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Articles by Joanna J. Cline
Integration Clause Without Anti-Reliance Provision Precludes Fraud Claims Where Extra-Contractual Misrepresentation Directly Conflicts With Express Contract Term | Troutman Pepper Locke - JDSupra
In Park7 Student Housing, LLC v. PR III/Park7 SH Holdings, LLC, the Delaware Court of Chancery held that a purchase agreement’s integration clause, which lacked anti-reliance language, barred the buyer’s fraudulent inducement claim based upon extra-contractual statements — that is, statements other than those in the purchase agreement itself — where the purchase agreement contained a term that contradicted the allegedly fraudulent extra-contractual statements.
Navigating 2025: The SEC's Evolving Role in Cryptocurrency Enforcement
In this episode of Crypto Exchange, Ethan Ostroff and Alexandra Barrage are joined by partners Joanna Cline and Jay Dubow to discuss the evolving landscape of the SEC’s enforcement actions involving cryptocurrencies. The episode highlights the demand for clear regulatory guidelines in the digital asset space, particularly regarding the classification of tokens and cryptocurrencies as securities.
The SEC Weighs In on Meme Coins
In a stated effort to provide greater clarity on the application of federal securities laws to “crypto assets,” the Securities and Exchange Commission’s (SEC) Division of Corporation Finance has released its views on “meme coins.” In sum, while the offer and sale of meme coins may not be subject to federal securities laws, fraudulent conduct related to meme coins could still be subject to enforcement actions. What Are Meme Coins?
The SEC Weighs In on Meme Coins
In a stated effort to provide greater clarity on the application of federal securities laws to “crypto assets,” the Securities and Exchange Commission’s (SEC) Division of Corporation Finance has released its views on “meme coins.” In sum, while the offer and sale of meme coins may not be subject to federal securities laws, fraudulent conduct related to meme coins could still be subject to enforcement actions. What Are Meme Coins?
The SEC's New Cryptocurrency Task Force: A Step Toward Regulatory Clarity | JD Supra
This article was originally published in The Legal Intelligencer on February 25, 2025 and is republished here with permission. On Jan. 21, 2025, Mark T. Uyeda, the acting chairman of the U.S. Securities and Exchange Commission (SEC), announced the launch of a cryptocurrency task force.
The SEC’s New Cryptocurrency Task Force: A Step Toward Regulatory Clarity
On Jan. 21, 2025, Mark T. Uyeda, the acting chairman of the U.S. Securities and Exchange Commission (SEC), announced the launch of a cryptocurrency task force. This task force, led by SEC Commissioner Hester Peirce, with Richard Gabbert serving as chief of staff and Taylor Asher as senior policy adviser, aims to establish a comprehensive and clear regulatory framework for cryptocurrency. On Feb. 4, 2025, Peirce outlined 10 key priorities for the task force.
The Increase in Artificial Intelligence-Related Securities Class Actions
With the increasing prominence of Artificial Intelligence technology (AI), the potential for legal disputes regarding its use has grown. While the full scope of AI-related legal risks is still developing, both the Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC) have revealed the kinds of AI-related corporate behaviors they consider problematic.
Chancery Addresses "Commercially Reasonable Efforts" Clauses in the Context of an Earnout Dispute | JD Supra
In Shareholder Representative Services LLC v. Alexion Pharmaceuticals, Inc., the Delaware Court of Chancery addressed an earnout dispute, holding that a buyer violated its contract with the seller by failing to use "commercially reasonable efforts" to meet the contractual milestones that would entitle the seller to a hefty earnout payment.
High Stakes in High Court: Supreme Court to Clarify Securities Fraud Pleading Requirements for Falsity and Scienter
Plaintiffs pleading fraud in securities actions under Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 are required to plead both falsity and scienter with specificity—but a crucial question remains: How specifically? This June, the U.S. Supreme Court granted certiorari in two cases that will answer this question, NVIDIA v. E. Ohman J:or Fonder AB (No. 23-970) and Facebook v. Amalgamated Bank (No. 23-980).
