Saturday, May 31, 2014
A couple of weeks ago, I posted about the Delaware Supreme Court's recent decision in ATP Tour, Inc., et al. v. Deutscher Tennis Bund, et al., which held that nonstock corporations may adopt bylaws that require unsuccessful plaintiffs engaged in intracorporate litigation to pay the defense's attorneys fees. Though the decision did not technically apply to stock corporations, nothing in the decision suggested the analysis for stock corporations would be any different.
The decision prompted an immediate, somewhat panicked response from the Delaware plaintiffs' bar, while some defense attorneys counseled their clients to adopt such bylaws to discourage merger litigation.
Though, as the previous link shows, Steven Davidoff, at least, is skeptical that these provisions would become popular with publicly traded corporations, there has been a quick push to have the Delaware legislature amend the DGCL to overrule ATP. The Delaware Corporation Law Council has proposed new legislation that will be considered by the Delaware legislature by June 30.