Hooray for progress! Please help us test out our new creation method, and let us know what you think.

We suggest clicking on the 1x button to the left of the Play button above and accelerating the speech to 1.25x or 1.5x, depending on your listening preferences.

We are aware that there are some verbal snafus and imperfections in this beta test edition, so please overlook those and concentrate on the high-level idea of listenability.

Thank you in advance for your feedback to contact@chancerydaily.com!

Our piece concerning the upcoming oral argument in In re Match Group, Inc. Derivative Litigation, No. 368, 2022, hearing (Del. Dec. 13, 2023) has been published on Columbia Law School’s Blue Sky Blog! Check it out there ICYMI. And if you missed my prior Substack adding some more commentary, it’s here.

I’m not sure that I have stopped thinking about the Match case and its implications for longer than a few hours at a time over the past few weeks. Tomorrow morning — Wednesday, December 13 — the oral argument will take place at the Delaware Supreme Court. The Supreme Court is kind enough to livelivestream all their arguments, so you can watch it as it happens, here. Ten o’clock in the morning, Eastern time — that's when it goes down.

Of course, I’ll be around to give you the debrief after it happens, as well. And if you’re just hankering for some more reading material in the interim, here are links to all of the relevant documents. But before you go and click away to do that, I still have some things to say below. Don’t miss, keep scrolling.

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, open. br. (Del. Nov. 17, 2022; pub. Dec. 2, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, ans. br. (Del. Dec. 19, 2022; pub. Jan. 3, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, ans. br. (Del. Dec. 29, 2022; red. Jan. 12, 2023)

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, reply br. (Del. Jan. 12, 2023; red. Jan. 27, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, supp. open. br. (Del. July 12, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, supp. ans. br. (Del. Aug. 24, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, amicus br. (Del. Sept. 5, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, amicus br. 1 of 2 (Del. Sept. 7, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, amicus br. 2 of 2 (Del. Sept. 7, 2023) 

In re Match Group, Inc. Derivative Litigation, No. 368, 2022, supp. reply br. (Del. Sept. 29, 2023) 

Ok, so, there is a reason – one that some of you might even recall – that the Match case is of such significant concern to me. Is anyone here old enough to remember when we discussed the Linda Lao v. Dalian Wanda Group Co., Ltd., et al. and AMC Entertainment Holdings, Inc., C.A. No. 2019-0303-MTZ, tr. ruling (Nov. 30, 2022) case back during the AMC era? I talked about it on a three-hour rambling YouTube video, and I mentioned it on a couple of podcast interviews that I did back then, because it informed my view of Adam Aron coming into “the” AMC case earlier this year. Whether you remember it or not, sit back, because this is going to take some explaining, but I promise it’ll be worth it.

AMC – before it became the definition of a meme stock for the people – was previously a subsidiary of the Chinese conglomerate, Dalian Wanda Group, until it wasn’t. I’ll let VCZ’s oral ruling explain the background of how the company as you know it now began to come out from under the control of Wanda:

In mid-2017, the Chinese government began pressuring Chinese companies, including Wanda, to decrease their leverage and repatriate cash. This prompted Wanda’s chairman and controller, Wang Jianlin, to express to AMC’s CEO, Adam Aron, a desire to liquidate a portion of its AMC stock to help pay down other debts….

Aron and Goldman Sachs, AMC’s financial advisor, began searching for a potential buyer for Wanda’s stock. These efforts were deliberately concealed from the company’s board. Following that process, Silver Lake emerged as the only interested party. Aron and Goldman Sachs then facilitated negotiations between Silver Lake and Wanda. Initially, in May 2018, Silver Lake and Wanda contemplated Silver Lake buying all of Wanda’s AMC shares or enough shares to provide Silver Lake with control of AMC.

In July of 2018, rather than purchasing shares directly from Wanda, Silver Lake expressed its desire to enter into a transaction involving AMC repurchasing shares from Wanda. It was around this time that Adam Aron informed the board and requested that a special committee be formed to evaluate the transaction.

On July 23rd, 2018, AMC’s board formed a special committee consisting of three directors, all of whom are defendants in this action. The special committee retained Moelis as its financial advisor and Skadden Arps as its legal advisor.

The special committee proceeded to negotiate with Wanda, though Adam Aron often served as an intermediary. [It was shown] that when serving as this intermediary, Aron demonstrated divided loyalties and at times negotiated against or around the special committee in a manner that appears to be for Wanda’s benefit.

AMC and Silver Lake agreed to a transaction by which AMC would issue $600 million in unsecured convertible notes to Silver Lake. AMC would then use the proceeds to acquire and cancel over 24 million shares of AMC common stock held by Wanda and then pay a special dividend of $1.55 per share to all company stockholders. This transaction allowed Wanda to maintain voting control of AMC, but it would also increase AMC’s leverage…

Plaintiff filed her complaint in April 2019, asserting direct and derivative breach of fiduciary duty claims against Aron, three AMC directors, and Wanda. Plaintiff also asserted claims for aiding and abetting against Silver Lake. Specifically, plaintiff alleged that the debt issuance and share repurchase were undertaken not for the benefit of AMC, but for Wanda’s liquidity needs, and that the special committee’s process leading up to the transaction was deficient. Plaintiff also alleged that these conditions gave rise to an unfair price, both with regard to the repurchase price and the terms on which the convertible debt was issued…

On July 18th, 2019, AMC formed a special litigation committee for purposes of responding to the complaint. The special litigation committee was comprised of [two new independent directors, who had both joined the board mid-2019].

The SLC investigated the allegations in the complaint for 18 months, slowed at times like the rest of the world when the global pandemic hit. It retained six experts, reviewed over 40,000 documents, and conducted 21 interviews. The SLC did not receive documents or testimony from Wanda nor its controller, Wang due to a lack of cooperation.

Plaintiff did not sit idly by while the SLC investigated. For example, the SLC initially did not recognize WeChat messages as a potential source of documents. Plaintiff identified and pressed this oversight, and those messages ended up being a central focus of the SLC report.

On January 8th, 2021, the SLC issued its report spanning over 350 pages and including more than 200 exhibits. The SLC concluded that the director defendants did not breach their fiduciary duties. The SLC further found that Silver Lake did not aid and abet any breaches of fiduciary duty. The SLC could not conclude that Aron and Wanda did not breach their fiduciary duties, but nevertheless, did not believe pursuing litigation against them would be in AMC’s best interest.

As to Adam Aron, the SLC stated that it did not believe the company was likely to recover any damages given its findings that Aron’s conduct, while suboptimal, did not infect the SLC’s process or the transaction price.

The litigation ensued, and eventually settled during briefing on a motion to dismiss. In approving a settlement, the Court must evaluate the “give” and the “get” of the proposed settlement, and in so doing, can give a bit of insight into the merits of the claims brought…

The SLC failed to identify Adam Aron’s WeChat messages as a relevant source of documents, despite those documents [later] becoming a key aspect of its report. The SLC also did not disclose that they were missing six weeks of Aron’s WeChats, nor that Aron tried to divert the SLC from pursuing electronic communications [discovery]. Additionally, . . . the SLC failed to obtain documents from Wanda or Wang.

Those issues, among others, certainly cast doubt on the adequacy of the SLC’s investigation, making it possible plaintiff could prevail…

I also agree with plaintiff that she would have likely been able to establish Aron’s, Wang’s, and Wanda’s liability if she had gotten past the motion to dismiss. Wanda was AMC’s controlling stockholder, meaning it owed AMC the duty of loyalty. Because the company was repurchasing Wanda’s shares, Wanda stood on both sides of the stock repurchase. This is sufficient to invoke entire fairness review unless the transaction was cleansed, which it was not.

And the defendants may well have struggled to show this transaction was fair. Entire fairness entails two components: fair dealing and fair price. The SLC report [informed by the discovery of WeChat messages at the behest of plaintiff] demonstrates that the dealings fell far short of fair. Aron, [the CEO], demonstrated clearly divided loyalties that members of the special committee described as “disappointing,” “disturbing,” and “beyond fathom.” The special committee was far from an effective bulwark against his overreaching. With such poor dealing, it would not be surprising for a court to eventually find that the price was unfair. Aron’s bragging about saving Wanda $25 million at the minority [stockholder]’s expense contributes to this problem.

Let me just reiterate that last bit, because all the rest was just to get you to this point. Adam Aron was bragging about saving Wanda (AMC’s controlling stockholder) $25 million dollars in a transaction where AMC was Wanda’s counterparty. Do you know what it means if the controller is doing a self-interested transaction with the company, and the CEO saves the controller $25 million? Do you know where that money comes from, in large part? At least half of it comes from the minority stockholders -- you know, the ones to whom fiduciary duties were owed in the transaction.

AMC’s own special committee – once litigation revealed facts they did not previously know – described Aron and Wanda’s conduct as “disappointing,” “disturbing,” and “beyond fathom.” Now, I know a lot of you reading this may not have read many transcripts of directors’ depositions in your life, but those are Very Strong Words™️ — particularly in that context.

Why on Earth am I telling you all of this? Just to relive the heady days of AMC? No. No, thank you. I’m telling you this because – if the IAC Defendants’ suggestion in the Match case is adopted by the Delaware Supreme Court, the Wanda Group case would have become a “business judgment rule” case, which means that it would have been dismissed on the pleadings before any of these “disappointing,” “disturbing,” and “beyond fathom”-type facts were revealed.

Being able to invoke business judgment rule protection effectively neuters the courts’ ability to review the fairness of the transaction. And you know what does not happen once the judiciary has been declawed of its only incisive means of reviewing the fairness of such conflicted transactions? Imagine it’s like It’s a Wonderful Life (Corporate Law Edition) – in the alternate universe, when there are no petals from ZuZu in your pocket, there’s no plaintiff to bring this case, which means there’s no Special Litigation Committee in the first place, never mind a Special Litigation Committee that is pushed by the plaintiff into demanding discovery that shows that the controller was – in fact – consciously extracting value in the transaction at the expense of the minority (with the gleeful help of the CEO).

All those facts are just … poof … gone. Known only by the controller and his cronies. There’s no available evidence to show fraud on the board at the pleading stage, so there’s no point of entry for the court. Fraud rarely willingly leaves a trail of evidence of its own doings, but that is especially the case when the ones keeping the books that are available for inspection don’t even know they are being defrauded. There’s no outside examination allowed, of a situation that was clearly ripe for extracting value from the minority.

Does that seem right to anyone? And for what would we make this tradeoff? To save on some transaction costs that litigation necessarily brings? These companies are surely not pinching pennies when it comes to hiring the most expensive lawyers to create transactions that already attempt to evade judicial review in the first place, and that’s in the current regime where the Court still has some grip. In the proposed new world order? It’s a free for all.

Cases like Wanda Group, like In re Straight Path Communications Inc. Consolidated Stockholder Litigation, C.A. No. 2017-0486-SG (consol.), memo. op. (Del. Ch. Oct. 3, 2023), and like Stewart N. Goldstein, MD v. Alexander J. Denner, et al. [Bioverativ], C.A. No. 2020-1061-JTL, memo. op. (Del. Ch. May 26, 2022) – these cases show that, left to their own devices, the self-interested drives of our (very) human nature will be the forces driving controlling stockholders. And without entire fairness review, no one will ever been any the wiser. The standards of review are put in place for a reason, and while all rules add costs, there’s been no showing that this new proposed plan benefits anyone but the controllers at the inevitable expense of the minority. And whom are rules, laws, and judicial review frequently meant to constrain? In my humble opinion, it’s those with the most power who could do the most damage if left unchecked. Thems would be the controllers, ya hear?

The Court of Chancery has previously observed, “fraus omnia corrumpit—fraud vitiates everything.” In re Dole Food Co., Inc. Stockholder Litigation, C.A. No. 8703-VCL (consol.), opinion (Del. Ch. Aug. 27, 2015). Unsurprisingly, like Wanda Group, many of Delaware’s leading fiduciary cases involve correcting and deterring fraud-on-the-board. See, e.g., Confronting the Problem of Fraud on the Board (Friedlander). But under the IAC Defendants’ proposed standard-shifting regime in the Match appeal, it is hard to imagine how Delaware courts could realistically continue to combat fraud-on-the-board in non-squeeze-out transactions (and lord knows there’s not going to be any such thing as a squeeze-out anymore if controllers can just tunnel value away into an unreviewable “non”-squeeze-out transactions).

Predatory controllers will simply withhold relevant information from the special committee (as Aron and Wanda did), knowing that they will have no obligation to seek a stockholder vote, which in turn means they’ll have no obligation to provide a full accounting of the facts in a proxy statement. Even if hardy stockholders would opt to investigate through a books-and-records demand, they will find no trace of the fraud in the formal board materials because the special committee will not know that it was misled. Query what plaintiffs’ law firm is going to be willing to foot the bill for the books-and-records demand with almost zero hope that it will turn up the truth, also.

Even if some willful stockholders are persistent and make a books-and-records demand, the investigation will likely end with the production of sanitized board level materials (they give CLEs on how to paper those things up, let’s not kid ourselves, and that’s for when the board knows something – never mind when it’s also in the dark). So, anyhoo, the fraud will go undetected.

Even the most persistent stockholder who convinces the Court to order the production of company-side emails and text messages will still come up dry, as Section 220 offers no mechanism for stockholders to obtain emails or text messages from anyone other than the company. Imagine if Aron had been smart enough not to brag about the $25 million in his own WeChat messages and the only evidence existed in internal text messages amongst people at Wanda. Or imagine if it was outside investment bankers doing the bragging. Those documents could never -- under any circumstances -- be had through a books-and-records investigation.

The status quo -- to be clear, that is the actual status quo, which entails “that entire fairness presumptively applies whenever a controller extracts a non-ratable or unique benefit” and “minority stockholders are entitled to entire fairness review” absent the dual procedural protections outlined in In re MFW / M&F Worldwide (See, e.g., In re Tilray, Inc. Reorganization Litigation, C.A. No. 2020-0137-KSJM (consol.), memo. op. (Del. Ch. June 1, 2021)) – is working. The fact that some cases are brought and do not succeed is not a sign of the failure of the judicial standards of review, far from it. It is a sign that the court exercises a vast amount of judicial restraint in seeking the truth, and sometimes, the truth is not what it seems. At times, when there is smoke, there is actually no fire. That fact -- of course -- does not mean that we should give up investigating when we smell something funny.

As they say, should a system function well, there exists no necessity for its alteration. Just kidding, no one says that. In the parlance of our times: if it ain’t broke, don’t fix it. That is, we should probably let sleeping dogs (not controlling stockholders) lie.

[The original version of this post had broken links that have been corrected below.

This is me ⤵️, who begs your forgiveness for multiple emails.]

The Chancery Daily x Substack is devoted to deep dives on popular matters in the Delaware Court of Chancery and other Delaware courts. When cases like Twitter v. Musk, Fox v. Dominion, or In re AMC Entertainment Holdings, Inc. are going on (and on and on and on and on), this Substack publishes regularly, sometimes even multiple times per day. I put my heart and soul into sharing all the relevant things about those kind of popular interest cases with this audience, because I truly give a bleep. When such cases calm, and the waters quiet, I take hiatuses where I can.

The last few months have been one such much-needed hiatus, but it’s time to ramp up production here once again. For those of you who don’t know, The Chancery Daily’s main publication is The Long Form, which is a trade publication geared toward lawyers and practitioners in the Delaware Courts, and of which I am the Editor-in-Chief. The Long Form is also subscribed to by some sophisticated finance types, and many academics. We even have a few hard-core legal geeks on our rolls.

As you should know, I don’t post on Twitter (alav ha-shalom), but if you want to follow my random thoughts of the sort that used to go there, you can follow me on Threads. It’s mostly jokes, memes, and quirky random thoughts on all things legal, tech, and the morass that is Musk’s absolute destruction of $44 billion, his reputation, and the platform that used to be found at twitter dot com. Threads is actually a great platform, and it’s nearly Nazi free, which is more than I can say for the old place.

By way of brief update on what you can expect to see in future Substack posts here, there are many cases of public interest pending in the Delaware Court of Chancery at the moment, including but not limited to:

• Elon Musk’s compensation case concerning $55 billion in option grants, Tornetta v. Musk is pending post-trial ruling after post-trial supplemental briefing was completed.

• Tesla’s director compensation settlement, in Police and Fire Retirement System of the City of Detroit v. Elon Musk, et al. which was subject to objection, is pending a ruling from the fairness hearing.

• Briefing in the AMC Entertainment appeal at the Delaware Supreme Court (no, not this one, the Rose Izzo appeal) is soon to be filed, and will be scheduled for oral argument once briefing is complete. (Yes, it’s really not over!)

• The Sjunde AP-Fonden v. Activision Blizzard, Inc. case is pending a ruling on motions to dismiss, for summary judgment, and to stay.

• The currently-stayed remedies trial in 26 Capital Acquisition Corp., et al. v. Tiger Resort Asia Ltd., et al., C.A. No. 2023-0128-JTL, which is now pending the outcome of Rimu Capital Ltd v. Ader, C.A. No. 2023-1109-JTL.

• The inevitable showdown that will come to a head someday concerning the former Twitter execs’ owed parachute payments.

• Updates from the Match Group oral argument on December 13, 2023 at the Delaware Supreme Court.

• Goings on in recent cases filed in the Court of Chancery involving Disney, WWE, Netflix, NVIDIA, and many others.

• Whatever else readers might request coverage on! Go ahead, reply to this email, I dare you.

Most of these posts on Substack will be for paying subscribers, but there is always a significant amount of free content for those of you with only a passing interest. We’re glad you’re here — whether you are a die-hard or a newbie.

But today, I’d like to bring you some cross-over content from our flagship publication about an incredibly important case that has been working its way through the Delaware Courts, and is on tap for oral argument at the Delaware Supreme Court on December 13th. The below synopsis was prepared for lawyers, so pardon its somewhat more sophisticated language, and its lack of background deep dives on all the new concepts it’s touching on. But it’s important, and some of you will take what you can, and the rest of you will ask great questions in the comments, and everyone will learn and grow!

Much commentary has been written on the topic of the In re Match Group, Inc. Derivative Litigation appeal, including a recent piece from Gregory Varallo, Andrew Blumberg, and James Janison of Bernstein Litowitz entitled “Optimizing” and Match: Bad Policy Threatens to Drive Bad Law. That piece even got a response on LinkedIn from the Honorable Vice Chancellor Laster himself that gives more than a hint of his take on the certain positions argued by defendants in the case:

If it’s not clear, those are strong words. But after our entire team took a deep dive on all of the Match briefing, I can say with confidence that they are entirely justified. The question is whether or not the Delaware Supreme Court will be snowed by arguments that seem nearly dependent on thinking that the Justices are something other than what they are — some of the smartest, sharpest, insightful minds in the state. Inshallah they will see rightly.

