Delaware Supreme Court upholds fee-shifting provision in company bylaw, signifying a future sea change in corporate litigation
By Jay Coogan and John L Reed
The Delaware Supreme Court, sitting en banc, has held that a Delaware corporate bylaw that requires a losing claimant to pay the legal fees and expenses of the defendants is not invalid per se, and if otherwise enforceable can be enforced against losing claimants whether or not they were already stockholders when the relevant bylaw provision was adopted.
The court’s ruling in ATP Tour Inc et al v Deutscher Tennis Bund et al was in response to four certified questions from the US District Court in Delaware, which had been considering whether to enforce the bylaw provisions in question in a dispute between ATP Tour and some of its members.
In 2006, the board of directors of ATP Tour, a Delaware non-stock (also known as a membership) corporation, adopted a bylaw providing that if any member or members brought or supported a claim against the corporation or any other member, the claimant would then be obligated (and if more than one claimant, jointly and severally obligated) to pay the legal fees and expenses of those against whom the claim was brought if the claimant ‘does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought’. Members of ATP Tour filed claims against the corporation and the board as a result of certain changes to the importance and timing of their tournaments, and the district court, having found for the defendants on all counts, certified the question of the fee-shifting provision to the Delaware Supreme Court…
Click on the link below to read the rest of the DLA Piper briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
The Australian government has launched ‘Accelerating Commercialisation’, an initiative aimed at accelerating the commercialisation of intellectual property relating to new products, processes and services.
Hong Kong Competition Commission publishes draft guidelines — a key step toward bringing the competition ordinance into full force
The Hong Kong Competition Commission has published a set of draft guidelines on 9 October 2014 for public consultation.
Analysis from The Lawyer
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work
Shearman & Sterling is making its presence felt in the City, squaring up to magic circle firms and looking to muscle in on key relationships. Private equity house Bridgepoint is one outfit that has had its head turned by the US firm.