Recently in Corporate Governance Category

September 25, 2014

Delaware Amends Laws Relating to Corporations, LLCs, LPs, and Partnerships

Many Massachusetts residents elect to incorporate their businesses under the often more favorable and flexible business laws of Delaware. Accordingly, it is important to be aware of changes in the applicable Delaware statutes, and to understand how those amendments affect existing and future business entities incorporated under those laws.

Delaware recently amended its General Corporation Law, its Limited Liability Company Act, its Revised Uniform Limited Partnership Act, and its Revised Uniform Partnership Act. Those amendments, as explained in a recent National Law Review article, are summarized below.

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March 20, 2014

No Breach of Fiduciary Duty by Corporate Shareholder Who Opened Similar Business

In Ricci Consultants, Inc. v. Bournival, a case recently tried in the Norfolk Superior Court, it was determined that a defendant did not breach a fiduciary duty when she left employment with Ricci Consultants, Inc. (RCI), an actuarial consulting firm in which she was a shareholder with a one-third interest, to start her own actuarial consulting firm, KMS Actuaries, Inc. (KMS). Although both firms provided actuarial consulting services for clients, the types of clients each firm serviced differed: RCI specialized in private sector work, while KMS focused on the public sector. Following the defendant's departure from RCI, both parties filed suit against each other, both alleging intentional interference with contractual/advantageous relations with customers, and breaches of fiduciary duties. A jury returned verdicts in favor of the defendant and KMS on the intentional interference claims. The parties waived their right to have a jury decide the breach of fiduciary duty claim, which the judge considered.

RCI alleged that the defendant, through KMS, competed with RCI and thereby stole corporate opportunities from KMS, to which she owed fiduciary duties. In doing so, RCI alleged that the defendant breached her duty of loyalty owed to RCI.

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February 20, 2014

The End of Forum Shopping?

The Supreme Court's January decision in Daimler Chrysler v. Bauman has clarified the standard that must be met to establish general personal jurisdiction over corporations that seemingly have a presence in a particular state. The effect of the decision is to limit, to some degree, a plaintiff's ability to "forum shop" - or, to strategically select a certain court in a certain state in which to file a lawsuit in order to gain an advantage over the rival corporation.

Daimler is a German corporation that was sued by Argentinian plaintiffs in California. The plaintiffs brought suit for human rights violations that occurred in Argentina. At issue was whether a defendant parent corporation may be called to a certain court under the pretense of general jurisdiction when a subsidiary of the corporation does business in that state. The Court found that California did not have general jurisdiction over Daimler, and so Daimler could not be sued in California for injuries caused by the conduct of its Argentinian subsidiary when that conduct took place entirely in Argentina.

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