'No Better Than a Racket'—Seventh Circuit Critical of Mootness Fees for Merger Disclosures | The Legal Intelligencer
This April, the U.S. Court of Appeals for the Seventh Circuit took aim at what are typically referred to as “mootness fees” in Alcarez v. Acorn, 99 F.4th 368 (7th Cir. 2024). Mootness fees arise when companies are sued for allegedly incomplete corporate disclosures, most often in the context of proposed or pending mergers. In response to these lawsuits, companies agree with plaintiffs counsel to make additional disclosures, thus mooting the plaintiffs’ claims.
Delaware Supreme Court Confirms Dual MFW Protections Are Needed Outside of the Freeze-Out Merger Context for Application of Business Judgment Rule | JD Supra
In In re Match Group, Inc. Derivative Litigation, the Delaware Supreme Court held that the dual procedural protections announced in the seminal case of Kahn v. M & F Worldwide Corp.
The Role of the SEC In Cryptocurrency Regulation and Enforcement
Cryptocurrency Regulation White Collar Crime The SEC's cryptocurrency-related actions reached a new high in 2023, jumping more than 50% when compared to 2022. We expect the SEC’s enforcement efforts in this area to continue at a high pace in 2024, even though whether or not cryptocurrency should be classified as a security or something else remains uncertain.
In an AI-Inundated World, Attorney Intelligence Can’t Be Artificial: 12 Considerations to Raise AI IQ
Generative artificial intelligence has become unequivocally one of the most disruptive developments to sweep the legal profession. While staying power, total impact and practical use cases are yet to be determined, lawyers are embracing the cutting edge of what they can do with the technology. A variety of studies and surveys continue to illustrate increasing use of generative AI tools, planning for future use cases, along with ongoing tensions between readiness and caution.
SEC Continues to Regulate Cryptocurrency Through Record-High Enforcement Efforts
The U.S. Securities and Exchange Commission’s (SEC) cryptocurrency-related actions reached a new high in 2023, jumping more than 50% when compared to 2022. Although the SEC continues to view cryptocurrency enforcement as a top priority, the question of what role the SEC should play in regulating cryptocurrencies has been an ongoing debate.
Delaware Court of Chancery Clarifies Fiduciary Limitations on Controlling Stockholder's Exercise of Voting Power | JD Supra
[co-author: Mike Swallow]* In a landmark decision, [1] the Delaware Court of Chancery addressed, for the first time, the precise duties that a controlling stockholder owes, and the standard of review that will apply, when a controlling stockholder takes actions to block a board of directors' desired course of action — such as by removing directors or enacting a bylaw requiring a unanimous vote for board action.
Opt-Outs in Securities Class Action Settlements Are Creating Issues for Litigants | The Legal Intelligencer
With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. View Now Our Team Account subscription service is for legal teams of four or more attorneys.
SPAC Transaction Challengers Face Uphill Battle
Class Actions Securities Litigation White Collar Crime Recent decisions by the Delaware Court of Chancery demonstrate that when a special purpose acquisition company (SPAC) transaction and the disclosures surrounding it are challenged, defendants may face an uphill battle to prevail on a motion to dismiss, especially where breach of fiduciary duty claims have been asserted.
Family Receives $6.5M Settlement for Woman, 89, Struck and Killed by Car
With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. View Now Our Team Account subscription service is for legal teams of four or more attorneys.
Continued Challenges Arising From SPAC-Related Litigation
With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. View Now Our Team Account subscription service is for legal teams of four or more attorneys.
2023 Amendments to DGCL Streamline Ratification of Defective Corporate Acts, Stock Splits, and Other Corporate Actions | JD Supra
The latest proposed amendments to the Delaware General Corporation Law (DGCL) will simplify the process for ratifying defective corporate acts; eliminate or reduce the stockholder vote required to authorize some types of stock splits and changes to the number of a corporation's authorized shares; harmonize required stockholder notice with the determination of the applicable record date; provide a safe harbor for the disposition of mortgaged or pledged assets; and expand appraisal rights for...
2023 Amendments to Delaware Alternative Entity Statutes | JD Supra
This year's proposed amendments to the Delaware Revised Uniform Partnership Act (Partnership Act), the Delaware Limited Liability Company Act (LLC Act), and the Delaware Revised Uniform Limited Partnership Act (LP Act) (collectively, the acts) add several notable changes concerning amendments to certificates of division, revocation of termination of a protected series, and revocation of dissolution of a registered series.
