SPACapalooza, Grayscale, WWE, AMC & Musk ... Oh, My!

An Update from the Delaware Court of Chancery & What's Coming up for Substack

One year ago today, at the close of business on March 7th, 2022, the Delaware Court of Chancery had seen 214 cases filed year-to-date.

In 2021, the Court had seen 196 cases filed year-to-date by March 7th.

In 2020, the number was 174.

In 2019, 189.

In 2018, 156.

In 2017, 176.

In 2016, 218.

In 2015, the Year of the Disclosure Claim: 249

In 2014, 213.

In 2013, 221.

In 2012, 163.

Historically, last year was an extraordinarily busy year for the Court, approaching the famous pre-Trulia levels that peaked in 2015. And certainly this year will forever be known as the year of the §205 claims, which will irretrievably skew all statistical analyses of filings, but the facts are that:

1. The §205 cases still have to be handled by the Court, and require significant judicial resources, so they obviously must “count” in considering caseload.

2. There are ~47 such SPAC §205 petitions, and even if you back them out of the equation for certain comparisons, the number of filings this year is still off the charts, because … drum roll, please …

3. There have already been 285 cases filed year-to-date as of March 7th, 2023. (That’s through the 4pm cutoff — it could actually be more when morning comes.) That is 71 more cases than last year at this time, and 2022 was a barn burner of a year. And it’s still 24 more cases than last year, even if you remove all of the §205 actions!

4. Even if you do remove all the §205 actions, it’s nearly as many filings as in 2015, when almost every announced merger was accompanied by the filing of multiple stockholder complaints. But, see also, #1, and recognize that there’s no logical reason to remove all the §205 actions and still be considering anything like apples to apples.

5. On an absolute basis, no matter how you slice it, it’s 36 more filings in just over two months than the busiest year in TCD history.

6. Analysis of the number of motions to expedite would undoubtedly blow any prior year out of the water, given that all 47 SPAC petitions were expedited, in addition to an increasingly-significant portion of other matters presented to the Court.

As we recently pointed out in a Salvo to our main mailing list, the Court is looking at all manner of creative ways to handle the increased burden created by a confluence of various factors, including the expansion of its jurisdiction under 8. Del. C. §111.

One thing that has been striking over the past few weeks is the breadth and depth of the complaints being filed in the Court of Chancery. From In re AMC Entertainment Holdings, Inc. Stockholder Litigation (consol.), which quickly introduced the Court to a new contingent of extremely-online stockholders, to Alameda Research Ltd. v. Grayscale Investments, LLC, et al., to five World Wrestling Entertainment, Inc. matters involving Vince McMahon’s handling of a series of horrific sexual harassment allegations, it’s never been more interesting to peruse the recent filings in this Court and follow along with the new and existing matters.

In upcoming posts on Substack, we will cover the following (edited to add links after the fact):

• What’s next in the AMC matter, what to expect around the upcoming stockholder vote, and timing of the close of discovery and briefing and hearing schedules.

• Debrief of the § 205 filings and resolutions thus far, as well as the first stockholder opposition to a petition filed earlier this week in In re Quantum-Si Incorporated (among others).

• Rundown of recent complaints filed, including WWE, Grayscale, Kraft Heinz, Peloton and other high-profile matters.

Last tidbits for today — an update about the Tornetta v. Musk case:

Although Elon Musk has been busy on Twitter doing something that many commentators have likened to bullying and discriminating against disabled people — while also posting incredibly misogynistic content that garners hundreds of millions of views now that he controls “the memes of production” — his lawyers have in fact been doing some work while he mostly does things unproductive.

In the Tornetta v. Musk case, the parties filed a joint stipulated and proposed scheduling order, as the Chancellor directed them to do in her post-hearing magnum opus of a letter.

The Chancellor subsequently entered the order, so the parties will brief the four topics outlined in the letter, which means that they will be addressing the amicus curiae brief filed by Professor Elson.

This schedule has briefing completed on April 11, 2023. At that time, presumably, the Chancellor and the parties will confer upon or otherwise determine whether or not any additional argument is requested or warranted. Presuming that no additional argument is held, and no further briefing is requested as a result of what is submitted, this could result in a decision sometime toward the end of July 2023, applying a liberal version of the “end-of-the-month-ish in which 90-day period ends, starting from when the case is taken under advisement” calculation, particularly since the Schedule of Evidence won’t be submitted until April 21, 2023 by this agreement. If the parties or the Court determines that additional argument is warranted, then the clock won’t even begin its quiet tick until the subsequent argument is completed.

Long story short: it’s possible — but by no means guaranteed — that we could see a decision sometime late this summer in this matter. We will have a much more interesting sense of Musk’s substantive responses (presuming he has any) to the arguments he declined to address in his original briefing, once this supplemental round is complete. It’s interesting to see defendants get opening and reply briefs, while plaintiff rests on an interposing answering brief. This is really a second (and third?) bite at the apple for defendants, who decided to risk forgoing arguing these matters on the merits in their trial presentation and briefing.

Of course, we will cover all of that for you, in due course. Defendants’ opening brief, when we learn whether or not they were able to gin up case law that they could not cite in their prior brief or at oral argument, is due on March 14, 2023.

As always, if you have questions or coverage you would like to see, drop a comment, send us a message here, or an email to chance@chancerydaily.com. We love hearing from you!