You can read our Long Form diegesis of the entire Match case and what’s at stake here, where you can also find links to all the cases and briefing, and our summary of all the arguments that have been put forth. For those of you who don’t like clicking links, you can simply read on below for the take-away. This is an important case that threatens to significantly alter certain protections for minority stockholders, which have traditionally been — in my humble opinion — the hallmark of the Delaware franchise. I have talked before about my mentor Professor Michael Wachter, and I went back and checked my Corporations outline, and I wasn’t going crazy (at least not like that) when I was reading defendants’ arguments and found them to be nearly antithetical to the propositions I have always known to be true about how Delaware law works. Kahn v. Tremont is in my outline, for exactly the proposition that I thought it stood for, in the non-squeeze-out merger context — that “[o]rdinarily, in a challenged transaction involving self-dealing by a controlling shareholder, the substantive legal standard is that of entire fairness, with the burden of persuasion resting upon the defendants” and moreover, that use of a single protection (such as — in that case — a special committee) does not alter the burden of proof, much less the standard of review. Now, of course, things have changed and the law has evolved since 1997, but as you can see from VCL’s comments above, defendants’ arguments don’t seem to get any more tethered to reality when covering the intervening years.

I’ve written before about how it’s hard to speak (what I see as) the truth publicly, given my great respect for many of the lawyers involved in any given case in Delaware. It’s a small bar. I will see these people at conferences, I enjoy talking inside baseball with them. The Delaware Way, though I love aspects of it, sometimes treads dangerously close to silencing dissent and real talk about matters of importance. But whereas some people consider lawyers who practice in Delaware to be thin-skinned enough to hold it against me if I speak out on what I believe is right, I like to see them as bigger people who wouldn’t be so easily frayed. The law is all about debate and the different ways that the same truth can be conceived of, and although I don’t have a dog in the fight, I nonetheless advocate for what I think is right. And regardless of how people feel about it, I will share my view, and they can share theirs. And hopefully, we can have lively and educated debate about the legitimate issues at play in any given instance. And I’m always up for being proved wrong, or having my mind changed about things. I have spent my whole life learning, I’m not about to stop now.

Much love, as always —

Chance

Today’s edition of The Chancery Daily previews arguments on appeal in advance of oral argument in In re Match Group, Inc. Derivative Litigation, No. 368, 2022, hearing (Del. Dec. 13, 2023), which we perceive to be of great significance. Given its importance, we are sending this special edition of The Long Form to our free and paid subscribers of all stripes. If you want to receive this kind of analysis and in-depth coverage on a daily basis, reach out for more information on how to subscribe.

TCD reiterates disclaimers that arguably have been watered down by repetition over the years, but which nevertheless remain always true and relevant to our presentation. We do not represent parties in litigation. We report what happens in litigation without allegiance to what could be characterized as plaintiff-friendly or defendant-friendly legal rules or outcomes. To the extent we have any preference on litigation outcomes, it is that Delaware law will be rendered with integrity to achieve just results -- consistent with its deep roots in the equitable tradition -- and that it will thus remain justifiable as an influential de facto national body of corporate law.

Not coincidentally, this publication’s namesake institution has, for more than a century, honed unparalleled expertise and a unique body of corporate law based on equity – and is thus adaptable to address injustice. It is that body of law that distinguishes Delaware and has elevated it among all other jurisdictions as a preeminent forum for business entity formation and business dispute resolution. Less well-known but of greater societal significance is Delawarean equity’s contribution to matters of social justice. See Ethel Louise Belton, et al. v. Francis B. Gebhart, et al., C.A. No. *258-CS, opinion (Del. Ch. Apr. 1, 1952), affirmed sub nom. Oliver Brown, et al. v. Board of Education of Topeka, et al., No. 1, opinion (U.S. May 17, 1954). Indeed, this publication was intended not only to assist counsel in practice before the Court of Chancery, but to promote awareness of and respect for Delaware’s influential equity-infused law. Our quasi-labor of love was fostered by the views that equity well serves the ends of justice -- and that Delaware’s just law contributes significantly to macro-level stability of the U.S. economy. Such is TCD’s view of equity’s paramount importance to Delaware law.

Perhaps somewhat ironically then, shortly after TCD’s launch in 2012, Delaware law began to constrain the role of equity. Significantly, in the Supreme Court’s decision in Alan Kahn, et al. v. M&F Worldwide Corp., et al., No. 334, 2013, opinion (Del. Mar. 14, 2014), the High Court adopted a novel mechanism by which the judicial standard of review of interested controlling stockholder mergers would shift from entire fairness to business judgment if a transaction was structured using procedural “protections” in the form of approval by both an independent committee and a majority of minority stockholders. The novelty was to shift thestandard of review, as opposed to merely shifting the burden of proof for demonstrating that a squeeze-out merger was or was not entirely fair from a controlling stockholder to minority stockholders, as occurs under Alan R. Kahn v. Lynch Communication Systems, Inc., et al., No. 272, 1993, opinion (Del. Apr. 5, 1994) when only one of the “protections” is used. Standard shifting, rather than burden shifting, was provided as an inventive tool to encourage controllers to use both stockholder-protective mechanisms.

Following M&F Worldwide, the Supreme Court issued Robert A. Corwin, et al. v. KKR Financial Holdings, LLC, et al., No. 629, 2014, opinion (Del. Oct. 2, 2015), which conceptually followed M&F Worldwide by providing for case-dispositive standard shifting, albeit in non-controlling stockholder transactions. Under Corwin, “when a transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies,” and, as a practical matter, the action will be dismissed. Corwin differed from M&F Worldwide in that the basis for standard shifting was not to incentivize use of procedural protections, but because stockholder voting was deemed to have “cleansed” the transaction through ratification. But the result of standard shifting under both M&F Worldwide and Corwin would be the same: challenged transactions would be placed beyond equitable review of the Court.

As TCD discussed at some length in its January 6, 2023 edition, the concept of standard shifting under M&F Worldwide was conceived as a means of stockholder protection. As articulated in two pre-M&F Worldwide decisions (In re Cox Communications Shareholders Litigation, C.A. No. 613-VCS (consol.), opinion (Del. Ch. Jun. 6, 2005) and In re MFW Shareholders Litigation, C.A. No. 6566-CS (consol.), opinion (Del. Ch. May 29, 2013)), approval by both an independent committee and a stockholder vote would replicate an arms-length bargain in a transaction between a controller and a controlled company, which would both protect stockholders from misappropriation of corporate value by the controller -- by ensuring the best price (at least hypothetically) -- and protect fiduciaries from meritless lawsuits by shifting the standard of review to business judgment, requiring dismissal; to the extent the procedural protections failed to protect stockholders from value misappropriation and ensure the best price, statutory appraisal provided a backstop. The M&F Worldwide Court’s adoption of the standard proposed in the In re MFW decision modified the policy rationale, however, in emphasizing stockholder protection against misappropriation of value by the controlling stockholder and making no reference to preclusion of non-meritorious claims or accrual of settlement value by facilitation of pleading-stage dismissal. The “protection” that drove the M&F WorldwideCourt’s decision was solely protection of stockholders.

As TCD has noted, the standard adopted by the M&F Worldwide Court is materially different from the standard articulated by the In re MFW Court, and it is in no small sense confusing that both the M&F Worldwide decision and the standard it announced are routinely described as “MFW.” The standard should probably be called the Synutra standard because, as discussed in our January 26, 2023 edition, the Supreme Court’s subsequent decision in Arthur Flood v. Synutra International, Inc., et al., No. 101, 2018, opinion (Del. Oct. 9, 2018) recontextualized the standard as one intended to avoid judicial review, and overruled the M&F Worldwide decision (which it refers to as “MFW”) to the extent that it was inconsistent with the Court of Chancery’s In re MFW opinion (which it also refers to as “MFW”). See footnote 81. The protection that drove the Synutra decision was protection of the controller. (Notably, by the time the SynutraOpinion overruled the M&F Worldwide Opinion’s allowance for equitable review of the value stockholders received in a controlling stockholder squeeze-out, the ability of stockholders to challenge the merger price through statutory appraisal -- touted particularly by the Cox Communications Court, and to a lesser degree by the In re MFW Court as a backstop protection -- was severely truncated by DFC Global Corp. v. Muirfield Value Partners, LP, et al., No. 518, 2016, opinion (Del. Aug. 1, 2017), Dell, Inc. v. Magnetar Global Event Driven Master Fund, Ltd., et al., No. 565, 2016, opinion (Del. Dec. 14, 2017), and Verition Partners Master Fund, Ltd., et al. v. Aruba Networks, Inc., No. 368, 2018, opinion (Del. Apr. 16, 2019)).

Corwin, for its part, introduced a unique procedural anomaly. Ratification, the basis for Corwin's vote-based standard shifting, is an affirmative defense that must be pled in an answer; yet the standard-shift to business judgment provided a pleading-stage basis for dismissal. In In re Solera Holdings, Inc. Stockholder Litigation, C.A. No. 11524-CB (consol.), memo. op. (Del. Ch. Jan. 5, 2017), the Court of Chancery ruled that, although defendants bear the burden of proof in showing that the criteria for a ratification defense are met, plaintiffs bear the burden of pleading facts in their complaint demonstrating that a stockholder vote was uninformed or coerced. In effect, this required that plaintiffs plead evidence required to overcome an affirmative defense that defendants would presumably assert in an answer, where no answer was filed, on a motion to dismiss, with no entitlement to discovery. TCD hesitates to say that this procedural anomaly is unique in the U.S. legal system, but we are aware of no analog. Although Solera dealt only with claims subject to a Corwinratification defense, the same procedural anomaly presumably applied to an M&F Worldwide “procedural protections” defense: a plaintiff must plead evidence.

The problem of pleading evidence without discovery led to other innovations, including pursuit of statutory appraisal to obtain discovery that might support a breach of fiduciary duty claim (which was curtailed to a degree by statutory amendments limiting stockholders’ entitlement to seek appraisal), and inspection of corporate books and records under 8 Del. C. § 220. TCD believes that the first action that sought books and records to plead around a Corwin defense was Elizabeth Morrison v. Fresh Market, Inc., C.A. No. 12243-VCG, compl. (Del. Ch. Apr. 22, 2016). That effort failed when the Court rejected plaintiffs’ argument that the stockholder vote was not fully informed in Elizabeth Morrison v. Ray Berry, et al. [Fresh Market], C.A. No. 12808-VCG, letter op. (Del. Ch. Sept. 28, 2017), and dismissed the matter as an "exemplary case" for application of Corwin. But oddly, on appeal, the Supreme Court, in Elizabeth Morrison v. Ray Berry, et al. [Fresh Market], No. 445, 2017, opinion (Del. July 9, 2018), undertook what one might consider an uncharacteristically searching review of evidence on review of a motion to dismiss -- most notably email from the non-controlling founder / director of the target company -- to reach a shocking conclusion: the non-controlling founder / director of the target company lied to the board with respect to material facts, resulting in the stockholder vote being uninformed.

As TCD observed in its Labor Day Weekend 2018 edition, “Fresh Market might be viewed as an initial success or proof of principle of the use of a ‘post-Corwin 220 action’ as a ‘tool at hand’ for obtaining information, pre-filing, supporting class action claims capable of withstanding dismissal . . . Fresh Marketcould foreseeably also be a catalyst igniting defendant resistance to inspection and delay in production.” Both proved accurate. The filing of books and records actions increased dramatically, as inspection appeared to be the only means of pleading a viable breach of fiduciary duty claim; defense firms complained about the epidemic of books and records actions; and defendants stridently refused to produce any documents in books and records under tenuous theories (that have since been rejected but continue to be asserted).

From the perspective of a neutral observer, it appears that stockholders’ use of 220 actions to investigate and diligence potential breaches of fiduciary duty has been a boon to the jurisdiction -- at least to the extent that the jurisdictional ideal is that legitimate breach of fiduciary duty claims be discovered and non-meritorious claims be ferreted out at an early stage. TCD was initially troubled by the procedurally warped and perhaps unprecedented pleading requirement imposed by Solera. But if the proof of the pudding is in the eating, certainly as compared with the types of breach of fiduciary duty actions that were being filed in the Court of Chancery between the time we began publishing in 2012 and the time of Solera and Fresh Market, TCD perceives breach of fiduciary duty actions that have been brought by plaintiffs who have obtained inspection of books and records as being far more often based on legitimately questionable activity, and as asserting appropriately litigable claims.

As with the Fresh Market matter, complaints based on evidence obtained through books and records actions have also revealed how easily nominal compliance with procedural requirements that deactivate judicial scrutiny under M&F Worldwide and Corwin can be given the “patina of normalcy” described by Vice Chancellor Laster in In re Del Monte Foods Co. Shareholders Litigation, C.A. No. 6027-VCL (consol.), opinion (Del. Ch. Feb. 14, 2011), which can sometimes only be “disturbed by discovery.” Chancellor Allen noted the same phenomenon in In re Fort Howard Corp. Shareholders Litigation, C.A. No. *09991-CA, memo. op. (Del. Ch. Aug. 8, 1988). (“Rarely will direct evidence of bad faith — admissions or evidence of conspiracy — be available. . . . [The] “surface of events . . . in most instances, will itself be well-crafted and unobjectionable.”)

In Nicholas Olenik v. Frank A. Lodzinski, et al. and Earthstone Energy, Inc., No. 392, 2018, opinion (Del. Apr. 5, 2019), the Supreme Court reversed the Court of Chancery’s dismissal of an action challenging a merger based on standard-of-review shifting under M&F Worldwide, finding that a controller had already negotiated economic terms of the transaction without board knowledge or approval before the controller purportedly conditioned the transaction “ab initio” on approval by an independent committee.

But as stockholders began in earnest to use the “tools at hand” -- which Delaware case law had for decades encouraged stockholders to use to investigate claims -- to expose genuine malfeasance and assert valid claims, the Supreme Court in KT4 Partners, LLC v. Palantir Technologies, Inc., No. 281, 2018, opinion (Del. Jan. 29, 2019) imposed limitations on information that stockholders could obtain under Section 220. Although the Palantir Court found that the stockholder plaintiff was entitled to inspection of informal communications among directors, including email, that was only because the board operated informally. The Palantir Court held that “the Court of Chancery should not order emails to be produced when other materials (e.g., traditional board-level materials, such as minutes) would accomplish the petitioner's proper purpose,” which notably would exclude evidence of deceitful or surreptitious conduct such as that found to defeat standard-shifting defenses in Fresh Market and Earthstone.

The issuance of Palantir seemingly prompted companies that had not exercised formality to retroactively correct course, for example by creating minutes for meetings long past -- presumably reflecting a desired narrative -- for production in response to books and records demands, perhaps (one might suspect) in an attempt to defeat the stockholder’s demand for entitlement to inspection of contemporaneous informal records that would reveal more troubling underlying conduct. And going forward, Palantir invited tactical creation of tailored contemporaneous board materials. While it is not apparent to TCD that companies immediately grasped the concept, facts alleged in In re Zendesk, Inc. Section 220 Litigation, C.A. No. 2023-0454-BWD (coord.), final report (Del. Ch. Aug. 25, 2023), for example, seem to suggest that counsel meticulously advised and papered board actions leading up to the sale of a company -- completed after acceleration of stock-option grants to key executives at a price 40% lower than an offer the board had rejected as inadequate four months earlier -- and there, the Magistrate in Chancery recommended that plaintiffs be entitled to inspection only of official board materials.

Soon after the issuance of Palantir, prominent Delaware corporate law scholars published Understanding the (Ir)Relevance of Shareholder Votes on M&A Deals (Thomas; Cox; Mondino). As discussed in TCD’s February 15, 2019 edition, the study undertook a detailed empirical examination of stock ownership and voting by institutional investors (particularly index funds), as well as arbitrageur acquisition of target-company shares from longer-term investors and other phenomena, and concluded that:

[T]he Delaware courts need to rethink their obsession with the shareholder vote, renounce the current doctrinal trends that are taking them in the wrong direction, and return to their historic role of evaluating whether directors have satisfied their fiduciary duties in M&A transactions.

(The same edition discussed Farewell to Fairness: Towards Retiring Delaware's Entire Fairness Review(Licht), which argued that M&F Worldwide’s move toward elimination of the entire fairness standard of review is “highly desirable in principle,” assuming that the integrity of stockholder voting is ensured “by securing the supply of full information throughout the process and minimizing the impact of potential conflicts.”)

At some point, TCD encountered the term “MFW creep.” Given the foregoing, if we were to guess what the term meant, we would guess that it referred to the Court’s deactivation of its own ability to consider breach of fiduciary duty claims in favor of purported stockholder self-determination, and the rather creepy subsequent developments that have moved away entirely from the rationale highlighted in In re Cox Communications of protecting stockholders (“. . . [A] relatively modest alteration of Lynch would do much to ensure . . . integrity [of the representative litigation process that is important to our corporate law's ability to protect stockholders against fiduciary wrongdoing], while continuing to provide important, and I would argue, enhanced, protections for minority stockholders. . . .”) to protecting corporate defendants from litigation costs, settlement value, appraisal, and discovery through the tools at hand -- even in the face of evidence that corporate controllers, insiders, and fiduciaries intentionally lie, mislead, and feign compliance with standard-shifting requirements in order to expropriate corporate value for themselves with impunity.

TCD’s guess does not accurately capture what “MFW creep” is understood to mean, however. In Optimizing the World's Leading Corporate Law: A 20-Year Retrospective and Look Ahead (Hamermesh; Jacobs; Strine), the authors urged that Delaware case law had misapplied “MFW” by finding that conflicted controlling stockholder transactions other than freeze-out mergers are subject to standard shifting from entire fairness to business judgment only if conditioned on approval by both an independent special committee and unaffiliated stockholders, and argued that standard shifting should apply outside the freeze-out context if only one such protection is provided.

It was against this backdrop that the Match Group case arose. In In re Match Group, Inc. Derivative Litigation, C.A. No. 2020-0505-MTZ (consol.), memo. op. (Del. Ch. Sept. 1, 2022), the Court dismissed stockholder claims challenging a reverse spinoff and merger in which a conflicted controlling stockholder allegedly obtained non-ratable benefits. The Court found that, because the transaction was approved by a special transaction committee and by stockholder vote, those protections shifted the entire fairness standard of review to business judgment under M&F Worldwide. Plaintiffs appealed, in part arguing that the Court erred in finding that the special committee (which included a member who was not independent of the controlling stockholder) was independent for purposes of M&F Worldwide. Defendants responded that, because the challenged transaction was not a squeeze-out merger, the trial court erred by finding that both approval by an independent committee and approval by stockholder vote were required to shift the standard from entire fairness to business judgment. Rather, they argued, either approval by independent directors or unaffiliated stockholders was sufficient to shift the standard.

Although defendants did not raise that issue before the trial court, the Supreme Court found that the issue should be considered in the interests of justice, and requested supplemental briefing on “whether the Court of Chancery judgment should be affirmed because the Transactions were approved by either of (a) the [transaction] Committee or (b) a majority of the minority stockholder vote[.]”

Today’s edition previews the parties’ arguments on appeal, as well as the arguments of three separate amicus curiae in support of plaintiffs: a group of current law professors; a former professor, who is also a current and former public company director (Charles Elson); and a venture capital fund. Defendants argue that either approval by a majority of independent directors, approval by an independent committee, or approval by unaffiliated stockholders is effective to shift the standard of review applicable to a conflicted controlling stockholder transaction other than a squeeze out merger from entire fairness to business judgment, that this has been the law for decades, that such standard shifting is required under 8 Del. C. § 144, and that it is also required by “MFW” due to its refutation of the inherent coercion doctrine. The law professors’ arguments focus on economics and agency costs associated with controlling stockholders, while Elson’s arguments challenge defendants’ interpretation of case law that is asserted to have provided for standard shifting, and the venture capital fund discusses its practical concerns as a stockholder about expropriation of company value by interested insiders.