2023 Amendments to DGCL Streamline Ratification of Defective Corporate Acts, Stock Splits, and Other Corporate Actions
The latest proposed amendments to the Delaware General Corporation Law (DGCL) will simplify the process for ratifying defective corporate acts; eliminate or reduce the stockholder vote required to authorize some types of stock splits and changes to the number of a corporation’s authorized shares; harmonize required stockholder notice with the determination of the applicable record date; provide a safe harbor for the disposition of mortgaged or pledged assets; and expand appraisal rights for...
Delaware Court of Chancery Confirms Enforceability of NVCA Covenant Not to Sue for Breach of Fiduciary Duty | JD Supra
In New Enterprise Associates 14, L.P. v. Rich, the Delaware Court of Chancery held that a covenant not to sue for breach of fiduciary duty, which was contained in a stockholder's agreement and modeled after the NVCA model voting agreement, was enforceable against sophisticated counterparties under the facts of the case. Background Fugue, the corporation in question, underwent a recapitalization led by investor George Rich (Rich).
Delaware Court of Chancery Confirms Enforceability of NVCA Covenant Not to Sue for Breach of Fiduciary Duty
In New Enterprise Associates 14, L.P. v. Rich, the Delaware Court of Chancery held that a covenant not to sue for breach of fiduciary duty, which was contained in a stockholder’s agreement and modeled after the NVCA model voting agreement, was enforceable against sophisticated counterparties under the facts of the case. Background Fugue, the corporation in question, underwent a recapitalization led by investor George Rich (Rich).
Constitutional Attacks Mount Against Federal Agency Proceedings in Wake of High Court Decision
The U.S. Supreme Court has signaled its willingness to constrain the bounds of administrative enforcement power with its recent decision in Axon Enterprise v. Federal Trade Commission (FTC) and Securities and Exchange Commission (SEC) v. Cochran, which paves the way for parties subject to agency enforcement proceedings to bring early constitutional challenges to such proceedings in district court before the proceedings conclude.
Securities Litigation In 2023 Showing Continued Muscle Flexing from the SEC
Business Crimes Bulletin Regulation Securities Litigation White Collar Crime Newer trends — such as environmental, social, and governance (ESG), cybersecurity-related disclosure violations, and cryptocurrency regulation — are likely to provide further fuel for securities litigation and enforcement in the coming year. With this year’s securities law trends just beginning to take shape, we can anticipate what is on the horizon for 2023.
Navigating Securities Litigation in 2023: Trends for the New Year
Each new year brings new developments in securities litigation and enforcement. With this year’s securities law trends just beginning to take shape, now is the time to reflect on last year and anticipate what is on the horizon for 2023. Companies should expect to see the Securities and Exchange Commission (SEC)—armed with an additional $210 million in funding this year—continue to flex its regulatory muscles.
More Than a Majority: Chancery Court Provides Rare Guidance on Charter Amendments | JD Supra
It is well known that the Delaware General Corporation Law (DGCL) provides that a majority of the voting power of all stockholders entitled to vote is required for a Delaware corporation to take certain fundamental actions, including mergers, sales of all or substantially all of the corporate assets, and dissolutions.
Oversight Duties Apply to Corporate Officers | JD Supra
It is well established that corporate officers owe the same fiduciary duties as directors under Delaware law. However, the Delaware courts have not had occasion to consider every species of fiduciary duty claim against officers and how those various claims operate as a practical matter. For example, it has long been held that directors' fiduciary duties require them to oversee the company's operations and its mission-critical risks.
Oversight Duties Apply to Corporate Officers
It is well established that corporate officers owe the same fiduciary duties as directors under Delaware law. However, the Delaware courts have not had occasion to consider every species of fiduciary duty claim against officers and how those various claims operate as a practical matter. For example, it has long been held that directors’ fiduciary duties require them to oversee the company’s operations and its mission-critical risks.
