In an abrupt reversal, Delaware says ‘Ummm... Wait!’ to fee-shifting bylaws

By Ed Batts

It has been a dizzying couple of weeks for the Delaware Bar. Previously, the disaffected German tennis federation of the professional ATP tennis tour had sour grapes over the downgrading of the Hamburg tennis tournament and the tournament’s concurrent move from spring to summer. (One cannot invent such colourful facts.) The German federation sued but lost in court, prompting the ATP tour to request reimbursement of its legal fees and other costs and expenses (‘of every kind and description’) in accordance with the bylaws of the ATP tour. The federal District Court of Delaware held that the enforceability of such a provision was an open question under Delaware law and sent limited related questions over to the Delaware state courts for a decision.

On 8 May, Delaware’s Supreme Court released an opinion in ATP Tours Inc v Deutscher Tennis Bund in which fee-shifting bylaws were upheld for a non-stock corporation. But in a ‘dude, not so fast’ moment, after wrangling behind closed doors, on 22 May the Corporation Law Section of the Delaware State Bar Association served notice that a special meeting would be held on 29 May. 

This is high drama in the buttoned-down halls and quiet streets of Wilmington. The purpose of the meeting will be to halt the forecasted consequences of ATP by voting on recommending to the Delaware Legislature a statutory amendment that would quash such bylaw provisions — essentially making a legislative end-run around the Supreme Court’s decision…

Click on the link below to read the rest of the DLA Piper briefing.

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