TCD notes that, as has become customary with respect to the standard-shifting mechanism adopted by the Supreme Court in M&F Worldwide, the mechanism, the Court of Chancery Opinion adopting the mechanism, and the Supreme Court Opinion affirming the Court of Chancery Opinion are all referred to as “MFW” -- which to some degree complicates understanding of what is being discussed. To the extent “MFW” is described as having rejected the doctrine of inherent coercion, TCD does not understand how the Supreme Court’s Opinion in M&F Worldwide rejected the doctrine. To the extent standard shifting from entire fairness to business judgment has always been the law, TCD confesses that it understood standard shifting to be a novel procedure first proposed (in a judicial opinion) in In re Cox Communications and first applied in In re MFW -- and before that, the only “shifting” mechanism was burden shifting. TCD is quick to add that it hasn’t been around for decades and hasn’t seen it all.

On the other hand, we have been extremely attentive observers of Delaware corporate litigation since 2012, and to the extent standard shifting through a cleansing mechanism other than under those approved in M&F Worldwide and Corwin are accepted methods of venerable vintage, their application somehow escaped our notice for the last eleven years. Nor are we alone in apparently overlooking this point of law. The defendants’ supplemental reply brief in Match distinguishes at least four prior Supreme Court opinions (each stating that the use of a single cleansing device could have only a burden- (not standard-) shifting effect in the context of a conflicted, non-squeeze-out transaction with a controller), on the grounds that defense counsel in those cases had failed to raise the argument. An odd oversight, if this is, in fact, the traditional rule.

It also bears mention that in Alan Russell Kahn v. Tremont Corp., No. 170, 1996, opinion (Del. June 10, 1997), the Delaware Supreme Court explicitly rejected the IAC defendants’ position in a case involving a share purchase, not a squeeze-out. In reviewing de novo the proper standard of review, the High Court wrote broadly about “challenged transaction[s] involving self-dealing by a controlling shareholder” -- not merely squeeze-out mergers:

Ordinarily, in a challenged transaction involving self-dealing by a controlling shareholder, the substantive legal standard is that of entire fairness, with the burden of persuasion resting upon the defendants. [William B. Weinberger v. UOP, Inc., No. 58, 1981, opinion (Del. Feb. 1, 1983)]; See [Emanuel G. Rosenblatt, et al. v. Getty Oil Co., No. 352, 1983, opinion (Del. May 9, 1985)]. The burden, however, may be shifted from the defendants to the plaintiff through the use of a well functioning committee of independent directors. [Alan R. Kahn v. Lynch Communication Systems, Inc., et al., No. 272, 1993, opinion (Del. Apr. 5, 1994)]. Regardless of where the burden lies, when a controlling shareholder stands on both sides of the transaction the conduct of the parties will be viewed under the more exacting standard of entire fairness as opposed to the more deferential business judgment standard. Id.

Entire fairness remains applicable even when an independent committee is utilized because the underlying factors which raise the specter of impropriety can never be completely eradicated and still require careful judicial scrutiny. [Weinberger]. This policy reflects the reality that in a transaction such as the one considered in this appeal, the controlling shareholder will continue to dominate the company regardless of the outcome of the transaction. [Edith Citron v. E.I. Du Pont de Nemours & Co., et al., C.A. No. *6219-VCJ, opinion (Del. Ch. June 29, 1990)]. The risk is thus created that those who pass upon the propriety of the transaction might perceive that disapproval may result in retaliation by the controlling shareholder. Id.Consequently, even when the transaction is negotiated by a special committee of independent directors, "no court could be certain whether the transaction fully approximate[d] what truly independent parties would have achieved in an arm's length negotiation." Id. Cognizant of this fact, we have chosen to apply the entire fairness standard to "interested transactions" in order to ensure that all parties to the transaction have fulfilled their fiduciary duties to the corporation and all its shareholders. [Kahn]

With respect to 8 Del. C. § 144, TCD’s February 8, 2019 edition collects the sparse sum of references to the statute that this publication had encountered or discussed as of that date, to which we now add Anurag Mehta v. Mobile Posse, Inc., et al., C.A. No. 2018-0355-KSJM, memo. op. (Del. Ch. May 8, 2019). As with the decades of precedent providing for standard shifting, to the extent Section 144 requires standard shifting in controlling stockholder transactions, litigants seem not to have found occasion to raise it for the past decade. The plain language of that statute addresses the use of cleansing mechanisms to prevent voidness of transactions with interested directors and says nothing about controlling stockholders, and given that void acts reside outside the realm of equity -- as the Supreme Court ruled in CompoSecure, LLC v. CardUX, LLC, No. 177, 2018, opinion (Del. Nov. 7, 2018), and recently reaffirmed in Gregory A. Holifield, et al. v. XRI Investment Holdings, LLC, No. 407, 2022, opinion (Del. Sept. 7, 2023) -- TCD finds it difficult to conclude that Section 144 governs application of equitable standards of review.

Generally, TCD perceives the defendants’ arguments as being reliant upon overstatement of already attenuated principles, and finds the plaintiffs’ and the amici’s analyses of the law, the economic and policy consequences, and the practical consequences to stockholders -- of what would be effectively the elimination of judicial review of conflicted controlling stockholders’ actions (given the ease with which purportedly-independent approval can be procured) -- comparatively more cogent and more compelling. We will not attempt to offer our own take on the points they make, but follow their focus on practical rather than merely theoretical constructs, noting that the idea that inherent coercion does not exist is difficult to square with reality. It is inconsistent with the response observed all-too-often from corporate directors whose positions are threatened by activist stockholders: capitulation to all demands.

Why directors would be less protective of their positions when threatened by a controlling stockholder than by an activist stockholder is difficult to imagine. And we assume it is the rare and fortunate individual who has never felt or responded to at least a tacit threat to their position or their livelihood in a manner with which they are not entirely comfortable. It is still more difficult to disregard detriments to minority stockholders of controlling stockholder expropriation. The very notion of M&F Worldwide’s standard-shifting protections, by requiring controllers to disable themselves, recognized the reality of that threat. Current market realities -- in which control disproportionate to economic interest is conferred through super-voting stock -- seemingly increase, rather than reduce, legitimate concerns of expropriation. Whatever past case law supposedly can be read to suggest, practical considerations do not seem to cry out in favor of abandoning judicial scrutiny.

Nevertheless, TCD interprets the Supreme Court’s agreement to consider defendants’ argument in the disfavored context where it was never raised before the Court below as indicative of amenability to the position. TCD does not have an admirable track record for predicting what the Supreme Court will do -- but the Court seemed to take pains to remand and reconsider Marion Coster v. UIP Companies, Inc., et al., No. 163, 2022, opinion (Del. June 28, 2023) on issues that did not figure prominently in the trial court’s decision -- perhaps for the purpose of constraining application of equity review under Andrew H. Schnell, Jr., et al. v. Chris-Craft Industries, Inc., opinion (Del. Nov. 29, 1971), only to cases involving stockholder voting -- and to raise the issue of voidness not argued before the trial court in CompoSecure for the purpose of precluding application of equity (and to reaffirm that analysis in XRI). This appears to be in connection with an increasing embrace of Delaware corporate law as a corpus governed by contract principles, antithetical to equity, with the object of conferring greater certainty and holding parties to things-deemed-agreements. This is mere speculation, however; we are unaware of any clear statement by members of the Supreme Court about such an intent. But if that is the intent, TCD questions what the effective elimination of equitable judicial review of controlling stockholders’ interested transactions leaves of equity’s role in Delaware law beyond a smoldering crater.

As noted at the beginning of this discussion, TCD regards Delaware’s unique application of equity as what distinguishes the jurisdiction and fosters the franchise. Perhaps reasonable minds could disagree on that point; if so, we hope they are correct. On this point, we find Professor Elson’s assessment worthy of emphasis:

The IAC Defendants seek a rule that is a gift to controllers at the expense of minorities, plain and simple. The IAC Defendants would have Delaware take a giant leap in the direction of the overly permissive legal regime of Nevada (which has effectively abandoned entire fairness review) -- the classic “race to the bottom.” That is not the right path for Delaware. Delaware should protect all investors, not simply controlling ones as Defendants’ rule would enable. . . .

. . . More importantly, the existing doctrine has not proved unworkable. For all the reasons set forth above, the IAC Defendants’ arguments to upend the entire fairness doctrine as applied to non-squeeze-out conflicted-controller transactions are not even marginally compelling, let alone urgent or bespeaking clear error. As amicus has observed [in Why Delaware Must Retain its Corporate Dominance and Why it May Not(Elson)], “Delaware’s preeminent role in corporate regulation has endured, despite numerous challenges, for decades [because] . . . [i]nvestors, directors, and managers respect its even-handedness and predictable approach to regulation and the resolution of corporate controversy. This is the product of a highly advanced corporate code and a judiciary renowned for its neutrality and corporate specialization.”

Put simply, Delaware law is working. The Delaware franchise is strong, and the Delaware brand is more valuable than ever. Accepting the IAC Defendants’ invitation would do far more harm to the franchise than any theoretical concerns about the Court of Chancery being unable to weed out nuisance claims, even if they are viewed under the entire fairness paradigm. Delaware’s reputation is based on maximizing stockholder value and, to achieve that goal, it has carefully managed the balance between enabling transactional flexibility and ensuring investor protection. The IAC Defendants’ proposed approach would undo that careful balance and send the law in precisely the wrong direction.

The Court should not try to fix what is not broken. Change and adaption are inevitable and desirable. But when change happens, it should be through gradual tweaks at the margins through the familiar, common-law approach that is at the core of Delaware’s brand. This Court must not perform the radical and dangerous surgery that the IAC Defendants demand.

So say we all.

The Chancery Daily x Substack is devoted to deep dives on popular matters in the Delaware Court of Chancery and other Delaware courts. When cases like Twitter v. Musk, Fox v. Dominion, or In re AMC Entertainment Holdings, Inc. are going on (and on and on and on and on), this Substack publishes regularly, sometimes even multiple times per day. I put my heart and soul into sharing all the relevant things about those kind of popular interest cases with this audience, because I truly give a fck. When such cases calm, and the waters quiet, I take hiatuses where I can.

The last few months have been one such much-needed hiatus, but it’s time to ramp up production here once again. For those of you who don’t know, The Chancery Daily’s main publication is The Long Form, which is a trade publication geared toward lawyers and practitioners in the Delaware Courts, and of which I am the Editor-in-Chief. The Long Form is also subscribed to by some sophisticated finance types, and many academics. We even have a few hard-core legal geeks on our rolls.

As you should know, I don’t post on Twitter (alav ha-shalom), but if you want to follow my random thoughts of the sort that used to go there, you can follow me on Threads. It’s mostly jokes, memes, and quirky random thoughts on all things legal, tech, and the morass that is Musk’s absolute destruction of $44 billion, his reputation, and the platform that used to be found at twitter dot com. Threads is actually a great platform, and it’s nearly Nazi free, which is more than I can say for the old place.

By way of brief update on what you can expect to see in future Substack posts here, there are many cases of public interest pending in the Delaware Court of Chancery at the moment, including but not limited to:

• Elon Musk’s compensation case concerning $55 billion in option grants, Tornetta v. Musk is pending post-trial ruling after post-trial supplemental briefing was completed.

• Tesla’s director compensation settlement, in Police and Fire Retirement System of the City of Detroit v. Elon Musk, et al. which was subject to objection, is pending a ruling from the fairness hearing.

• Briefing in the AMC Entertainment appeal at the Delaware Supreme Court (no, not this one, the Rose Izzo appeal) is soon to be filed, and will be scheduled for oral argument once briefing is complete. (Yes, it’s really not over!)

• The Sjunde AP-Fonden v. Activision Blizzard, Inc. case is pending a ruling on motions to dismiss, for summary judgment, and to stay.

• The currently-stayed remedies trial in 26 Capital Acquisition Corp., et al. v. Tiger Resort Asia Ltd., et al., C.A. No. 2023-0128-JTL, which is now pending the outcome of Rimu Capital Ltd v. Ader, C.A. No. 2023-1109-JTL.

• The inevitable showdown that will come to a head someday concerning the former Twitter execs’ owed parachute payments.

• Updates from the Match Group oral argument on December 13, 2023 at the Delaware Supreme Court.

• Goings on in recent cases filed in the Court of Chancery involving Disney, WWE, Netflix, NVIDIA, and many others.

• Whatever else readers might request coverage on! Go ahead, reply to this email, I dare you.

Most of these posts on Substack will be for paying subscribers, but there is always a significant amount of free content for those of you with only a passing interest. We’re glad you’re here — whether you are a die-hard or a newbie.

But today, I’d like to bring you some cross-over content from our flagship publication about an incredibly important case that has been working its way through the Delaware Courts, and is on tap for oral argument at the Delaware Supreme Court on December 13th. The below synopsis was prepared for lawyers, so pardon its somewhat more sophisticated language, and its lack of background deep dives on all the new concepts it’s touching on. But it’s important, and some of you will take what you can, and the rest of you will ask great questions in the comments, and everyone will learn and grow!

Much commentary has been written on the topic of the In re Match Group, Inc. Derivative Litigation appeal, including a recent piece from Gregory Varallo, Andrew Blumberg, and James Janison of Bernstein Litowitz entitled “Optimizing” and Match: Bad Policy Threatens to Drive Bad Law. That piece even got a response on LinkedIn from the Honorable Vice Chancellor Laster himself that gives more than a hint of his take on the certain positions argued by defendants in the case:

If it’s not clear, those are strong words. But after our entire team took a deep dive on all of the Match briefing, I can say with confidence that they are entirely justified. The question is whether or not the Delaware Supreme Court will be snowed by arguments that seem nearly dependent on thinking that the Justices are something other than what they are — some of the smartest, sharpest, insightful minds in the state. Inshallah they will see rightly.

You can read our Long Form diegesis of the entire Match case and what’s at stake here, where you can also find links to all the cases and briefing, and our summary of all the arguments that have been put forth. For those of you who don’t like clicking links, you can simply read on below for the take-away. This is an important case that threatens to significantly alter certain protections for minority stockholders, which have traditionally been — in my humble opinion — the hallmark of the Delaware franchise. I have talked before about my mentor Professor Michael Wachter, and I went back and checked my Corporations outline, and I wasn’t going crazy (at least not like that) when I was reading defendants’ arguments and found them to be nearly antithetical to the propositions I have always known to be true about how Delaware law works. Kahn v. Tremont is in my outline, for exactly the proposition that I thought it stood for, in the non-squeeze-out merger context — that “[o]rdinarily, in a challenged transaction involving self-dealing by a controlling shareholder, the substantive legal standard is that of entire fairness, with the burden of persuasion resting upon the defendants” and moreover, that use of a single protection (such as — in that case — a special committee) does not alter the burden of proof, much less the standard of review. Now, of course, things have changed and the law has evolved since 1997, but as you can see from VCL’s comments above, defendants’ arguments don’t seem to get any more tethered to reality when covering the intervening years.

I’ve written before about how it’s hard to speak (what I see as) the truth publicly, given my great respect for many of the lawyers involved in any given case in Delaware. It’s a small bar. I will see these people at conferences, I enjoy talking inside baseball with them. The Delaware Way, though I love aspects of it, sometimes treads dangerously close to silencing dissent and real talk about matters of importance. But whereas some people consider lawyers who practice in Delaware to be thin-skinned enough to hold it against me if I speak out on what I believe is right, I like to see them as bigger people who wouldn’t be so easily frayed. The law is all about debate and the different ways that the same truth can be conceived of, and although I don’t have a dog in the fight, I nonetheless advocate for what I think is right. And regardless of how people feel about it, I will share my view, and they can share theirs. And hopefully, we can have lively and educated debate about the legitimate issues at play in any given instance. And I’m always up for being proved wrong, or having my mind changed about things. I have spent my whole life learning, I’m not about to stop now.

Much love, as always —

Chance

Today’s edition of The Chancery Daily previews arguments on appeal in advance of oral argument in In re Match Group, Inc. Derivative Litigation, No. 368, 2022, hearing (Del. Dec. 13, 2023), which we perceive to be of great significance. Given its importance, we are sending this special edition of The Long Form to our free and paid subscribers of all stripes. If you want to receive this kind of analysis and in-depth coverage on a daily basis, reach out for more information on how to subscribe.

TCD reiterates disclaimers that arguably have been watered down by repetition over the years, but which nevertheless remain always true and relevant to our presentation. We do not represent parties in litigation. We report what happens in litigation without allegiance to what could be characterized as plaintiff-friendly or defendant-friendly legal rules or outcomes. To the extent we have any preference on litigation outcomes, it is that Delaware law will be rendered with integrity to achieve just results -- consistent with its deep roots in the equitable tradition -- and that it will thus remain justifiable as an influential de facto national body of corporate law.

Not coincidentally, this publication’s namesake institution has, for more than a century, honed unparalleled expertise and a unique body of corporate law based on equity – and is thus adaptable to address injustice. It is that body of law that distinguishes Delaware and has elevated it among all other jurisdictions as a preeminent forum for business entity formation and business dispute resolution. Less well-known but of greater societal significance is Delawarean equity’s contribution to matters of social justice. See Ethel Louise Belton, et al. v. Francis B. Gebhart, et al., C.A. No. *258-CS, opinion (Del. Ch. Apr. 1, 1952), affirmed sub nom. Oliver Brown, et al. v. Board of Education of Topeka, et al., No. 1, opinion (U.S. May 17, 1954). Indeed, this publication was intended not only to assist counsel in practice before the Court of Chancery, but to promote awareness of and respect for Delaware’s influential equity-infused law. Our quasi-labor of love was fostered by the views that equity well serves the ends of justice -- and that Delaware’s just law contributes significantly to macro-level stability of the U.S. economy. Such is TCD’s view of equity’s paramount importance to Delaware law.

Perhaps somewhat ironically then, shortly after TCD’s launch in 2012, Delaware law began to constrain the role of equity. Significantly, in the Supreme Court’s decision in Alan Kahn, et al. v. M&F Worldwide Corp., et al., No. 334, 2013, opinion (Del. Mar. 14, 2014), the High Court adopted a novel mechanism by which the judicial standard of review of interested controlling stockholder mergers would shift from entire fairness to business judgment if a transaction was structured using procedural “protections” in the form of approval by both an independent committee and a majority of minority stockholders. The novelty was to shift thestandard of review, as opposed to merely shifting the burden of proof for demonstrating that a squeeze-out merger was or was not entirely fair from a controlling stockholder to minority stockholders, as occurs under Alan R. Kahn v. Lynch Communication Systems, Inc., et al., No. 272, 1993, opinion (Del. Apr. 5, 1994) when only one of the “protections” is used. Standard shifting, rather than burden shifting, was provided as an inventive tool to encourage controllers to use both stockholder-protective mechanisms.

Following M&F Worldwide, the Supreme Court issued Robert A. Corwin, et al. v. KKR Financial Holdings, LLC, et al., No. 629, 2014, opinion (Del. Oct. 2, 2015), which conceptually followed M&F Worldwide by providing for case-dispositive standard shifting, albeit in non-controlling stockholder transactions. Under Corwin, “when a transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies,” and, as a practical matter, the action will be dismissed. Corwin differed from M&F Worldwide in that the basis for standard shifting was not to incentivize use of procedural protections, but because stockholder voting was deemed to have “cleansed” the transaction through ratification. But the result of standard shifting under both M&F Worldwide and Corwin would be the same: challenged transactions would be placed beyond equitable review of the Court.

