Delaware Corporate and Commercial Case Law Year in Review 2018

Morris James Podcasts

This top ten list summarizes significant decisions of the Delaware Supreme Court and the Delaware Court of Chancery over the past calendar year 2018. The cases selected either meaningfully changed Delaware law or provided clarity or guidance on issues relevant to corporate and commercial litigation in Delaware. Among cases selected, in 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), the decision arose out of a merger involving the Dr. Pepper and Keurig companies. In a reverse triangular merger, the parent company uses a subsidiary to acquire a target, with the target absorbing that subsidiary. 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. 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. Key Takeaway: Under Dr. Pepper, stockholders of a parent in a reverse triangular merger lack appraisal rights.