Morris James LLP
Lewis H. Lazarus
Albert H. Manwaring, IV
Albert J. Carroll
1
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Delaware Corporate and Commercial Case Law Year In Review – 2018
This top ten list summarizes significant decisions of the Delaware Supreme Court and the
Delaware Court of Chancery over the past calendar year. Our criteria for selection are that the
decision either meaningfully changed Delaware law or provided clarity or guidance on issues
relevant to corporate and commercial litigation in Delaware. We present the decisions in no
particular order. The list does not include every significant decision, but provides litigants and
litigators with an array of decisions on varied issues likely to affect business dealings or business
litigation.
One: City of North Miami Beach General Employees’ Retirement Plan v. Dr. Pepper Snapple
Group Inc., 189 A.3d 188 (Del. Ch. June 1, 2018) (Bouchard, Chancellor)
This decision arose out of a merger involving the Dr. Pepper and Keurig companies. In a
reverse triangular merger, a parent company uses a subsidiary to acquire a target, with the target
absorbing that subsidiary. That is how Dr. Pepper and Keurig structured their deal. The result
was Dr. Pepper stockholders getting cash but retaining their stock, and Keurig’s stockholders
getting a controlling interest in Dr. Pepper. Certain Dr. Pepper stockholders sued in the Court of
Chancery, asserting that they had appraisal rights to a judicially-determined fair value in
connection with the deal under Section 262 of the Delaware General Corporation Law (DGCL),
which were being violated.
Under Section 262 of the DGCL, Delaware law makes available appraisal rights for
stockholders under certain circumstances, which means a statutory process allowing them to
forgo a merger’s financial consideration in favor of a judicially-determined appraisal of “fair
value.” The statute makes appraisal rights available to stockholders of a “constituent
corporation.” As this decision holds, that term means an entity actually being merged or
combined, and not the parent of such an entity. Since Dr. Pepper itself did not merge or
combine, its stockholders had no appraisal rights. The Court also added a second, alternative
basis for finding appraisal rights were unavailable. Section 262 contemplates petitioners who
have been forced to give up their shares in a proposed transaction. While they would become
minority stockholders through the deal with Keurig, Dr. Pepper’s stockholders were retaining
their shares. So they had no appraisal rights for that additional reason.
Key Takeaway: Under Dr. Pepper, stockholders of a parent in a reverse triangular merger
lack appraisal rights.
Two: CBS Corp. v. National Amusements, Inc., 2018 WL 2263385 (Del. Ch. May 17, 2018)
(Bouchard, Chancellor)
This decision was both front-page newsworthy and legally significant. It arose out of the
highly-publicized dispute over a proposed transaction involving CBS and Viacom, each
controlled by members of the Redstone family. CBS and Viacom used to be one entity but
split. The Redstones retained voting control in each through a dual-class voting structure. Later,