As TCD discussed at some length in its January 6, 2023 edition, the concept of standard shifting under M&F Worldwide was conceived as a means of stockholder protection. As articulated in two pre-M&F Worldwide decisions (In re Cox Communications Shareholders Litigation, C.A. No. 613-VCS (consol.), opinion (Del. Ch. Jun. 6, 2005) and In re MFW Shareholders Litigation, C.A. No. 6566-CS (consol.), opinion (Del. Ch. May 29, 2013)), approval by both an independent committee and a stockholder vote would replicate an arms-length bargain in a transaction between a controller and a controlled company, which would both protect stockholders from misappropriation of corporate value by the controller -- by ensuring the best price (at least hypothetically) -- and protect fiduciaries from meritless lawsuits by shifting the standard of review to business judgment, requiring dismissal; to the extent the procedural protections failed to protect stockholders from value misappropriation and ensure the best price, statutory appraisal provided a backstop. The M&F Worldwide Court’s adoption of the standard proposed in the In re MFW decision modified the policy rationale, however, in emphasizing stockholder protection against misappropriation of value by the controlling stockholder and making no reference to preclusion of non-meritorious claims or accrual of settlement value by facilitation of pleading-stage dismissal. The “protection” that drove the M&F WorldwideCourt’s decision was solely protection of stockholders.

As TCD has noted, the standard adopted by the M&F Worldwide Court is materially different from the standard articulated by the In re MFW Court, and it is in no small sense confusing that both the M&F Worldwide decision and the standard it announced are routinely described as “MFW.” The standard should probably be called the Synutra standard because, as discussed in our January 26, 2023 edition, the Supreme Court’s subsequent decision in Arthur Flood v. Synutra International, Inc., et al., No. 101, 2018, opinion (Del. Oct. 9, 2018) recontextualized the standard as one intended to avoid judicial review, and overruled the M&F Worldwide decision (which it refers to as “MFW”) to the extent that it was inconsistent with the Court of Chancery’s In re MFW opinion (which it also refers to as “MFW”). See footnote 81. The protection that drove the Synutra decision was protection of the controller. (Notably, by the time the SynutraOpinion overruled the M&F Worldwide Opinion’s allowance for equitable review of the value stockholders received in a controlling stockholder squeeze-out, the ability of stockholders to challenge the merger price through statutory appraisal -- touted particularly by the Cox Communications Court, and to a lesser degree by the In re MFW Court as a backstop protection -- was severely truncated by DFC Global Corp. v. Muirfield Value Partners, LP, et al., No. 518, 2016, opinion (Del. Aug. 1, 2017), Dell, Inc. v. Magnetar Global Event Driven Master Fund, Ltd., et al., No. 565, 2016, opinion (Del. Dec. 14, 2017), and Verition Partners Master Fund, Ltd., et al. v. Aruba Networks, Inc., No. 368, 2018, opinion (Del. Apr. 16, 2019)).

Corwin, for its part, introduced a unique procedural anomaly. Ratification, the basis for Corwin's vote-based standard shifting, is an affirmative defense that must be pled in an answer; yet the standard-shift to business judgment provided a pleading-stage basis for dismissal. In In re Solera Holdings, Inc. Stockholder Litigation, C.A. No. 11524-CB (consol.), memo. op. (Del. Ch. Jan. 5, 2017), the Court of Chancery ruled that, although defendants bear the burden of proof in showing that the criteria for a ratification defense are met, plaintiffs bear the burden of pleading facts in their complaint demonstrating that a stockholder vote was uninformed or coerced. In effect, this required that plaintiffs plead evidence required to overcome an affirmative defense that defendants would presumably assert in an answer, where no answer was filed, on a motion to dismiss, with no entitlement to discovery. TCD hesitates to say that this procedural anomaly is unique in the U.S. legal system, but we are aware of no analog. Although Solera dealt only with claims subject to a Corwinratification defense, the same procedural anomaly presumably applied to an M&F Worldwide “procedural protections” defense: a plaintiff must plead evidence.

The problem of pleading evidence without discovery led to other innovations, including pursuit of statutory appraisal to obtain discovery that might support a breach of fiduciary duty claim (which was curtailed to a degree by statutory amendments limiting stockholders’ entitlement to seek appraisal), and inspection of corporate books and records under 8 Del. C. § 220. TCD believes that the first action that sought books and records to plead around a Corwin defense was Elizabeth Morrison v. Fresh Market, Inc., C.A. No. 12243-VCG, compl. (Del. Ch. Apr. 22, 2016). That effort failed when the Court rejected plaintiffs’ argument that the stockholder vote was not fully informed in Elizabeth Morrison v. Ray Berry, et al. [Fresh Market], C.A. No. 12808-VCG, letter op. (Del. Ch. Sept. 28, 2017), and dismissed the matter as an "exemplary case" for application of Corwin. But oddly, on appeal, the Supreme Court, in Elizabeth Morrison v. Ray Berry, et al. [Fresh Market], No. 445, 2017, opinion (Del. July 9, 2018), undertook what one might consider an uncharacteristically searching review of evidence on review of a motion to dismiss -- most notably email from the non-controlling founder / director of the target company -- to reach a shocking conclusion: the non-controlling founder / director of the target company lied to the board with respect to material facts, resulting in the stockholder vote being uninformed.

As TCD observed in its Labor Day Weekend 2018 edition, “Fresh Market might be viewed as an initial success or proof of principle of the use of a ‘post-Corwin 220 action’ as a ‘tool at hand’ for obtaining information, pre-filing, supporting class action claims capable of withstanding dismissal . . . Fresh Marketcould foreseeably also be a catalyst igniting defendant resistance to inspection and delay in production.” Both proved accurate. The filing of books and records actions increased dramatically, as inspection appeared to be the only means of pleading a viable breach of fiduciary duty claim; defense firms complained about the epidemic of books and records actions; and defendants stridently refused to produce any documents in books and records under tenuous theories (that have since been rejected but continue to be asserted).

From the perspective of a neutral observer, it appears that stockholders’ use of 220 actions to investigate and diligence potential breaches of fiduciary duty has been a boon to the jurisdiction -- at least to the extent that the jurisdictional ideal is that legitimate breach of fiduciary duty claims be discovered and non-meritorious claims be ferreted out at an early stage. TCD was initially troubled by the procedurally warped and perhaps unprecedented pleading requirement imposed by Solera. But if the proof of the pudding is in the eating, certainly as compared with the types of breach of fiduciary duty actions that were being filed in the Court of Chancery between the time we began publishing in 2012 and the time of Solera and Fresh Market, TCD perceives breach of fiduciary duty actions that have been brought by plaintiffs who have obtained inspection of books and records as being far more often based on legitimately questionable activity, and as asserting appropriately litigable claims.

As with the Fresh Market matter, complaints based on evidence obtained through books and records actions have also revealed how easily nominal compliance with procedural requirements that deactivate judicial scrutiny under M&F Worldwide and Corwin can be given the “patina of normalcy” described by Vice Chancellor Laster in In re Del Monte Foods Co. Shareholders Litigation, C.A. No. 6027-VCL (consol.), opinion (Del. Ch. Feb. 14, 2011), which can sometimes only be “disturbed by discovery.” Chancellor Allen noted the same phenomenon in In re Fort Howard Corp. Shareholders Litigation, C.A. No. *09991-CA, memo. op. (Del. Ch. Aug. 8, 1988). (“Rarely will direct evidence of bad faith — admissions or evidence of conspiracy — be available. . . . [The] “surface of events . . . in most instances, will itself be well-crafted and unobjectionable.”)

In Nicholas Olenik v. Frank A. Lodzinski, et al. and Earthstone Energy, Inc., No. 392, 2018, opinion (Del. Apr. 5, 2019), the Supreme Court reversed the Court of Chancery’s dismissal of an action challenging a merger based on standard-of-review shifting under M&F Worldwide, finding that a controller had already negotiated economic terms of the transaction without board knowledge or approval before the controller purportedly conditioned the transaction “ab initio” on approval by an independent committee.

But as stockholders began in earnest to use the “tools at hand” -- which Delaware case law had for decades encouraged stockholders to use to investigate claims -- to expose genuine malfeasance and assert valid claims, the Supreme Court in KT4 Partners, LLC v. Palantir Technologies, Inc., No. 281, 2018, opinion (Del. Jan. 29, 2019) imposed limitations on information that stockholders could obtain under Section 220. Although the Palantir Court found that the stockholder plaintiff was entitled to inspection of informal communications among directors, including email, that was only because the board operated informally. The Palantir Court held that “the Court of Chancery should not order emails to be produced when other materials (e.g., traditional board-level materials, such as minutes) would accomplish the petitioner's proper purpose,” which notably would exclude evidence of deceitful or surreptitious conduct such as that found to defeat standard-shifting defenses in Fresh Market and Earthstone.

The issuance of Palantir seemingly prompted companies that had not exercised formality to retroactively correct course, for example by creating minutes for meetings long past -- presumably reflecting a desired narrative -- for production in response to books and records demands, perhaps (one might suspect) in an attempt to defeat the stockholder’s demand for entitlement to inspection of contemporaneous informal records that would reveal more troubling underlying conduct. And going forward, Palantir invited tactical creation of tailored contemporaneous board materials. While it is not apparent to TCD that companies immediately grasped the concept, facts alleged in In re Zendesk, Inc. Section 220 Litigation, C.A. No. 2023-0454-BWD (coord.), final report (Del. Ch. Aug. 25, 2023), for example, seem to suggest that counsel meticulously advised and papered board actions leading up to the sale of a company -- completed after acceleration of stock-option grants to key executives at a price 40% lower than an offer the board had rejected as inadequate four months earlier -- and there, the Magistrate in Chancery recommended that plaintiffs be entitled to inspection only of official board materials.

Soon after the issuance of Palantir, prominent Delaware corporate law scholars published Understanding the (Ir)Relevance of Shareholder Votes on M&A Deals (Thomas; Cox; Mondino). As discussed in TCD’s February 15, 2019 edition, the study undertook a detailed empirical examination of stock ownership and voting by institutional investors (particularly index funds), as well as arbitrageur acquisition of target-company shares from longer-term investors and other phenomena, and concluded that:

[T]he Delaware courts need to rethink their obsession with the shareholder vote, renounce the current doctrinal trends that are taking them in the wrong direction, and return to their historic role of evaluating whether directors have satisfied their fiduciary duties in M&A transactions.

(The same edition discussed Farewell to Fairness: Towards Retiring Delaware's Entire Fairness Review(Licht), which argued that M&F Worldwide’s move toward elimination of the entire fairness standard of review is “highly desirable in principle,” assuming that the integrity of stockholder voting is ensured “by securing the supply of full information throughout the process and minimizing the impact of potential conflicts.”)

At some point, TCD encountered the term “MFW creep.” Given the foregoing, if we were to guess what the term meant, we would guess that it referred to the Court’s deactivation of its own ability to consider breach of fiduciary duty claims in favor of purported stockholder self-determination, and the rather creepy subsequent developments that have moved away entirely from the rationale highlighted in In re Cox Communications of protecting stockholders (“. . . [A] relatively modest alteration of Lynch would do much to ensure . . . integrity [of the representative litigation process that is important to our corporate law's ability to protect stockholders against fiduciary wrongdoing], while continuing to provide important, and I would argue, enhanced, protections for minority stockholders. . . .”) to protecting corporate defendants from litigation costs, settlement value, appraisal, and discovery through the tools at hand -- even in the face of evidence that corporate controllers, insiders, and fiduciaries intentionally lie, mislead, and feign compliance with standard-shifting requirements in order to expropriate corporate value for themselves with impunity.

TCD’s guess does not accurately capture what “MFW creep” is understood to mean, however. In Optimizing the World's Leading Corporate Law: A 20-Year Retrospective and Look Ahead (Hamermesh; Jacobs; Strine), the authors urged that Delaware case law had misapplied “MFW” by finding that conflicted controlling stockholder transactions other than freeze-out mergers are subject to standard shifting from entire fairness to business judgment only if conditioned on approval by both an independent special committee and unaffiliated stockholders, and argued that standard shifting should apply outside the freeze-out context if only one such protection is provided.

It was against this backdrop that the Match Group case arose. In In re Match Group, Inc. Derivative Litigation, C.A. No. 2020-0505-MTZ (consol.), memo. op. (Del. Ch. Sept. 1, 2022), the Court dismissed stockholder claims challenging a reverse spinoff and merger in which a conflicted controlling stockholder allegedly obtained non-ratable benefits. The Court found that, because the transaction was approved by a special transaction committee and by stockholder vote, those protections shifted the entire fairness standard of review to business judgment under M&F Worldwide. Plaintiffs appealed, in part arguing that the Court erred in finding that the special committee (which included a member who was not independent of the controlling stockholder) was independent for purposes of M&F Worldwide. Defendants responded that, because the challenged transaction was not a squeeze-out merger, the trial court erred by finding that both approval by an independent committee and approval by stockholder vote were required to shift the standard from entire fairness to business judgment. Rather, they argued, either approval by independent directors or unaffiliated stockholders was sufficient to shift the standard.

Although defendants did not raise that issue before the trial court, the Supreme Court found that the issue should be considered in the interests of justice, and requested supplemental briefing on “whether the Court of Chancery judgment should be affirmed because the Transactions were approved by either of (a) the [transaction] Committee or (b) a majority of the minority stockholder vote[.]”

Today’s edition previews the parties’ arguments on appeal, as well as the arguments of three separate amicus curiae in support of plaintiffs: a group of current law professors; a former professor, who is also a current and former public company director (Charles Elson); and a venture capital fund. Defendants argue that either approval by a majority of independent directors, approval by an independent committee, or approval by unaffiliated stockholders is effective to shift the standard of review applicable to a conflicted controlling stockholder transaction other than a squeeze out merger from entire fairness to business judgment, that this has been the law for decades, that such standard shifting is required under 8 Del. C. § 144, and that it is also required by “MFW” due to its refutation of the inherent coercion doctrine. The law professors’ arguments focus on economics and agency costs associated with controlling stockholders, while Elson’s arguments challenge defendants’ interpretation of case law that is asserted to have provided for standard shifting, and the venture capital fund discusses its practical concerns as a stockholder about expropriation of company value by interested insiders.

TCD notes that, as has become customary with respect to the standard-shifting mechanism adopted by the Supreme Court in M&F Worldwide, the mechanism, the Court of Chancery Opinion adopting the mechanism, and the Supreme Court Opinion affirming the Court of Chancery Opinion are all referred to as “MFW” -- which to some degree complicates understanding of what is being discussed. To the extent “MFW” is described as having rejected the doctrine of inherent coercion, TCD does not understand how the Supreme Court’s Opinion in M&F Worldwide rejected the doctrine. To the extent standard shifting from entire fairness to business judgment has always been the law, TCD confesses that it understood standard shifting to be a novel procedure first proposed (in a judicial opinion) in In re Cox Communications and first applied in In re MFW -- and before that, the only “shifting” mechanism was burden shifting. TCD is quick to add that it hasn’t been around for decades and hasn’t seen it all.

On the other hand, we have been extremely attentive observers of Delaware corporate litigation since 2012, and to the extent standard shifting through a cleansing mechanism other than under those approved in M&F Worldwide and Corwin are accepted methods of venerable vintage, their application somehow escaped our notice for the last eleven years. Nor are we alone in apparently overlooking this point of law. The defendants’ supplemental reply brief in Match distinguishes at least four prior Supreme Court opinions (each stating that the use of a single cleansing device could have only a burden- (not standard-) shifting effect in the context of a conflicted, non-squeeze-out transaction with a controller), on the grounds that defense counsel in those cases had failed to raise the argument. An odd oversight, if this is, in fact, the traditional rule.

It also bears mention that in Alan Russell Kahn v. Tremont Corp., No. 170, 1996, opinion (Del. June 10, 1997), the Delaware Supreme Court explicitly rejected the IAC defendants’ position in a case involving a share purchase, not a squeeze-out. In reviewing de novo the proper standard of review, the High Court wrote broadly about “challenged transaction[s] involving self-dealing by a controlling shareholder” -- not merely squeeze-out mergers:

Ordinarily, in a challenged transaction involving self-dealing by a controlling shareholder, the substantive legal standard is that of entire fairness, with the burden of persuasion resting upon the defendants. [William B. Weinberger v. UOP, Inc., No. 58, 1981, opinion (Del. Feb. 1, 1983)]; See [Emanuel G. Rosenblatt, et al. v. Getty Oil Co., No. 352, 1983, opinion (Del. May 9, 1985)]. The burden, however, may be shifted from the defendants to the plaintiff through the use of a well functioning committee of independent directors. [Alan R. Kahn v. Lynch Communication Systems, Inc., et al., No. 272, 1993, opinion (Del. Apr. 5, 1994)]. Regardless of where the burden lies, when a controlling shareholder stands on both sides of the transaction the conduct of the parties will be viewed under the more exacting standard of entire fairness as opposed to the more deferential business judgment standard. Id.

Entire fairness remains applicable even when an independent committee is utilized because the underlying factors which raise the specter of impropriety can never be completely eradicated and still require careful judicial scrutiny. [Weinberger]. This policy reflects the reality that in a transaction such as the one considered in this appeal, the controlling shareholder will continue to dominate the company regardless of the outcome of the transaction. [Edith Citron v. E.I. Du Pont de Nemours & Co., et al., C.A. No. *6219-VCJ, opinion (Del. Ch. June 29, 1990)]. The risk is thus created that those who pass upon the propriety of the transaction might perceive that disapproval may result in retaliation by the controlling shareholder. Id.Consequently, even when the transaction is negotiated by a special committee of independent directors, "no court could be certain whether the transaction fully approximate[d] what truly independent parties would have achieved in an arm's length negotiation." Id. Cognizant of this fact, we have chosen to apply the entire fairness standard to "interested transactions" in order to ensure that all parties to the transaction have fulfilled their fiduciary duties to the corporation and all its shareholders. [Kahn]

With respect to 8 Del. C. § 144, TCD’s February 8, 2019 edition collects the sparse sum of references to the statute that this publication had encountered or discussed as of that date, to which we now add Anurag Mehta v. Mobile Posse, Inc., et al., C.A. No. 2018-0355-KSJM, memo. op. (Del. Ch. May 8, 2019). As with the decades of precedent providing for standard shifting, to the extent Section 144 requires standard shifting in controlling stockholder transactions, litigants seem not to have found occasion to raise it for the past decade. The plain language of that statute addresses the use of cleansing mechanisms to prevent voidness of transactions with interested directors and says nothing about controlling stockholders, and given that void acts reside outside the realm of equity -- as the Supreme Court ruled in CompoSecure, LLC v. CardUX, LLC, No. 177, 2018, opinion (Del. Nov. 7, 2018), and recently reaffirmed in Gregory A. Holifield, et al. v. XRI Investment Holdings, LLC, No. 407, 2022, opinion (Del. Sept. 7, 2023) -- TCD finds it difficult to conclude that Section 144 governs application of equitable standards of review.