Court of Chancery Strikes Down Restrictive Covenants Designed to Protect Private Equity Investments Beyond the Target | JD Supra
Recently, the Delaware Court of Chancery issued a decision regarding restrictive covenant agreements that will likely have an immediate impact on the scope of restrictive covenants in private equity transactions. In the decision, the court completely struck down a restrictive covenant that prevented sellers from competing, not only with the target of the transaction, but also with the private equity fund's other operating companies that were not part of the transaction.
Delaware Corporations Cannot Use Their Charter to Alter the Judicial Standard of Review | JD Supra
In Totta v. CCSB Financial, the Court of Chancery invalidated a boards’ invocation of an anti-takeover provision in the corporation’s certificate of incorporation. It did so because the board invoked the provision to thwart an insurgent slate of director nominees without compelling justification.
M&A Ruling Illustrates Limits of Disclaiming Fraud in Del. | JD Supra
Last month's Fortis Advisors LLC v. Johnson & Johnson [1] decision by the Delaware Court of Chancery makes clear that extracontractual fraud claims may only be eliminated through explicit anti-reliance provisions, not through other contractual mechanisms, such as exclusive remedy provisions. Generally speaking, there are two varieties of intentional fraud under Delaware law — contractual fraud and extracontractual fraud. Contractual fraud is a fraudulent statement made within the contract itself.
Delaware Court of Chancery Signals That Delaware Is a Pro-Sandbagging Jurisdiction | JD Supra
[co-author: Michael Walker] A recent post-trial decision from the Delaware Court of Chancery has become the latest authority in the debate over whether Delaware is or is not a "pro-sandbagging" jurisdiction. In Arwood v. AW Site Services, Vice Chancellor Slights stated that Delaware is, or should be, a pro-sandbagging jurisdiction. [1] The case arose from AW Services' (AWS) acquisition of Arwood's waste management business.
Disclaiming Fraud Under Delaware Law | JD Supra Original
A recent decision [1] by the Delaware Court of Chancery makes clear that extra-contractual fraud claims may only be eliminated through explicit anti-reliance provisions, not through other contractual mechanisms, such as exclusive remedy provisions. Generally speaking, there are two varieties of intentional fraud under Delaware law — contractual fraud and extra-contractual fraud. Contractual fraud is a fraudulent statement made within the contract itself.
Upshots of Del. Holding on Appraisal Rights Waivers in M&A | JD Supra
In what represents a victory for private equity and venture capital investors, on Sept. 13, the Delaware Supreme Court issued a decision in Manti Holdings LLC v. Authentix Acquisition Co., confirming the enforceability of appraisal waivers by private contract so long as the stockholders agreeing to the waiver are sophisticated, informed, represented by counsel and have at least some bargaining power.
An Overview of the 2021 Amendments to the Delaware General Corporation Law and Alternative Entity Acts | JD Supra
[co-author: Kevin Ahmed] On June 30, Governor Carney signed into law certain amendments (Amendments) to the Delaware General Corporation Law (DGCL), the Delaware Limited Liability Company Act (LLC Act), the Delaware Revised Uniform Partnership Act (GP Act), and the Delaware Revised Uniform Limited Partnership Act (LP Act and, together with the LLC Act and the GP Act, the “Alternative Entity Acts).
Appraisal Waivers Are Enforceable Under Delaware Law | JD Supra
[co-author: Kevin Ahmed] On September 13, the Delaware Supreme Court issued a decision in Manti Holdings LLC v. Authentix Acquisition Co., confirming the enforceability of appraisal waivers by private contract so long as the stockholders agreeing to the waiver are sophisticated, informed, represented by counsel, and have at least some bargaining power.
Controlling Stockholder or Member Status Under Delaware Law – A Table of Key Decisions | JD Supra
Whether a stockholder of a corporation or member of a limited liability company (LLC) is a controlling stockholder or member often has a significant impact on breach of fiduciary duty actions, including those arising out of merger and acquisition (M&A) transactions. Indeed, when a stockholder or member is a controller, there are two primary consequences. Originally published in the American Bar Association 2021.
Pill with 5% Trigger Too Poisonous to Address Hypothetical Stockholder Activism | JD Supra
Who Needs to Know Boards of directors of Delaware corporations contemplating the adoption of a stockholder rights plan (a/k/a poison pill).
