
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Recent Events
Affiliated Programs
Association of Corporate Counsel San Francisco Bay Area — Deal or No Deal
Wilson Sonsini is proud to sponsor the Association of Corporate Counsel San Francisco Bay Area’s biggest event of the year — Deal or No Deal. The day includes 6 hours of CLE programs on topics focused on contracts, transactions, and related case law, as well as numerous networking opportunities. All in-house counsel are welcome to attend.
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Affiliated Programs
29th Annual Stanford Directors’ College
Wilson Sonsini is proud to support the 29th Annual Directors’ College from June 24–26. This conference is the nation’s premier executive education program for directors and C-level executives of publicly traded firms. The program addresses a broad range of problems that confront modern boards, including the board’s role in setting business strategy, CEO and board succession, crisis management, techniques for controlling legal liability, challenges posed by activist investors, boardroom dynamics, international trade issues, the global economy, and cybersecurity threats.
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