Generally, TCD perceives the defendants’ arguments as being reliant upon overstatement of already attenuated principles, and finds the plaintiffs’ and the amici’s analyses of the law, the economic and policy consequences, and the practical consequences to stockholders -- of what would be effectively the elimination of judicial review of conflicted controlling stockholders’ actions (given the ease with which purportedly-independent approval can be procured) -- comparatively more cogent and more compelling. We will not attempt to offer our own take on the points they make, but follow their focus on practical rather than merely theoretical constructs, noting that the idea that inherent coercion does not exist is difficult to square with reality. It is inconsistent with the response observed all-too-often from corporate directors whose positions are threatened by activist stockholders: capitulation to all demands.

Why directors would be less protective of their positions when threatened by a controlling stockholder than by an activist stockholder is difficult to imagine. And we assume it is the rare and fortunate individual who has never felt or responded to at least a tacit threat to their position or their livelihood in a manner with which they are not entirely comfortable. It is still more difficult to disregard detriments to minority stockholders of controlling stockholder expropriation. The very notion of M&F Worldwide’s standard-shifting protections, by requiring controllers to disable themselves, recognized the reality of that threat. Current market realities -- in which control disproportionate to economic interest is conferred through super-voting stock -- seemingly increase, rather than reduce, legitimate concerns of expropriation. Whatever past case law supposedly can be read to suggest, practical considerations do not seem to cry out in favor of abandoning judicial scrutiny.

Nevertheless, TCD interprets the Supreme Court’s agreement to consider defendants’ argument in the disfavored context where it was never raised before the Court below as indicative of amenability to the position. TCD does not have an admirable track record for predicting what the Supreme Court will do -- but the Court seemed to take pains to remand and reconsider Marion Coster v. UIP Companies, Inc., et al., No. 163, 2022, opinion (Del. June 28, 2023) on issues that did not figure prominently in the trial court’s decision -- perhaps for the purpose of constraining application of equity review under Andrew H. Schnell, Jr., et al. v. Chris-Craft Industries, Inc., opinion (Del. Nov. 29, 1971), only to cases involving stockholder voting -- and to raise the issue of voidness not argued before the trial court in CompoSecure for the purpose of precluding application of equity (and to reaffirm that analysis in XRI). This appears to be in connection with an increasing embrace of Delaware corporate law as a corpus governed by contract principles, antithetical to equity, with the object of conferring greater certainty and holding parties to things-deemed-agreements. This is mere speculation, however; we are unaware of any clear statement by members of the Supreme Court about such an intent. But if that is the intent, TCD questions what the effective elimination of equitable judicial review of controlling stockholders’ interested transactions leaves of equity’s role in Delaware law beyond a smoldering crater.

As noted at the beginning of this discussion, TCD regards Delaware’s unique application of equity as what distinguishes the jurisdiction and fosters the franchise. Perhaps reasonable minds could disagree on that point; if so, we hope they are correct. On this point, we find Professor Elson’s assessment worthy of emphasis:

The IAC Defendants seek a rule that is a gift to controllers at the expense of minorities, plain and simple. The IAC Defendants would have Delaware take a giant leap in the direction of the overly permissive legal regime of Nevada (which has effectively abandoned entire fairness review) -- the classic “race to the bottom.” That is not the right path for Delaware. Delaware should protect all investors, not simply controlling ones as Defendants’ rule would enable. . . .

. . . More importantly, the existing doctrine has not proved unworkable. For all the reasons set forth above, the IAC Defendants’ arguments to upend the entire fairness doctrine as applied to non-squeeze-out conflicted-controller transactions are not even marginally compelling, let alone urgent or bespeaking clear error. As amicus has observed [in Why Delaware Must Retain its Corporate Dominance and Why it May Not(Elson)], “Delaware’s preeminent role in corporate regulation has endured, despite numerous challenges, for decades [because] . . . [i]nvestors, directors, and managers respect its even-handedness and predictable approach to regulation and the resolution of corporate controversy. This is the product of a highly advanced corporate code and a judiciary renowned for its neutrality and corporate specialization.”

Put simply, Delaware law is working. The Delaware franchise is strong, and the Delaware brand is more valuable than ever. Accepting the IAC Defendants’ invitation would do far more harm to the franchise than any theoretical concerns about the Court of Chancery being unable to weed out nuisance claims, even if they are viewed under the entire fairness paradigm. Delaware’s reputation is based on maximizing stockholder value and, to achieve that goal, it has carefully managed the balance between enabling transactional flexibility and ensuring investor protection. The IAC Defendants’ proposed approach would undo that careful balance and send the law in precisely the wrong direction.

The Court should not try to fix what is not broken. Change and adaption are inevitable and desirable. But when change happens, it should be through gradual tweaks at the margins through the familiar, common-law approach that is at the core of Delaware’s brand. This Court must not perform the radical and dangerous surgery that the IAC Defendants demand.

So say we all.

What follows may sound like obsessive nuttery over inane minutiae (very on brand for me, of course), but in reality, it is relevant to disclosure of information at the highest-level concerning a settlement of three-quarter billion dollars, requesting attorneys’ fees of nearly a quarter-billion dollars.

To be clear, I strongly support the plaintiffs’ bar. I believe they should be paid well for their work. This is not about tearing them down. This is about making sure that settlements are properly vetted and are in the best interests of stockholders and the corporation. If anyone understands that large sums of money can distort incentives for human beings, it is the plaintiffs’ bar. They crow about this phenomenon all the time. They get it.

So, yes. This is in the weeds, but this is nonetheless big-picture important. It’s also indicative of wide-spread issues that have to be fixed on a broader level, because it’s certainly not an isolated incident of objectors getting frozen out for timing issues. High quality objections are part of a healthy class action and derivative litigation ecosystem. We must allow time and space for them.

What am I crowing about? Well, let’s back up a tiny bit. Tesla directors agreed to settle the largest derivative case in Delaware history a few months back, which I discussed in a lot of detail. It seemed sus. When the scheduling order for the settlement fairness hearing was filed, the timeline was tight. Sure, it followed the model order, but the model order is pretty tight, especially when there are holidays and unnecessarily sealed filings are involved, and particularly when you insert creative definitions of “business days” in your stipulation. Between filing the opening brief under seal and then filing a public version with no apparent redactions twelve days later, leaving objectors ten days with the brief to file their objections, the “60-day notice period” felt a lot more like a “10-day notice period” to me.

In an attempt to keep life interesting, the website for the benefit of educating Tesla stockholders about the Tesla Detroit Derivative Action Settlement has now been updated to say that today is the deadline for objections to the settlement, which is what one would have thought were the case, as I originally did when using normal business days calculations under the Delaware Court of Chancery rules. But of course, then with the help of some smart friends, I realized that according to the weirdest provision in the Stipulation, the deadline actually should have been yesterday, which is in fact what the website said, up until about … yesterday. But now the website has been changed to say that the deadline is today.

Are you confused yet?

Me too.

Keen-eyed reader Anthony Rickey pointed out one possible reason for this eleventh hour change. The plaintiff’s opening brief, which — for what it’s worth is still not posted on the settlement information website, was filed on August 31st, 2023.

Hmmmm. Interesting. When I pointed out this whole creative-definition of Business Days means that Columbus Day/Indigenous Peoples’ Day (g-d I hate that dichotomous bullshit, which seems to encapsulate everything that is wrong with the hallmarkification of our culture wars, but I digress and fear that someone will take this parenthetical for a reductionist argument in the wrong direction) does not count as a business day, Tony pointed out that this rule should obviously apply to the plaintiff’s filing of their opening brief. And, well, if it did — the plaintiff had filed their brief one day late.

Hmmm. Suboptimal outcome for plaintiff.

So, like manna from the heavens, somehow one day was magically added back to the calculation on the website from somewhere out in the ether. No saying how or why it happened. The calculation in the stipulation with this weird definition of business days still should technically have the deadline be yesterday for objectors, but that calculation would also have the plaintiff’s opening brief have been due on August 30th. And no one likes having filed their brief one day late.

And you know what? With the weird configuration of Labor Day, and the way that Rule 5.1 works, if the plaintiff’s brief had been filed on August 30th, their redacted version would have had to have been filed three days earlier, which would have given objectors nearly 30% more time with the brief with which to contemplate their objections. Non-trivial, I must say.

It’s like it was never meant to happen.

But alas, there’s only so much retconning one can do in the rearview mirror. Sometime between today and two days ago, the website was updated to say that today is the deadline, for all the good that did for objectors, who were certainly dissuaded from objecting when they were told the deadline was yesterday and only had ten days to get their shit together.

Especially when the quarter of a billion dollars in attorneys’ fees — again, I’m not against it, I just think that the whole deal needs to be carefully vetted in light of such a potentially judgment-skewing incentive — is not included in the stipulation, it is first mentioned in the brief … how can ten (or eleven, or twelve, or even twenty, or even thirty?) days be a sufficient amount of time for people to review, consider, determine whether to object, find, retain counsel, have counsel get up to speed, draft an objection, potentially hire an expert, sign the undertaking, get access to and review discovery?

You know, Chancellor McCormick has the Tornetta decision under advisement. And I still can’t help but wonder — apropos of nothing — what is the big freaking hurry here.

Much love,

Chance

P.S. If you’re wondering, so far there has been one objection filed in this case. You can — and should — read it here. It took four attempts to get it through the Register in Chancery’s gauntlet, but nevertheless, he persisted. Not legal advice, but according to many plaintiffs’ attorneys I have spoken with over the years, the best of them will always tell me, “if any objector ever needed to file an objection, especially if they were having problems getting it on file, they can always just send it to me, and I’ll make sure it gets on file for them.” Those are the good ones, as it should be. And, the AMC case’s more rigorous procedures notwithstanding, most folks in the know will still tell you that — particularly in instances where notice has been problematic or delayed — there’s a good chance that even late-filed objections received in advance of the hearing will be heard, so illegitimi non carborundum. Metaphorically speaking, of course.

If you have read my updates over the last twenty-four hours concerning the obscenely but oh-so-routinely truncated objections period for the Tesla settlement that stands to wash nearly seven-hundred-plus pages of discovery under the proverbial rug in a matter of days, and with it, grant a certain amount of absolution to the Tesla board, in exchange for a transfer of value originating from we-literally-do-not-know-exactly-where … well, I wouldn’t blame you if you were wondering exactly what is going on with me.

Other than being grateful for the adversarial litigation process and lamenting its conspicuous absence in the settlement context, notwithstanding all the lessons that we thought we learned in the AMC case, I’m trying hard to heed the advice of a good friend and “not ascribe to malice that which can be ascribed to incompetence.” But I just can’t get this “days that a bank is permitted to close” definition out of my mind. I’m trying, I promise. I’m trying really hard not to make it mean that there’s something in the discovery or elsewise beneath this settlement that they really don't want people digging into, and that even shaving one day off the potential window for objectors was worth coming up with such creative language, and that it was all just some absolutely unhappy accident with some bullshit stock text that I’ve just never bothered to be bothered by before. But when the savviest players in Delaware say there’s no chance that they could have time to get a request in within the deadline to get access to the discovery under the protective order with the current schedule, it’s hard to stay positive. I swear to you, I’m trying.

And as I mentioned, a lot of it feels like burnout after seven months of non-stop AMC double duty, and burning a bright candle at both ends, trying to illuminate a lot of very dark corners for people who didn’t have the first clue how they even ended up in the state where they found themselves. But there’s more to it than that. And I’ve talked about it on Threads, but I know that many of you aren’t there, so I want to talk about it here, because it’s important.

I found out last week that a law school sectionmate of mine — Justin Ehrenwerth — died by suicide in May. I discovered this tragic fact because Threads is an Instagram product, which requires a Meta login, which in turns links to Facebook, and so in the process of doing all the social media things, I somehow got logged into my Messenger account and got a very outdated notification from a group thread that took me to our Alumni FB group, which lead to an obituary and several other pieces that broke my heart.

It wasn’t — obviously — that Justin was an incredibly close friend of mine. Because, one would hope, if that were the case, that it wouldn’t have taken four months for me to learn of his passing. And nothing about the loss is mine, and so while I appreciate the sentiments that people share when they say, “I’m so sorry for your loss” when I express my sorrow about it, it certainly is not in any sense my loss. It is the world’s loss, his family’s loss, his children’s loss, it is all of our loss. This planet is less without this man in it. That is part of what I am struggling so much with, in his passing.

Full disclosure: I am a Section 3 homegirl for my law school classmates in a way that I can’t explain. It’s stupid and weird and plenty of people will hate this about me. I don’t fucking care. I loved Penn Law and in particular, everything about our section. We were close knit, we were good to each other, we had so much fun together. And I was the kind of person who loved law school and everything about it. Justin and I weren’t close friends in a traditional sense, but we did have a bond that was weird, and idiosyncratic, and based upon some very specific synchronicities that make this particular death hard to grapple with, especially in light of my own recent struggles of the past few years that I haven’t been shy about discussing. Justin was the epitome of someone who exuded giving a fuck in the really good way, in his nature.

Justin and I were odd balls because we were very close in age but otherwise out of our age group in law school. We had both taken time after college to explore the world. We were both philosophy dorks. He had gone to college with a bunch of my friends since I had gone to high school in Maine and he went to Colby College and ran a diversity conference that spanned Colby, Bates, and Bowdoin where many of my high school friends had dispersed to. Our relationship didn’t run deep beyond these random shared facts and some campaign work in the late oughts, but he was the kind of person who made the world better for everyone, even those far in his periphery. His mother also died almost exactly when mine did, very young in terms of their lives and ours. And he had just outlived her lifespan. And I’m absolutely sure I’m just projecting my own struggles on him, but it just hurts my heart to think about how hard life must have been to get to the place he ultimately did—to not be able to see what everyone else saw in him, to not be able to feel the joy that his own existence brought to the rest of the world.

When I say that he was an extraordinary person, I don’t think that I’m exaggerating or apotheosizing him in death. He just was. He was a pleasure to be around. He was supremely successful. He was kind and giving of himself. He was gentle but whip smart. He was born into a certain amount of privilege, but took that to mean that he should act with humility and grace.

I cannot really bear to think about what it means for the world that this happened. I know it’s just a thing that happens. I know it doesn’t necessarily mean anything more than that it did happen. But I’m so gutted for him, his pain, and for the rest of us and especially his loved ones. His wife. His kids. I also can’t help but notice his recent service on the Anti-Defamation League and wonder to myself how the world is failing in so many ways large and small to avoid losing its center.

Justin was the kindest soul who did so much good in the world. He worked tirelessly for the protection of our literal coastlines. But I fear that we are not grappling with the mental health waves that are crashing on our shores. Perhaps they are usual tidal patterns, but something feels different about the ferocity of this rip tide. I know in particular that in the legal community, we are just beginning to dip our toe in the water to even contemplate addressing the enormity of these problems. I implore us to try harder, move faster, and speak about it more. We have so much to lose.

So much love,

Chance

Nine figures for creativity here. Someone drafted and / or agreed to a stipulation that includes the following very novel provision designed for what purpose one can only imagine:

• Stip, para. 1.1:  “Business Day” is defined as “any day other than a day on which banks in Delaware are required or permitted to close.”

• And apparently banks in Delaware are “permitted to close” (literally whatever tf that means) on Columbus Day/Indigenous Peoples’ Day:  https://www.communitybankdelaware.com/about-us/holidays/

After the last post I wrote, I got nastygrams from plaintiffs’ attorneys and retail stockholders alike, and I’m sure I didn’t make any friends on the bench, so I’m batting a thousand speaking my truth today.

Hope y’all are having a good Monday. 🙃

And if you haven’t read the backstory on this settlement, highly recommend before it’s literally too late:

From the night of February 20th, 2023 — when the first AMC complaint was filed — until last Friday when the Court of Chancery’s involvement in the case came to a close with the entry of the Proposed Order and Final Judgment, my life entered something of a dual-track time warp where I had two full-time jobs: my regular one, and a second one following these consolidated cases obsessively. Of course when things finally wrapped, it was going to be jarring. And jarring, it has been. On many levels, and for many people, much more than for me.

My mother may have died when I was young, but she taught me many things before she died. One thing she instilled deep within me was that if you do not have anything positive to contribute to a conversation, you should keep quiet. If you don't have anything nice to say, you know the old saw. Perhaps that teaching — coupled with the monster case of burnout I experienced after the death of my business partner’s own mother a few months ago — will help explain my silence over the past weeks.

I’m so very tired. Everything that I have to say feels like a complaint. I know that this, too, shall pass. And I know that what there is to do is to take the time to focus on the things that were shuffled to the side over the past half year — all the things that had been relegated to the sidelines for the “extraordinary” and “once-in-a-lifetime” opportunity of Twitter v. Musk that were then quickly given the same treatment in light of what was happening with AMC no sooner than they had made it back onto my desk to be addressed. And I wouldn’t do it any differently. It was worth diving so deep into the weeds. But I’d be lying if I said there wasn’t a cost. And don’t worry, I’m going to take the time that I need, and I am going to do what I need to take care of myself. Because if I don’t, I’m not going to be of much use to you all.

There’s so much to debrief from the AMC case and how it all went down, but I’m honestly not ready to do it yet in a way that doesn’t feel caustic. Just let me tell you a little bit about how the Tesla settlement is going and you’ll see where my head is at. You’ll want to send me packing back on my little hiatus back to my day job for a few more weeks while I get my mind right, I promise.

First, let’s get things straight to finish out the AMC saga in the Court of Chancery. The clock has started ticking on the appeal to the Delaware Supreme Court, and possibly to the Supreme Court of the United States. The length of that path is as yet to be determined. Of course, I will follow it along for you as it goes. It will be at a much more sane and hopefully manageable pace.

The Court of Chancery ruled on the objector’s fee for Rose Izzo and granted the request for a $3,000 incentive fee and for $212,700 in attorneys’ fees for Izzo’s counsel. By my count, this is the largest fee for an objector who did not take over the case in the Court’s history, although the math feels retconned in a way that I think in good faith should have led to a larger number. I don’t have the patience to walk through the minutiae at the moment other than to give one example that’s stuck in my craw that’s probably one of those things that I should just let go but … when the Court says that it “expressly considered three separate inputs to [a] downward adjustment, of which [one Izzo expressly gets credit for proferring]. Thus, I conclude that Izzo was responsible for one third,” the Court fails to consider that the other two downward adjustments both effectively to a fair degree involved Izzo’s existence as an objector, which seems … oddly (but then again not) like vibes of always trying to ensure that objectors do not get credit in any and every way possible for whatever happens.

Anyway, perhaps suffice it to say that the part that bothers me the most is where Izzo is faulted for the following kind of things: “[S]he proffered no evidence to support her predicted [theory of the possible reason for a future stock price drop that, in fact, actually eventuated]” or “[H]er argument was too underdeveloped to be persuasive or useful.”

Harumph.

Seriously?

DOES NO ONE AROUND HERE OWN A CALENDAR? Has anyone actually seen how long objectors get to prepare their objections? Has anyone thought about how these things actually work in the real world?

I think this is a good time to transition to the Tesla matter because I’m about to say something that I regret, and it’s all of a piece. And I still need like two mental health weeks to recover from what is way too much burnout and way too many overdue tasks in my primary job that need tending to.

To answer my rhetorical screams into the void above, it’s patently obvious that the answers are, in order: apparently not, at least not one that is regularly utilized; either no, or they don’t care, and I guess not, or again, no one gives af.