Delaware Supreme Court Addresses Increasingly Common Choice of Law Issue in New Context — Directors' and Officers' Liability Insurance Policies | JD Supra
In a recent decision, the Supreme Court of the State of Delaware (Supreme Court) affirmed a ruling of the Superior Court of the State of Delaware (Superior Court) that Delaware has a more significant relationship than California to a directors’ and officers’ liability insurance policy (D&O policy), at least when the dispute involves a Delaware corporation and its directors and officers.
Buyer Beware: Untimely Delivery of Closing Statement Results in Waiver of the Right to Post-Closing Adjustments | JD Supra
In Schillinger Genetics, Inc. v. Benson Hill Seeds, Inc., the Delaware Court of Chancery held that plaintiff sellers were entitled to summary judgment on their claim that the buyer breached the parties' purchase agreement by failing to timely provide a closing statement following the closing of the sale.
Changes to Target’s Business Prompted by COVID-19 Pandemic Breached Ordinary Course Covenant, Permitting Buyer to Escape Deal | JD Supra
In a recent decision, the Delaware Court of Chancery permitted a buyer to escape its obligation to acquire a target from a seller under the parties’ purchase agreement because the target had made extensive changes to its business as a result of the COVID-19 pandemic in violation of the agreement’s ordinary course of business covenant.
Fraud on the Board II: Conflicted CEO Tilts Company Sale in PE Firm’s Favor | JD Supra
In In re Mindbody, Inc. Stockholders Litigation, the Delaware Court of Chancery declined to dismiss breach of fiduciary duty claims against the chief executive officer of MINDBODY, Inc. (the Company) arising out of the Company’s 2019 sale to private equity firm Vista Equity Partners.
Delaware Court of Chancery: Companies Must Maintain Trade Secret Confidentiality in a Remote World | JD Supra
In a recent decision, the Delaware Court of Chancery noted that a plaintiff-franchisor did not take adequate protections to safeguard the confidentiality of its purported trade secrets while using a remote audiovisual conferencing platform, Zoom, making it clear that litigants will be expected, when necessary, to understand and utilize the various security features included with such platforms. In Smash Franchise Partners, LLC v.
The Latest Successful Caremark Claim | JD Supra
In Teamsters Local 443 Health Services & Insurance Plan v. Chou, the Delaware Court of Chancery held, at the pleading stage, that plaintiff stockholders had stated a claim for Caremark [1] oversight liability against certain of the directors of AmerisourceBergen Corporation (ABC).
Delaware Court of Chancery Tells California To Get Off Its Lawn | JD Supra
In a recent decision, the Delaware Court of Chancery ruled that disputes regarding the internal affairs of a Delaware corporation, including stockholder inspection rights, are to be governed exclusively by Delaware law, even where another state’s law purports to govern the subject-matter of the internal affairs dispute at issue. Specifically, in JUUL Labs, Inc. v. Grove, C.A. No. 2020-0005-JTL (Del. Ch. Aug.
The 2020 Amendments to the Delaware General Corporation Law | JD Supra
Overview Governor Carney recently signed into law certain amendments (the Amendments) to the Delaware General Corporation Law (the DGCL) that (i) clarify the powers of boards of directors in an emergency, (ii) enumerate the officers entitled to mandatory indemnification, (iii) confirm the ability of a corporation to execute and deliver documents and notices by electronic means, and (iv) facilitate both the conversion of for-profit Delaware corporations to public benefit corporations and the...
The 2020 Amendments to the Delaware LLC Act and Partnership Acts | JD Supra
Overview On July 16, 2020, Governor Carney signed into law certain amendments (the Amendments) to the Delaware Limited Liability Company Act (the LLC Act), the Delaware Revised Uniform Limited Partnership Act (the LP Act) and the Delaware Revised Uniform Partnership Act (the GP Act and, together with the LLC Act and the LP Act, the Acts) that: (i) confirm the unavailability of statutory appraisal rights for alternative entities; (ii) reduce the possibility of technical pitfalls in connection...
Fraud on the Board: Material Conflicts Must Be Disclosed to the Board to Warrant Business Judgment Review | JD Supra
A recent decision [1] by the Delaware Supreme Court emphasizes the importance of fully disclosing material director and officer conflicts of interest in connection with proposed M&A transactions.
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