M&A Year in Review 2023 brochure - Flipbook - Page 87
| M&A Outlook | 2024
U.S. Litigation Landscape
The United States remains the jurisdiction with the
most transactional activity and the greatest number
of business disputes in the world. Taken together,
these elements produce a predictability of outcomes
that facilitate successful dealmaking under U.S. laws
and norms that we expect to continue in 2024. This
past year, Delaware courts issued notable opinions
on several topics, including the continued resurgence
of Caremark claims for breach of the duty of
oversight; the proper standard of review for conflict
of interest transactions (including the application of
Corwin cleansing); the interpretation of contract
language in foundational documents and standalone
agreements; and the importance of proper
compliance with books and records demands. In
2024, we expect to see the Delaware courts continue
to develop the law in these areas and beyond.
The decision by the Delaware Supreme Court in
Marchand v. Barnhill led to a renewed focus on
Caremark, and Delaware courts have since issued
numerous decisions addressing the scope of the
duty of oversight and the facts that a stockholder
needs to plead under “prong one” (no reporting
systems) or “prong two” (disregarding red flags).
In 2023, Delaware issued important decisions
extending the duty of oversight to officers and
applying statute of limitations and tolling principles
to Caremark disputes. In 2024, we anticipate
further refining of the Caremark doctrine.
At the end of 2023, several notable cases involving
conflicted transactions were pending before the
Delaware courts and, in the first quarter of 2024, the
Delaware Court of Chancery issued decisions in two
of these matters, In re Match Group, Inc. Derivative
Litigation and Tornetta v. Musk. These decisions,
along with others we expect to come to a resolution
in the remainder of 2024, will provide further insight
into the courts’ developing views as to who is a
controlling shareholder, what constitutes a
conflicted transaction, and when and how a special
committee should be implemented.
2024 may also see developments around ESG.
Companies and shareholders alike continue to
juggle “greenwashing,” “greenhushing,” new ESG
disclosure rules, and the uptick in backlash litigation.
While ESG litigation is often brought on a variety of
theories in many different courts, Delaware has one
case pending that alleges breach of fiduciary duty for
taking actions that benefit the company but have a
“net-negative” impact on society. Guidance from
Delaware courts on ESG issues will be significant for
Delaware-incorporated entities and beyond.
See our 2024 Securities, Shareholder, and M&A
Litigation Outlook for more insights.
The United States remains the jurisdiction with the
most transactional activity and the greatest number
of business disputes in the world.”
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