Because here’s how it’s going down in the Tesla settlement. And read carefully, because if you are a Tesla stockholder, you probably are just getting some half-assed notice of this settlement now and you have about three days to draft up an objection. And, by the way, find counsel willing to draft and file it in that time (ha!), because we all saw how it went down for those who didn’t hire counsel in the AMC matter — spoiler alert: not great) and you don’t just have to put in an objection with reasonable theories or useful information or decent objections, you apparently have to do something like file expert reports or put evidence in the record or do other things that seem absolutely bonkers unrealistic, if you want any chance of your counsel being compensated for going to the trouble of filing the objection. Which, by the way, is very unlikely to happen … and so, you can see, that counsel is very unlikely to take on your objection if you ask them to file it on contingency, because if they just read that AMC opinion, WHY IN THE WORLD WOULD THEY? And if you don’t get counsel, your objection is very unlikely to be persuasive to the Court. It’s like the tenth circle of Dante’s hell.

I am so tired. I am so tired of having to spell all this for people who don’t understand because no one has ever explained it, because the people who do understand it apparently actually are fine with it just the way that it is … but that makes me absolutely batshit crazy, because: HOW CAN THEY BE OKAY WITH IT? These are smart people whom I deeply respect. ::sigh::

For example, here are the facts in the Tesla case, let’s see if you can make the conclusions without me having to do any all caps screaming from here on out.

July 19, 2023: Scheduling Order Entered (the proposed documents were filed a few days before this, so my Substack about the settlement was published even before this was entered on the 18th, and my follow-up post on the 19th, which just shows that you should be a subscriber lol).

The Stipulation of Settlement lists certain information about the settlement, but the briefs in support of the settlement weren’t due to be filed until August 31, 2023, however, when they were filed, they were filed under seal, for some reason, so they were not available to the public under Rule 5.1 for an additional five business days. Due to the Labor Day holiday, this means that they did not become available until Monday, September 11, 2023.

The Stipulation of Settlement does not list the amount of attorneys’ fees and expenses sought, so potential objectors had no way of knowing whether they want to object on that issue until receipt of the brief.

It turns out that Plaintiff requests an award of $1,023,779 in out-of-pocket litigation expenses and $229,600,687 in attorneys’ fees, consisting of 25% of the monetary benefit achieved (net of expenses) before valuing governance reforms. Yes, that’s $229 million dollars.

The Stipulation of Settlement is just over 36 pages long (much of which is stock language), and the Brief in Support of Settlement is 78 pages long, accompanied by a seven-page forensic and financial affidavit, which — just by the bare math — would suggest that there is a lot of additional information that could inform a potential stockholders basis for objection that would be required. This would particularly be so if objectors are going to be held to high standards for providing detailed bases for objections (and perhaps even evidence or expert analysis) to have any solid hope of securing a fee for their counsel’s efforts in anything but the most highly unusual edge case such as AMC. What’s perhaps worse is that 36 of the 45 exhibits cited in the brief were filed under seal (comprising 755 out of 869 pages of document production exhibits relied upon in the Brief) and those exhibits do not come out from under seal via the Rule 5.1 standard process, so stockholders do not have access to those absent some further process, which further process they are unlikely to know exists or have the time to pursue in the real world.

Just to say what is unhelpfully inferable only to the people who already know in the iykyk way, access to this discovery is available (especially post-AMC) through a maze of steps that are basically inscrutable to anyone who cannot afford counsel, and I’ve already convinced myself that no one in their right mind would take on an objector on contingency at this point. And moreover, creating a system like that that has been the point of this system for a long while. And that’s all been in service of making sure that objectors’ counsel don’t abuse the system. God forbid. Phew, so glad we avoided that morass. Meanwhile, plaintiffs’ attorneys are starting to request eight figure awards on the regular (and two of the five nine figure requests in history came this year, one granted in Dell / one pending here), which absolutely certainly does not have any unintended consequences, I’m sure. No way that could be ripe and fertile ground for absolutely rampant abuse. Bullet dodged.

Anyhoo.

Thanks to what has been called “the Delaware Two-Step” where the calendar calculations run forward from a Rule 5.1 extended deadline for the brief being made public, and then backward from a certain number of business days prior to the hearing, objectors are left with a minimal number of days to process the brief, determine whether they want to lodge an objection, find competent counsel, and have their counsel draft a viable objection. If one were skeptical, you could imagine that the process were not set up to actually incentivize such behavior in good faith.

Here, by the way, that twelve-day redactions period led to — as far as I can tell — exactly zero actual redactions in the brief, which I’m sure I would be told was the best possible outcome (and it definitely is), but I’m also very skeptical of the fact that it required such time to come to such an outcome.

The thing that makes me very, very tired is that although I am now providing everyone with a copy of the brief here, I have no idea how anyone else was realistically supposed to know where to find it or how to get it in any world in which normal human people live. And if someone says that regular stockholders should get it from FSX, I literally will scream. But I mean, you would think that since there’s a whole-ass website set up called: http://www.tesladetroitderivativeaction.com/court-documents.aspx that the actual least that they could do is to post the briefs, but of course, they do not. And maybe someone’s wrist will get slapped again or someone will now put the briefs up on their website, but how many times do we have to do this nonsense until someone gives a fck in advance for the benefit of stockholders?

It turned out that website did not even exist for a long time (it was just a “this website is under construction page” when I wrote the last Substack, so at least it’s an improvement, I’m sure I should be grateful for what we get, I mean, compared to AMC, at least there’s a website that actually links to the documents instead of whatever rabbit holes you had to go down to find your way to the documents there). Maybe in this case, folks will do their thing and try to gaslight me by uploading the briefs once someone gets wind of someone ::cough me cough:: calling them out, but the website does currently post the much-less-helpful documents, and right now, that’s it. Currently none of the counsel’s sites post the brief either. Perhaps that, too, will change upon notification. Always post hoc.

Also, here’s the Forensic Affidavit, because I won’t hold my breath that they will post that even if they do get around to posting the brief.

The only quasi-useful thing this website does is to tell you that the objections deadline is September 21, 2023, but actually (g-d damn it), now that I look at it, I’m not sure that’s even right.

The Scheduling Order requires the following:

At the Settlement Hearing, any Tesla stockholder who desires to do so may appear personally or by counsel, and show cause, if any, why the Settlement in accordance with and as set forth in the Stipulation should not be approved as fair, reasonable, and adequate and in the best interests of Tesla and its stockholders; why Final Judgment should not be entered in accordance with and as set forth in the Stipulation; or why the Court should not grant the Fee and Expense Application of Plaintiff’s Counsel; provided, however, that unless the Court in its discretion otherwise directs, no Tesla stockholder, or any other Person, shall be entitled to contest the approval of the terms and conditions of the Settlement or (if approved) the Final Judgment to be entered thereon, or the Fee and Expense Award, and no papers, briefs, pleadings, or other documents submitted by any Tesla stockholder or any other person (excluding a party to the Stipulation) shall be received or considered, except by order of the Court for good cause shown, unless, no later than fifteen (15) Business Days prior to the Settlement Hearing, such person files with the Register in Chancery, Delaware Court of Chancery, 500 North King Street, Wilmington, DE, 19801, and serves upon the attorneys listed below: (a) a written notice of intention to appear that includes the name, address, and telephone number of the objector and, if represented by counsel, the name and address of the objector’s counsel; (b) include documentation sufficient to prove that the objector owned shares of Company common stock as of the date of the Stipulation, and contain a statement that the objector continues to hold such shares as of the date of filing of the objection and will continue to hold those shares as of the date of the Settlement Hearing; (c) a detailed statement of objections to any matter before the Court; and (d) the grounds thereof or the reasons for wanting to appear and be heard, as well as all documents or writings the Court shall be asked to consider. These writings must also be served by File & ServeXpress, by hand, by first-class mail, or by express service upon the following attorneys such that they are received no later than fifteen (15) Business Days prior to the Settlement Hearing:

Andrew S. Dupre Sarah E. Delia
MCCARTER & ENGLISH LLP
Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19801
(302) 984-6300

Counsel for Plaintiff

Raymond J. DiCamillo Kevin M. Gallagher Kyle H. Lachmund
RICHARDS, LAYTON & FINGER, P.A.
920 N. King Street Wilmington, DE 19801 (302) 651-7700

Attorneys for Defendants Elon Musk, Brad Buss, Robyn M. Denholm, Ira Ehrenpreis, Lawrence J. Ellison, Antonio J. Gracias, Stephen T. Jurvetson, Linda Johnson Rice, James Murdoch, Kimbal Musk, Kathleen Wilson- Thompson, and Hiromichi Mizuno

Jason C. Jowers Sarah T. Andrade
BAYARD, P.A. 600 N. King Street, Suite 400 Wilmington, DE 19801 (302) 655-5000

Attorneys for Nominal Defendant Tesla, Inc.

The key there is “no later than fifteen (15) Business Days prior to the Settlement Hearing,” and the settlement hearing is on October 13, 2023.

WHY IS EVERYTHING SO EXHAUSTING, because here I am — not really supposing to be giving random legal advice over the internet, but also very annoyed that no one can just tell poor fcking stockholders who have enough to figure out what the actual date on the calendar is properly as to when they have to get their objection in by because I do not believe that the date on that website is correct. I was pretty freaking sure that the deadline was September 22, 2023, and then the website popped up saying September 21, 2023, and I wracked my brain trying to figure out why tf it would say September 21, 2023, and I finally figured out that I think the calculation is including Indigenous Peoples’ / Columbus Day, but there’s two small (large) problems with that: 1.) neither of those are not Delaware State Holidays, and 2.) the Delaware Court of Chancery rules time calculations that I believe are used to interpolate these constraints demand reference to Delaware State Holidays when doing calculations. So … I personally believe that the deadline would be calculated as September 22, 2023. But obviously, you should never take random advice from some weirdo on the internet, that would be very unsafe and inadvisable. But it’s superiorly annoying that it’s even a question, and it’s supremely unjust that it’s something that stockholders should have to spend a moment of their short few days having to fuss over while they are busy trying to determine whether or not they want to file an objection to the merits of this settlement.

Did I mention that I’m tired? I’m tired of these things being so half-assed. I’m tired of having to yell about it on the internet, straight into the void. I’m tired of no one doing anything about it. I’m tired of so much. And I’m sure by now you are tired of hearing me whinge about it. I’m tired of hearing me whinge about it! So, I’m going to stop. I’m going to touch some grass, go on a short walk on a long pier (hang out at the beach, not vice versa, don’t worry) and find the center again. Let’s hope it holds.

Much love,

Chance

P.S. If I had more energy, I would do a whole rant about all the Tesla stockholders who are telling me about how they are just now getting notice of settlement from brokers like E*TRADE from Morgan Stanley, just now on September 16th, 2023 when the Notice Provision in the Scheduling Order directed these notices to go out sixty days before the settlement hearing, and yet, inevitably, notice will be likely be found to be problem, just fine, because those who object will have figured out there is a settlement to object to, and those who don’t, won’t. And no one can object on behalf of anyone else who may not have received notice. If the message is: “take your settlement, whatever it is, and stfu,” can’t we just be intellectually and morally honest about that?

[remainder of this rant redacted]

Good night, and good luck. Love y’all. I’ll report back after the hearing. Also, lmk in the comments if you have thoughts on the brief, presuming you don’t have jobs or lives or other things to do ofc, because what stockholder would be burdened by such things.

This morning, Rose Izzo filed her reply to the motion for status quo, slightly ahead of the required schedule in the order of operations laid out here, which — as I described therein — allowed the Supreme Court to do that which it then did, which you could have anticipated if you had read last night’s clear delineation of the possible actions of today, because just now they ruled on the motion for status quo order, and it was denied.

You can read the Supreme Court’s opinion here.

Much love,

Chance

Today, let’s do a short, sweet, and straightforward post on the upcoming timeline, because it’s getting wild and time is getting tight.

First, the tl;dr of what’s going on, and when, probably —

Read more

I have previously analogized the practice of erstwhile dunking on bad takes by some of the ohTubers (so-nommed just now by me because the responses to their videos generally begin with some version of oh, including but not limited to: ffs, my lawd, my god, jfc, are you fcking serious, or any number of other inappropriate curse words, for all sorts of various reasons) as shooting fish in a barrel. I don’t mean this to be a derogatory take, although I’m sure it will be taken as one. I just mean that sometimes the set up is too easy.

Read more

Just when you (I) think that you (I) might get a moment to rest … the universe (a law firm) comes along and files another law suit in the Court of Chancery against AMC Entertainment, Inc. Because, of course they do.

It always seemed like an inevitability that there would be a case filed by APE holders before this was all said and done. Even if it was non-sensical. Even if it seemed counterintuitive. Even if — as someone commented — “under normal circumstances it would be absolutely stupid for an APE to do that … it’s AMC, so yeah, it’s probably going to happen.” Well, yeah, it probably was, and it definitely did.

The case was actually filed Monday night minutes before 9pm but due to my favorite parts of File & Serve, none of us were any the wiser until nearly twenty hours later when the Register in Chancery decided to grace the world with its existence by accepting the filing and pushing it out to at least part of the public.

There are actually many other things to update you on that have been mostly going down in the comments section since the Opinion came out on Friday. First, an update to my previous post, which is to say that (of course) Vice Chancellor Zurn thought of everything. Although I didn’t know it on Friday because the Order hadn’t been pushed through File & Serve yet, so no one except the parties could see it (do you see a theme here?), it turned out that although the Opinion didn’t address the issue that I had raised previously (and perhaps obsessively) about the missing consolidated complaint and AMC not technically being a party to the operative complaint, that issue was (in fact) handled. First, in my defense, I only brought it up so much because I felt that the Vice Chancellor was dropping hints like … what’s something that’s dropped frequently? Flies? Why do flies drop? Anyway, like that.

When I read the Opinion but couldn’t see the accompanying Order, I was disappointed that there was no mention of the issue — it was just dropped. I felt like:

I couldn’t figure out how I had been so mistaken about something that had seemed to important to VCZ. Not to brag (okay, maybe a little), but it’s unlike me to misread something, or to be wrong like that. Well, it turned out, I hadn’t been wrong at all — VCZ had just found a different way of handling it that I admittedly hadn’t contemplated.

Enter, the Order. The addition of one Whereas clause, and the editing of another took care of the problem, without requiring another round of rejection and rigamarole.

With the clear addition of C.A. No. 2023-0216 to the Order, the definition of the Parties and the Claims got much-needed clarity. Let it never be said that VCZ prizes form over substance, or that she didn’t manage to do both efficiency and equity, because imho, she very easily could have required the parties themselves to make these changes, which would have caused additional delay but would have served very little purpose. Instead, she did the pragmatic thing, and made the changes herself. Et voilà, substantive problem solved, and settlement approved on the merits.

I’m sure there are other things that I said in the nearly one hundred comments to the last post. I’ll spare you the re-debrief here, and let you go dive in if you’re interested.

Everything You’ve Been Too Afraid To Ask

What’s that saying? All the things you always wanted to know about the reverse split and conversion but were too afraid to ask? Now all your questions are answered. It’s everything you ever wanted to know (or didn't) about the Reverse Split / Conversion and Settlement Consideration, and how to become part of this Class, should you so desire. It's (STILL!) not too late smh!

Read all about it in the 8-K that AMC released on Monday.

Please, please, please make sure to read the highlighted caveats and take them seriously.

You may or may not note some interesting implications about what might happen if you were to sell your AMC shares on various dates in the timeline, and what that would mean for your settlement consideration. All I can say is: it’s max chaos, always.

I want to tell you all the things about how you really need to know that the last day you can buy shares and get the settlement consideration is really NOT the 24th, but I’m not a financial advisor, and I do not want to give you financial advice, but also the company seems incredibly reticent, if not absolutely intensely opposed to actually saying what the last day you can purchase shares and receive the settlement consideration is, so I’m trying to figure out the best way to tell you without giving you financial advice is, and I don’t know why this is so fucking hard, but it’s probably lawyers’ fault.

Listen, here’s the OCC memo: it very clearly states that the 23rd is the EX-DIVIDEND DATE.

Please read the final piece here about ex-dividend dates very carefully:

Look, I’m not that afraid to say 1+1=2, since I know some of you are not great at math. It really looks to me like the last day you can purchase AMC shares and receive the settlement consideration is the 22nd. This is going to cause incredible chaos in the markets, because APEs are going to be trading through the 24th on a NON-split adjusted basis, while AMC will start trading on the 24th on a split-adjusted basis, but the conversion doesn’t happen until the 25th, and the consideration doesn’t go to record holders until the 28th, and beneficial holders: wen? ¯\_(ツ)_/¯

Not financial advice, none of it. But literally, if you don’t do a lot of actual non-Elon-type due diligence here, no matter how sophisticated you think you are, I can promise you one thing, you are going to get caught in a hella crossfire.

Anyway, back to something that I actually know fckall about: trying to get caught up on sleep and failing miserably, er, I mean, law.

Nary A Weekend’s Rest

With just a couple of days of something that I think was like rest and forgetting about the AMC Entertainment case under my belt (I did see the Barbie movie, because apparently I can’t give my brain an actual rest from theatre-related things), aside from the expected and fairly uneventful 8-K filing, Monday passed without obvious disruption on the shores of the AM-seas.

But alas, ‘twas short lived. Monday night, without our knowing it, the gears were turning, the machinations running hard, all under the cover of darkness. Let’s dig in to everything that’s been happening.

Read more

I think there’s a sense in which I knew deep in my bones — from the first night I paced around my living room reading the Complaint in this matter, when people had been begging me to get involved, and I had been duly resisting as long as I possibly could — that I was never going to be satisfied with whatever kind of resolution came about from the court case. And, welp, the so-called (non-final, partial-sorta-kinda-not-really-but-enough-to-make-it-probably-doneski resolution of the Court did not disappoint on that front, because it leaves me feeling just as empty and dissatisfied as I knew in my heart then that I would be now. The cross-holdings and intra-class conflicts always set this case up to be a one-of-a-kind bizarro world battle royale unlike any other in recent memory, with passions that ran higher and stronger than anyone could reasonably expect from a corporate law case in the Delaware Court of Chancery. And while in one sense, it’s not really over since there has been no final judgment entered (in a sense, it’s just another beginning of another quasi-end), in another sense, it really actually probably kinda is, for all intents and purposes (and also, for all intensive purposes, for those of you who never got such bad grammar and mistaken homophones beaten out of you in law school or elsewise).

Read more

To be honest, I have no idea, because I’m sending this email before I read the opinion so that you can see the Opinion as soon as it comes out, the moment my Rube Goldberg website tracker notifies me that an AMC opinion has been posted to the Court’s website.

https://courts.delaware.gov/Opinions/Download.aspx?id=351520

Read it yourself for all the glorious details …

I’ll debrief y’all as soon as I can do the same.

Enjoy.

I am really tired, and I need to go to bed, but I also know that you are tired of hearing me talk about the filing of the consolidated complaint (or not), but I’m going to do it one more time. Because there’s something I think you might want to read, and this time, it’s from the highest Court in the land — not highest like bestest (because that’s the Delaware Court of Chancery), but highest like literally in the judicial hierarchy of things — as in not even SCoDE but actual SCOTUS (don’t ask me why I capitalize the “O” in “of” in SCOTUS and not in SCoDE, I just do — probably because otherwise it looks too much like it looks like it says scode instead of sko-deee.)

Anyhoo, I spent a while (no, I will not admit how long) this weekend trying to figure out if it really mattered that the plaintiffs have not filed a consolidated complaint, because there has been a not-insignificant amount of ink spilled over it, no, not just by me, and yes, I’ve been whinging about it, but also, the footnote I highlighted above is the last in a lineage of comments from MTZ that won’t stop playing on a loop in my mind, and now they are playing in frère jacques kind of tandem rounds with some other annotations she made in a different case in a recent opinion about how she can only drop so many hints or make so many ::cough, cough:: suggestions, and I feel like I’m doing way too much ::internal screaming:: for my own good lately, so I wanted to figure out if this whole thing is really a problem or not, and if so, how and in what ways.

All I know is that “for the limited purposes of this opinion” and scare quotes around the word “defendant” are not trivial comments and I’m so tired of people not taking this woman as seriously as I think she should be taken.

But procedurally, the whole thing seems to be a bit of an edge case and as far as Delaware law goes, it’s probably a real corner case (we’re a small, strangely shaped state with a lot of nooks and crannies, so that happens a lot). The defendant is providing stock consideration (already a pretty rare scenario to begin with for various reasons) and is one of the central recipients of the release (pretty normal even for a non-party like D&O insurers, ok, yeah), but also not being a party to the operative complaint in a consolidated set of cases (strange, but maybe not unprecedented, but is that just because no one ever really noticed or cared enough to think about it?), but the confluence of all three starts to make your head spin, and … does it matter or not for the purposes of actually dismissing the second case in the set of consolidated cases, at an obsessive procedural level?

I really want to know. I need to know. I also need to sleep, so let me cut to the chase.

Read more

Ok, hi! If you are a YouTuber, and you think it’s cool to take my paywalled content and make a YouTube video where you read my posts to people on your YouTube videos, I mean … nah, bro, it’s kind of not. I provide subscriptions to people who cannot afford to access my content but that doesn’t mean that I invite you to capitalize on my content by repurposing it without asking my permission into ad-sponsored YouTube videos. I mean, obviously?!? And no, asking for my permission to quote a portion of one of my articles a few months ago wasn’t some blanket grant of infinite permission.

The things you have to say outloud on the internet, I stg.

Ok. We need to talk about Izzo’s Motion to Maintain the Status Quo Order Pending Appeal, because I thought I was going to have a minute to breathe, but of course, that’s not a thing.

Read more

If you are going to be annoyed by the fact that this insanely personal and even marginally-inappropriately-so post is cluttering up your Inbox, you should just delete it now. Or maybe you should go ahead and unsubscribe. If you can’t handle receiving a single email in your inbox that could possibly touch on a topic that isn’t related to a topic that you haven’t already decided that you are interested in, you might simply lack the intellectual curiosity needed to be the kind of person who is going to be interested in the kind of things that I have to say.

I don’t say this to trigger you, although I assume that by now, a handful of you are already having some sort of episode — furiously penning some responsive missive to me that I look forward to reading (perhaps we are more alike than you care to admit), but here’s the deal: I tell you this because I am going to write about a bunch of wacky shit and if you can’t be fcked to simply delete an email that doesn’t resonate with you, I just think it’s probably better for your blood pressure and overall health that you figure that out sooner rather than later. I truly want what’s best for everyone in this situation.

Despite the clear (and incredibly repetitive) prefatory warnings included with all of my work concerning its stylistic choices, and the reasons therefore, and even when I explicitly say that “[y]ou actually do not need to comment on [all] that, if you can believe it,” and further note that “[s]ome of you apparently find that very hard to believe,” well, some of you find it apparently impossible to resist because I still get emails with préci[ou]s comments like the following screenshot:

I suppose it’s to be expected. Due to countless hours of hard work, and years of training and skill, I have certain information that people want, and they want it like Burger King-style — their way, right away, Burger King, now. But you know what the thing is? Too fcking bad. Because if I hate my life, I am not going to keep doing what I’m doing. I have to love what I’m doing to keep doing it. I have tried the other way. It doesn’t stick.

Well, people really don’t like that. I suspect there’s a subset of people who also really just don’t like that I’m enjoying myself, but that’s probably a more niche problem. I think the bigger problem is that the information I have is not widely available, it’s sought-after, and people want it in their desired format. Sorry, bro. You can take what you get, or you can not. That’s the beauty of choice under capitalism. If capitalism doesn’t give you sufficient choices, I suppose you’ll have to take that rare case up with capitalism.

But let me give this whole précis thing a shot here, just so you can see how stupid it is. This post is going to about the following topics:

• a television show called The Bear;

• my mother’s death and my own mortality consciousness;

• the Delaware Court of Chancery;

• Elon Musk;

• the webthing formerly-known-as-Twitter;

• life in general;

• the importance of giving a fuck;

• what it means to give a fuck;

• art, work, meaning, and my philosophy on life.

Is this ridiculous yet? Can you just let me write, and read along if you so choose? Can we just enjoy the process of writing and reading for what they are? Can everything not be commoditized and reductive? Please? I seriously doubt it, but I’ll keep trying. To the extent this post says anything relevant to the AMC case in a way that someone following it for some abjectly crass financial reasons might be concerned, you can see an update on the litigation position and all relevant information here. Please don’t debase yourself with reading about my life and my views on art and meaning for such trivial ends. This post is personal to me. It probably has nothing to do with anything that you care about for any self-interested reasons of your own. I wrote it for entirely self-interested reasons of my own — to express my feelings about life, and art, and the world. Please do me a favor and skip it, okay? It’ll provide those of you who don’t like my other analyses some very personal bases on which to disregard my analysis. Bollocks for you.

This whole thing is actually dead simple. If you want to read what I have to write, you can. If you don’t want to read what I have to write, you don’t have to. If you can afford to pay for my work, I request that you do. If you cannot, you can may request forbearance. These principles seem very straightforward, actually. Not complicated. Stop making them complicated. Thank you.

The pandemic came, for me, at exactly the wrong time. I’m not sure it came at the right time for anyone, but for me, the years of collective societal focus on our mortality and health concerns coincided with the moment in time when I officially outlived my mother’s lifespan. If you are quick with calculations, or can just intuit the math here, you’ll soon figure that this means that my Mom died when I was very young, and also when she was quite young. It was a sad, tragic thing at the time — she was (as I am now) in her prime, far too young to die. She was vibrant and very much alive before she was no longer those things, and to a fifteen year-old, this sudden state change had the effect of imbuing my whole world with a kind of permanent sense of transience that I have never been able to shake off. The only thing I’ve ever been able to be entirely sure of is that nothing lasts.

I suppose it would have been easier — to use language weirdly and loosely and bizarrely — if she had died suddenly in an accident or from some external cause. But she died of the same breast cancer that had killed her mother, and if I had been old enough for her to be honest about it with me, I think she would have admitted she always thought was going to kill her, too. There’s nothing like growing up with a multi-generational target on your back, let me tell you. Why am I telling you this, anyway? Oh, yes. That’s right. There is a point to all this, I promise. I grew up with a mortality consciousness that had few rivals. I spent my teenage years longing to reach the age of maturity not so that I could drink alcohol legally, but so that perhaps they would let me get a mammogram. Finally, advancements in genetic testing started to make meaningful progress. Maybe I could actually find out if I was in for the kind of death sentence my mother had lived with for all of her truncated life.

I became a health nut, nerding out on plant-based this, and exercise that. Reduce sugar intake, increase leafy greens. More whole foods, less processed junk. I didn’t drink alcohol or smoke cigarettes after college. I participated in a longitudinal study about the impact of daily exercise on breast cancer in high-risk cohorts. I joined FORCE (Facing Our Risk of Cancer Empowered) and went to their annual conference. I was quite certain that I carried the BRCA genetic mutation, and finally got insurance to approve the test. When I got the results back that I was an “uninformed negative,” I was dumbfounded. (Although I don’t carry any known genetic mutation, that fact can’t fully “inform” my risk profile because my mother and grandmother both died well before the advent of genetic testing, so there’s no way to be sure that their cancers were caused by known genetic mutations, so as to say for sure that my risk profile is more akin to gen pop.) I still get biannual MRIs and mammogram/sonogram combos, see the best breast surgeon in the area, and do all the things that my mother refused to do after watching her own mother be broken and maimed by radiation treatment in the 1970s. I have prepared myself and learned from her mistakes.

What I wasn’t prepared for was how hard it would be to outlive her. I had only ever really done “back-of-the-napkin” math about how old she was when she died. I’m not a huge birthday/anniversary/dates kind of person, so I wasn’t one of those people who had things nailed down to a years/months/days kind of timeline. I had a general sense back in 2019 that I was getting close to approaching the age that she was when she had died, because my doctors were always asking how old she was when she died, and I would give them an approximate age, and I was right about at that age. Sometime during the pandemic, I finally decided to do the actual maths. And it turned out that my back-of-the-napkin math about how old she had been when she died had been off by a couple of years, so I had been consistently wrong on all those intake forms throughout the years, and I still had a couple of years to go. And I don’t know what it was about that miscalculation, but in conjunction with the entire world kind of joining in with the type of mortality consciousness and health consciousness that I have lived with my entire life — the kind of “is it a muscle cramp or am I dying of cancer?” — it really and truly sort of fucked me up.

All the memes about “is it the cold/flu/COVID” — all those things that people were experiencing for a while at the beginning of the pandemic, when people were at home with nothing to do but stare at death counters, and hospital statistics, and worrying about other people getting sick? It was like everyone was like me all of a sudden. I have lived my entire life worrying about my own health and the health of everyone that I love. It’s fucking exhausting, and for a moment, during the pandemic, everyone was face-down in the muck with me. And there was something kind of comforting about that. But then, when it stopped, and people got over it, and the world moved on, and then I actually did cross that threshold of surpassing my mother’s lifespan, and that also coincided almost perfectly with Elon Musk blowing up the Twitter deal and throwing my life into an entirely wild, new direction. It seems like some sick shit, in a way, but when I do something, I go for it, so at some point, I decided to calculate exactly how old my mother was when she died, and precisely how that mapped onto my own life. I calculated to the day when it would have been: May 7, 2022. So, right after I passed the most traumatic goalpost of my life, Elon Musk started the slow-motion train wreck that is still causing an epileptic seizure-inducing disaster to this day, at 1355 Market St., which was also coincident with a lot of you getting a lot more interested in what The Chancery Daily had to say about corporate law and the Delaware Court of Chancery; when what I liked to nerd out about became something that you all liked to nerd out about, too. And that was really cool, and fun, and absolutely all-consuming.

I know there is no causation here, obviously. I know that none of this is about me. I know that I am a small, insignificant, minuscule creature on this magnificent planet. But, to me, my story is pretty central. And as I mentioned, you are under no obligation to read it.

The reason that I’m telling you all of this is because I want you to understand what I am about to tell you, about what I believe about life. I want you to understand that what I personally believe about life comes — for me — from the fact that I don’t really know how to do anything else. It comes from the fact that if I do anything else, I will most likely spend a decent amount of time per day worrying about ridiculous shit like how many days my mother lived, and whether or not that slight pain in my chest is COVID or cancer or some other weird third thing. Go ahead and judge me for that, I’m sure you have no character flaws. I’m telling you all this preface so you know that there is a reason that I choose to live the way that I do, and that I’m not telling you about those choices to moralize to you about how you should do the same. I’m telling you because for me, the alternative is a kind of discomfort that I’d prefer not to live in everyday. And choosing to live the way that I do is quite blissful actually, and I very much love my life, so it really works out. I don’t think it’s this way for everyone. I think that there are people for whom choosing to live the way I do comes from totally different place. I don’t know — I only know my own origin story. I share mine with you so you can see that I’m not trying to proselytize about how my way is better. This isn’t a homiletic wherein I’m telling you how to be; this isn’t proscriptive, it’s just an explanation for why I am the way that I am. I don’t actually think that it’s per se better or worse than many other ways of being in any categorical sense. Everyone has complex choices to make about the moments that they have on Earth, and far be it from me to render negative judgment on the vast majority of those, save a scant hyper-public, highly-influential few who I think merit a check on their behavior since it is so impactful on the rest of ours. But no, I’m not telling you this to proscribe “good” behavior. Not by any means.

I’m telling you this because I most certainly have hypochondriac tendencies and mortality consciousness like it’s nobody’s business, but there are things that make it better. Not numbing out because alcohol and substances are not things that a health nut does. Exercise, sure. But there are only so many hours in the day I can dedicate to the Peloton or walking the neighborhood or running the track. One of the things that makes it better is focusing on something that I love that allows me to get into a flow state. There are two categories of those things in my life: my work (writ large) and my family. I could — and I have — written a lot on how I think people should or shouldn’t use other people to fulfill themselves. Suffice it to say here that I think focusing on other people to find or fulfill one’s purpose is a dangerous game, and one that takes restraint, cooperation, and deep mastery of communication so as not to become unintentionally suffocating or smothering. But work? When it is the right work? When it is work that allows me to access a flow state? When it is work broadly defined, that fulfills me on a creative and intellectual level — when it can preoccupy my mind, keep the worries at bay, when I enjoy for its ends, but also for its own sake? For me, I choose for this to be what the art of living is all about. Because: 1.) I have to choose something, 2.) it’s a fairly random choice, 3.) even if I don’t consciously choose, just like Rush said, I am choosing, 4.) it’s all quite meaningless in its own way, anyway, 5.) there’s something beautifully meaningful about the meaninglessness of it all. Most importantly, when it’s work that I can put my whole self into? That’s the real deal. Because my whole self? You want to know what my whole self is all about?

Enter, The Bear.

I said I was going to talk about a television show, didn’t I? The Bear is going to explain this all, so beautifully, so poetically, in a way that I never could. You’re going to have watch it, to truly understand, but I’m going to try to explain. I can’t really tell if what I’m about to say about the show should be categorized as spoilers, because they are simply little vignettes that can almost be entirely taken out of sequence, out of time. They are timeless moments of dialogue that are absolutely fucking transcendent in their truth. If you’re sensitive to knowing anything about a show before you see it, you should binge-watch both seasons before you read this. But I also think you could probably read this, have no idea what I’m talking about in relationship to the show, then watch the show, and come back later and say, “oh, yeah, that’s what she was talking about” and it would have absolutely no impact on you watching the show. It’s an intensely character-driven show. But I don’t know, I’m not a weird-television-watching person in general. I’m the kind of person who got rid of television back in the early aughts before streaming was a thing, and then admittedly probably spent a few years subtly (or not so subtly, as you can see) bragging about being that kind of person. Now I’m just like every other normal person — because does anyone actually have cable television anymore … is that even a thing, and if it is, do you have to also subscribe to streaming networks, and why is everything so unworkable these days?

Anyway, you’ll have to decide whether you can tolerate hearing a few character interactions from a show without context, because I certainly don’t want to ruin the show for you, because everyone on Earth should watch this show, really. And I’m not one to prescribe television watching to people. But this show will remind you why we need real writers and real actors and not AI and not garbage pumped out of a factory, and why the subtleties are what make everything work, and why the point of this whole piece, if I can ever make it there is that: the work is what matters, the details are what matters, the exacting obsession over putting in the work and getting it just fucking right is what matters. Because the show practices what it preaches, and it absolutely shows.

Because what it all comes down to in the end? What the show is about, what this whole piece is about, what my whole self and life is all about?

Giving a fuck.

So, we’ll get back to The Bear in a second. First, let me explain how this all relates to Elon Musk and Twitter, because to me, it really, really does.

On July 12, 2023, one year to the day after Twitter sued Elon Musk in the Delaware Court of Chancery, I finally deleted my Twitter account.

I suppose now we have to call my ex-Twitter account an X account to be accurate. It was a decision that — if you have been following me for that period of time, you will know — I have been struggling with for the entirety of the period of intervening months since Musk closed the deal and took over Twitter in October of 2022. On all the various platforms and in all the varied attempts to leave Twitter, I have shared reasons for this decision and the struggle therewith. But Elon made enough absolutely awful decisions in a short enough period of time to make the choice sufficiently clear that the one-year anniversary seemed like a perfect ending to a beautiful disaster. I couldn’t be happier that I finally pulled the plug just two days before he started paying out royalty payments to people like Andrew Tate, known rapist and sex trafficker. It’s only gotten worse from there, if you can believe it.

Twitter is relevant to this story in two ways. One, the year that I spent on Twitter educating people about the Delaware Court of Chancery was unlike anything I could have imagined. It was wild and crazy and enlightening and terrifying and so much more. What a decade that year was. And it was probably the only kind of absolutely unrelenting, around-the-clock demanding activity that could have kept me from whatever black hole depression I might have fallen into in the absence of that distraction.

I’ve been telling people lately — somewhat jokingly — that I think I’m in a lot of trouble (in the Ralph Wiggums kind of “I’m in danger” way) because previously when I expressed my workaholic tendencies while working at the law firm or in other roles, I always at least had some rate limiting factor to “protect” me. Either I low key did not enjoy the vibes where I was working, or the people whom I was working for high key wanted to suppress my energy, or I had other things going on at various stages of my family life that demanded to take precedence over work. There were always governors on how much I could get into it. There wasn’t just unmitigated love for what I was doing. There weren’t unsullied good vibes for the people I was doing it with. There wasn’t an atmosphere of complete support and camaraderie and openness and adventure. There weren’t people to cheer me on in my relentless pursuit of excellence, and my commitment to going above and beyond. There wasn’t an absolute absence of killjoys and energy vampires (ok, there are one or two of you who make it through to my email, but they are no longer my coworkers, and randos don’t have the same oomph).

What the fck am I going to do? I was at the 100th Anniversary Women in Law Celebration a few weeks ago, musing on this with several of the most badass women in the Delaware Bar, and I think I figured out the answer. No offense to Sheryl Sandberg, but not exactly in the way she meant it (only because I haven’t read the book, so I really have no idea how she meant it other than in an abjectly literal-metaphorical way), I think I’m going to lean into it. I mean, I think The Bear has given me my answer.

Second, Twitter is relevant to this story because Elon Musk and “X” are — to me — the antithesis of everything that I’m talking about here. For all of his yapping and all of his virtue signaling on this topic, I truly believe that Elon fundamentally lacks the ability to know how to or to “give a fuck” the way that I am defining it here. I have never seen Elon himself output results consistent with this kind of deep work that is both committed to excellence and to people in equal parts and at the same time. To be clear, he talks about striving a lot and about egoic pursuit of blah blah blah, and he seems to have hired people who are capable of certain aspects of working hard and killing one’s self through workaholism, something with which I am quite familiar, though he seems less and less able to retain (or hire) such people, there still are certain of them in his orbit. But he, himself, does not seem to be such a person in many senses. In fact, he appears to be kind of the opposite of this type of person. He seems impetuous, driven to act sporadically instead of consistently, unable to focus and maintain singular effort. He makes acts in ways that are sloppy or that create sloppy results. He doesn’t cut his tape with scissors (this is a Bear reference). But most importantly, he does not seem to give a fuck about people. And, it turns out, that’s all of a piece.

Ok, so back to the TV show. What did The Bear teach me, what do I believe is the greatest virtue in life, what saved me from going insane after I outlived my mother’s lifespan, what do I find most repugnant about Elon Musk, and — new topic — what do I find so refreshing and admirable about the Delaware Court of Chancery and why do I enjoy covering it so much? And also, why do I think that the bros who keep saying that Vice Chancellor Zurn is just going to pop out her opinion in the AMC Entertainment, Inc. case in a matter of hours are kind of missing the point, and are fundamentally still misunderstanding the work that is left to do, and the way that everything works?

It’s really all the same thing. It’s all about giving a fuck. About the work, and about people.

Because that’s what I’ve spent the last year doing. I have spent the last year giving every single possible fuck about what is going on at the Delaware Court of Chancery. And when I mean every single possible one, I seriously mean it. Every day, I know every single item that came in or out of that Court. I know who filed what, everything that the Court said — written and oral, what is going on in every single case, and do you know what? That takes a lot of work. Every single day. And then we summarize all of the written opinions for our publication, and we debrief all of it internally, and we decide which parts to focus on in our daily write-ups, and we obsess over how we are tracking the information, and we fuss over periods and commas, and when our janky IT system removes a space between two words, we debrief it the next day, because it fucking matters to us. And that’s why I cried during the episode about “the Smudge” — because those are my people. People who fucking care. People who give a shit. People who want to take radical responsibility (“Yes, fck me, Chef!”), not for being perfect — because no human beings are — but for attempting perfection. Because there is no giving a fuck about big things without giving a fuck about small things. And there is no giving a fuck about the work without giving a fuck about the people whom you are serving with the work that you do, and the people with whom you are doing it, and people in general, people at large.

And this is what I have been telling you all since day zero that I love and respect so much about Vice Chancellor Zurn. That woman’s work ethic is second to none, and it puts mine to shame, and I know of few people in the world about whom I can honestly say that, and several of them sit on the Delaware Court of Chancery, and the other one founded The Chancery Daily. At a time when the various judiciaries around the country make the news for doing sloppy work, or sprawl across headlines for cutting corners or breaching ethical guidelines, the Court of Chancery stands — in my mind — as far as the bench if concerned as a testament to this virtue. I think of Chancellor McCormick, and how masterfully she leads the Court, and what she demonstrated to the whole world in terms of excellence and impeccability last year in her handling of the Twitter v. Musk case; I think of Vice Chancellors Fioravanti, Will, and Cook and their unrelenting work ethics — each of them consistently prepared for hearings and trials, ready to dive deep into the particularities of the record or the case law in a way that never ceases to amaze me; I think of Vice Chancellor Glasscock and the care that goes into the crafting of his opinions; I think of Vice Chancellor Laster and the coherent narratives that he pens about corporate law with unfailing vigor in each of his Opinions. The care that these jurists give to their jobs is just not normal; to my mind, it’s extraordinary. And look … are there members of the bar who are probably annoyed with various aspects of this diligence, for various reasons? Sure. Do they think they could do it better — “it” being basically anything that you present to them? Of course. To me, though, there’s something honorable in giving a fuck in and of itself. Speaking of In and Of Itself, now that I think about it, the eponymous play might actually correlate with this whole concept, and it was an absolutely fucking spectacular work of art that everyone should watch, and it just so happens to also be streaming on Hulu, for which this Substack has now become an entire unwitting advertisement. But back to the regularly scheduled broadcasting.

There’s a pair of scenes in The Bear, which I think sort of sum up this whole concept for me. They are absolutely devoid of meaningful or memorable spoilers, as far as I can tell. But I’ve watched them several times and I can’t not be moved by them every time.

In one, Marcus is preparing one of the dishes he has learned how to make at his special training, and its preparation is insanely intense. It involves using tweezers and a blow-torch and carefully spooning a small scoop of caviar and a piping tool to make tiny little swirling towers of some fancy condiment. It’s painstaking, watching him put it together, and it’s taken him montage after montage of failures (“Again, Chef!”) and tons of trial-and-error to improve his skills to the point where he can even attempt it on his own. But you can see that his dexterity has improved, he’s developing the hand of the master now, he is fluid and facile with his movements, he has a bit of flourish in what he’s doing, he’s no longer as awkward and stilted. Nonetheless, the process is excruciating and exacting to put together a single perfect serving of this test dish. He fires the marzipan to a beautiful seared edge around its immaculate circular rim, and one can imagine all the predicate steps required to get that green color to come to fruition.

And then he inspects it, satisfied.

And then, he just … eats it.

In one, whole, bite.

A couple of chomps and a single gulp, a look into the middle distance as he processes the experience, and a barely perceptible nod of approval.

It’s gone, and that’s life.

Two scenes just before this, Marcus is walking home and he encounters a random man who has fallen off his bike and managed to get tangled up in some construction wire fencing. It’s not clear whether the man is drunk or mentally ill or just non-English speaking, such that their communication difficulties are due to the language barrier between them. But once Marcus stops to help disentangle him from the dangerous situation, the man stops to embrace him gently, picks up his slightly mangled bike, face bleeding, and hops on and rides off into the distance, Marcus’ voice trailing off behind him: “Are you sure you want to get back on that….?”

But that, too, is life.

It’s the scene with the bike that really sets up the scene with the everything-that-you-just-put-your-heart-and-soul-into, you-just-shoved-in-your-mouth-and-disappeared-in-one-bite, that makes the whole thing hit so hard. But in both cases, the scenes haven’t been written about much. Some synopses of the episodes actually leave these two scenes out entirely, choosing to say that the episode ends on the intervening scene, which is admittedly a sweet interaction between Marcus and another main character. But these two scenes tell the story of this show for me.

It is the story of giving a fuck.

Marcus stops to help the man because he gives a fuck, in the sense that he cares deeply for other human beings, even one whom he does not know, with whom he cannot communicate, and whom he will never see again. He hears the man crying out, and he goes to him. He helps him. The man demonstrates his appreciation, but — as is life — he just gets right back on the bike. Because that’s what we do. We ride again, sometimes, even, while we are bleeding from the face. Because, really, what’s the viable other option? To sit out life, to just lay back down, without the razor wire, to just … chill and do nothing? I tried that during the pandemic for a bit, and it did not work for me.

Marcus has put his entire self into learning how to make these intricate dishes, into how to be the best possible chef that he can be, into how to obsess about every single bit of minutiae, because he cares so deeply about his work. Because he gives a fuck. I used to have a neighbor, and when they sold their house, the realtor put on the listing, “shows pride of ownership” and I thought, “what the fuck does that mean?” but now I know. It means they had the systems serviced, they cleaned the gutters, they replaced the roof shingles when they broke, they didn’t let siding rot without repair, they had the foundation checked for cracks, they made repairs and had regular inspections — they gave a fuck. And when Marcus spends all that time just to make that dish, all alone in the kitchen with so many tools and prep bowls and ingredients, to serve no one other than himself, for only his own edification, and then he eats the entire product of his own work — because it was all just for its own sake, only for the sake of his own education, for his betterment, to improve his skill set — in one fell swoop, in one whole bite.

That, too, is life. Because everything is transient. Everything is consumable. We have to get up tomorrow and do it all over again. We don’t get to create a meaningful life and have that be the end of it. We have to wake up in the morning and choose to make another day for ourselves. And we have to choose to give a fuck, or not. We have to choose to have pride of ownership in our work, we have to choose to care about what we are doing. We have to choose to care to do it right, to do it well, to do it thoroughly, and not half assed. We have to choose to not do slipshod work, to make sure that our “i”s are dotted and our “t”s are crossed.

To me, there’s something beautiful about that kind of zeal and passion as an end in itself. That kind of love of the work for its own sake. Not as an ego goal, not as an objective end. Because one chooses to take pride of ownership in one’s work. Because, you choose to live, you choose to do a job, and you choose to live in society. So, why not do everything with the kind of passion that says, “I give a fck.” To me, that’s what life is all about. And maybe it’s because I really don’t know any other speed. I’m bad at not caring about people. I’m bad at not immersing myself in my work deeply. But when you find a space where you can lean into all of this, with other people who give a fuck about people, and their own work, it’s beautiful.

And The Bear also knows what my immediate response to all of this beauty is going to be. Carmy, the main character is living it right along with me: “I have to remind myself to breathe sometimes,” he admits. “I, um, have to remind myself to, uh...to be present, you know. Remind myself that the sky is not falling, that, um, there is no other shoe, which is incredibly difficult because there is always another shoe.”

And when he tells Claire about this belief — because he is noticing how nice things are with her, with his current situation, she so sweetly, wryly responds by asking him: “do you wanna know a secret?” He says yes, so she tells him.

The secret is: “Nobody's keeping track of shoes.”

Because this show is an enactment of the kind of passion and perfection and work ethic that it exalts, it shows and tells, the virtues of giving a fuck — but not just about work at the exclusion of everything else — also giving a huge fuck about people and about all aspects of the way that we live, but also yes, including first and foremost what we do for work, because the reality is that work is where we spend the bulk of our time and energy with and for people. You can see the love and care and the fucks given in every intimate and fine detail in the set. You can hear it in every pitch-perfect humanity-imbued line of dialogue that is acted with unmatched skill and practiced talent. This show is an absolute gem. Give it all the awards.

Much love,

Chance

P.S. I said the common thread is giving a fuck, which is a reference to where you can find me now that I torched my Twitter account. On Threads. It’s quite amazing that Elon is so terrible that he’s retconned the reputation of Mark Zuckerberg to a certain degree. Because it was Facebook who coined the expression that Musk seems to embody at his companies and in his life: “Move fast and break things.” I remember when Twitter 1.0 folks were sending back their laptops when Musk finally got around to figuring out how to have remote people send them somewhere, and I saw one of these stickers on one. It struck me as very much aligned with the philosophy that I saw in the former company: “Move purposefully and fix things.”

The Bear shows how sometimes you have to operate in an insanely high-speed environment where the tickets are printing faster than you can queue them, kind of like how fast the cases get filed in the Court of Chancery, but there’s also a way in which you can still abide by this philosophy, which I think is part of the transformation that the show demonstrates throughout Seasons 1 and 2 — from Facebook’s version to this one. At first, Carmy just moves fast and breaks things. But he learns that he can go fast by moving purposefully and fixing things. In a sense, Twitter 1.0 never quite got the hang of doing both at the same time, because it’s an insanely hard task and steering Twitter had become like navigating the Ever Given through the Suez Canal. But a big part of learning how to lead and operate in that kind of a dance is to truly give a fuck about both the people with whom you are working, and the people your work is serving, as well as about the work itself. Twitter 1.0 had that part nailed. And I’m one hundred percent sure that in the case of AMC, Vice Chancellor Zurn fully does, in all ways. Every piece of work product she has ever put out in her years on the bench has demonstrated exactly this commitment.

We know what Lampchop thinks about this case, and I don’t disagree with their assessment. It certainly has Neverending Story kind of vibes, that’s for sure. But let’s do a little check-in and see where things stand as of the end of July, because while it’s easy-ish to see where we sit in the grand scheme, there have been lots of small things happening around the periphery, and it’s also easy to lose track of all the minutiae. But you know, minutiae are my fav.

Read more

I was literally in the midst of writing the screed below, and then I was entirely vindicated:

https://courts.delaware.gov/Opinions/Download.aspx?id=350480

We’re going to have to update that old saw: the only things that are certain in life are death, taxes, and gaslighting by the bros.

Honest to g-d.

Ever since the parties ran to the Courthouse this weekend to file an inappropriate letter, in lieu of a motion, despite the fact that they couldn’t be fcked to actually just file the consolidated complaint that the Vice Chancellor has asked them to file on no less than four occasions that I can think of off the top of my head just sitting here (because … I don’t know why? maybe they aren’t paid enough? I’m sure there’s some good, head-patting reason they will give me that girls just don’t understand), all the bros have been coming out of the woodwork to say that the Vice Chancellor is primed and ready to drop her final approval of the settlement any minute now.

They mean it literally!

They mean that she did not mean anything that she said in the Opinion, but that we are not supposed to take her at her word, that we are supposed to read the words that she said and think, “oh, she just meant that … figuratively?” She … actually … had done all the work to approve the settlement … and had written up the entire approval … but for some reason … decided not to publish the entire opinion and instead just published the rejection? And then is just sitting around on an opinion that she’s going to whip out when we least expect it, like some twisted wish fulfillment of every arbitrageur on Wall St.?

Bro, I really do not think that’s how this works.

So, they say I’m the one who doesn’t know what she’s talking about.

Again.

They say I don’t understand how the Court works.

Again.

They say I don’t know what I’m talking about.

Again.

Maybe I don’t! Maybe I’ve just so happened to be right about everything in this case, maybe somehow I’ve been like a broken piece of a clock, but where the broken piece of the clock is on the façade of the clock, and it gets stuck on the second hand, so it just swings around with the second hand, keeping perfect atomic time all day, instead of like in the aphorism about how even a broken clock is right twice a day. Except in my little vignette, the clock isn’t really broken, is it?

Look, I’m not saying I can’t be wrong, or that I won’t be wrong, because I obviously can be and I obviously will be, and particularly because I’m standing up for myself and writing about this, I’m sure to be tempting some old Greek God who has a particular disdain for such behavior and who will come down from Mt. Olympus just to smite me for doing such a thing, but for fck’s sake, if Vice Chancellor Zurn had an entire settlement approval opinion written, she would not have said that she didn’t. She would not have said, “I’m getting this to you now, because I know you are in a hurry, and I know I can’t approve the settlement as it is, so you should tell me if you’re super attached to this provision, before I go ahead and do the deep dive on the rest of these things, like class certification and the opt-out issue, because those things are thorny, and there are a ton of other objection issues to deal with, and a whole bunch of other things I’ve got to wade through with my meticulous eye and supreme attention to detail, and I ain’t doing that if you are just going to be running for the hills anyway if I find the slightest problem with something.”

If she had the whole thing done, why would she have held it back? It makes no sense. It’s not who she is. It does not compute.

But they will not stop saying it.

That it happened before. Yeah, dude. I know. There’s precedent like that. I’ve read it all. But it’s nothing like what happened here. It’s precedent like we have debriefed in great detail here, where something like Ghost Penciling™️ happens, where the Court lays out their entire approval, but for a small piece, and then tells the parties basically, “if you go and fix this, I’ll trade you for a final approval,” and then guess what? No surprise, the parties go and fix that, and in a day, the parties get a final approval. And everyone is using that precedent to say that we are going to get a final approval in a day here? And I want to literally scream.

All I can say is, if the decision in the AMC Entertainment, Inc. case was at all surprising to you, you must not be a subscriber to this Substack. It’s like that meme: if you have a surprised look on your face while reading that opinion, I’ll just look at you and say: “tell me you don’t follow Chance or read The Chancery Daily x Substack without telling me you don’t follow Chance or read The Chancery Daily x Substack” because I don’t know if I could have said or written more words about the scope of that release being problematic due to the inclusion of the APE claims without just boring you-all to absolute tears about it.

Not to brag (maybe a little), I even tracked down the first night that I discovered it, because I remember the moment clearly, when I was up late, digging into the release on a line-by-line, word-by-word basis, with the finest-toothed comb I’ve got in the vanity kit. It was about two or three o’clock in the morning, and there it was: the bright, screaming red flag. I went on Andrew’s Yet Another Value Blog podcast the next day, still exhausted from being up all night and talked about it publicly first time — that was two months ago, on May 24th. I started really honing into how central of a problem I thought it was over the next few days and weeks, tweeting about it, talking through it on YouTube, and putting it together here on Substack in the magnum opus in advance of the hearing, and continuing to zero in on it, the more attention I put on it. If you read the section in this post entitled “What The Fuck Now” you’ll basically see that there was really no other outcome than the one that just happened, although I did my level best to try to talk myself into any other possible option, for everyone’s mental health. I was incredibly unconvincing in doing so, and it was patently obvious reading it what was going to happen. I even analogized it to how sure I was feeling in advance of the Status Quo Order ruling, and we all know how I right I was about that one. (Is it gauche to gloat? Fck it, I think I’ve worked hard enough to enjoy the moment.)

Anyway, that’s all just to say, if you were surprised yesterday — either by the timing of the opinion or by its substance, you needn’t have been. And I’ll also say that a lot of you seem to be not only surprised by the outcome, but also appear to be dramatically misunderstanding the necessary implications of this ruling. But, ya know, that’s a recurring theme here on the inter webs. Maybe it’s just a fact of online life that I have to live with. Someday, maybe I’ll learn even to deal with it without taking it personally. Maybe.

There is a lot to debrief about the Opinion itself, but right now, I want to get some information out there about what is actually happening in the real world, and not just in my head, because something is happening that is, in fact, more important than anything I might have to say about the Opinion (ikr, shocking, for real though), and it preempts much of what I might speculate about “what is likely to happen in the upcoming days or weeks” since, well, ish is already going down.

But just briefly before the internet gets the cart forty-seven football fields in front of the horse, let’s just be clear that this opinion was not ruling on the final approval or rejection of the settlement as a whole or really even on its substantive merits. This Opinion was more like saying: “Hey, y’all! I know you’re in a super big hurry to get this thing done, and I’ve sat down to do the work, but there is this big, flashing red flag that is actually like a bright LED red flag, and it’s so bright that I really cannot concentrate on all the other predicate steps of the approval process, nor am I going to bother even writing out all my thoughts on the substance of the merits with this thing flashing in my face, because why would I even bother doing all that work if y’all are super committed to this release as it is written, because — as you might have heard — this release encompassing APE claims for AMC holders is a bridge too far and there ain’t no way it’s gonna fly. So, without yet walking through all the rest of the analysis, let me just say that 1. there’s no chance in Hades I’m gonna approve the release as it is, and 2. while we’re here, I overrule all the exceptions to the objections to the Special Master’s Report and Recommendations, and thanks so much to the Special Master, xoxo, xthxbai, pls send that faking complaint I’ve asked for like twenty times, much appreciate.”

So don’t trip, because although this is sort of an analogue to a Ghost Penciling™️ scenario, it is not that, because in a Ghost Penciling scenario, like ones we discussed such as UniSuper, Ltd., et al. v. News Corp., et al.,
C.A. No. 1699-CC, memo. op. (Del. Ch. May 31, 2006), where the Court had already addressed all of the other points relevant to settlement approval and said something more like, “Hey, y’all! Let me walk through the settlement approval steps! We’re good on #1 for all these reasons, we’re good on #2 and most of #3, but just so you know, there’s this one bit of #4 that I don’t like, and if you change it, I can then just sign right off on the final judgment and with that sign off, the approval will be a done deal.”

The biggest misconception I see floating around the internet right now is there was a final disposition on the settlement itself, such as a permanent injunction against the reverse split and conversion, for instance, or a decision rejecting the merits of the settlement consideration, for another. There was not. There was no ruling on anything like that. There was only the ruling that I described above, as articulated in the full opinion, here. To be fair, lots of news organizations who either don’t understand enough or don’t care enough to try to help avoid misunderstandings are doing their fair share of contributing to the problem. ::sigh::

Anyway, in the last twenty-four hours there has already been about twenty-four million human-hours’ worth of speculation about what’s going to happen from here. Would the parties actually get off their collective butts and do stuff, or were we going to have to wait another few weeks to see something from them, like last time? Was the Vice Chancellor going to have to ping them again? Well, wait no longer, because we already have an answer. The documents, they have been filed.

The parties have asked the Vice Chancellor to stay her order for them to file a consolidated complaint, pending what is basically a request to “take a look at this release language, see if you’re cool with it, and also — are you good if we don’t re-notice the class, ‘cause remember what a nightmare that was and no one really wants to do that again, amirite?” type of thing.

They attached an addendum to the settlement agreement and a revised proposed Order and Final Judgment and a redline of the same, which non-ironically still lists Munoz as a plaintiff, because well, it would just be too much to ask for these things to not be messy, I guess.

Read more