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5.17.22
Wilson Sonsini Obtains Securities Litigation Win for Dropbox
On May 13, 2022, the California Court of Appeal affirmed a decision dismissing a lawsuit filed in state court against Dropbox, its officers, its board of directors, the underwriters, and certain venture capitalists for alleged violations of Section 11 of the Securities Act of 1933 (’33 Act). The suit arose out of Dropbox’s March 2018 IPO, with the plaintiff alleging that Dropbox made false or misleading statements in its registration statement and prospectus. Dropbox moved to dismiss, invoking its Federal Forum Provision (FFP)—a bylaw that states that any lawsuit brought under the ’33 Act must be brought in federal court. Building upon the firm’s win in Salzberg v. Sciabacucchi, in which the Delaware Supreme Court confirmed the validity of FFPs, the California Court of Appeal agreed with the trial court’s ruling that Dropbox’s FFP did not violate the ‘33 Act’s anti-waiver or anti-removal provisions, was constitutional under the Commerce Clause and the Supremacy Clause, and was enforceable under California law. Wilson Sonsini Goodrich & Rosati represented Dropbox in the matter.
Alerts
3.23.20
Practical Considerations for Private and Public Company Clients in Light of the Delaware Supreme Court's Decision Upholding Federal Forum Provisions
Last week, the Delaware Supreme Court issued an important decision upholding the validity of "Federal Forum Provisions" in corporate charters requiring that claims under the Securities Act of 1933 (the "'33 Act") be brought in federal court. Wilson Sonsini previously issued an alert (available here) describing the opinion, which represents a significant development in Delaware law and which should have important implications for pre-IPO companies that are considering adopting a Federal Forum Provision in their post-IPO charters as well as for public companies. Below are some of the key questions and considerations that follow from the decision:
Alerts
3.18.20
Delaware Supreme Court Rules Federal Forum Selection Charter Provisions Are Valid
Earlier today the Delaware Supreme Court issued an important en banc decision1 upholding the right of Delaware corporations to adopt forum-selection provisions in their charters requiring claims under the Securities Act of 1933 (the "'33 Act") to be brought in federal court (the "Federal Forum Provisions"). The Supreme Court's decision provides a critical tool for pre-IPO companies to address the increase in the number of lawsuits brought in state court asserting claims under Section 11 of the '33 Act challenging disclosures in their registration statements. Prior to this ruling, many such claims were brought in state courts which had led to inconsistent and unpredictable rulings. As a result, D&O insurance premiums for such claims have increased dramatically in recent years.
Client Highlights
3.18.20
Delaware Supreme Court Upholds Provisions Selecting Forum for Securities Act Claims
The Delaware Supreme Court issued its opinion in Matthew B. Salzburg et al. v. Matthew Sciabacucchi, finding that forum-selection charter provisions that require ’33 Act claims to be brought in federal court are facially valid.
Client Highlights
5.01.19
Wilson Sonsini Represents Clear Channel in Separation from iHeartMedia
On May 1, 2019, Clear Channel Outdoor Holdings, the international advertising company, and iHeartMedia, the broadcasting company, announced that, in connection with iHeart's emergence from its Chapter 11 restructuring, Clear Channel has separated from iHeart and will continue operations as a standalone public company.
Client Highlights
12.14.17
Deckers Obtains Victory in Proxy Contest Against Marcato Capital Management
On December 14, 2017, Deckers Brands, a global leader in designing, marketing, and distributing innovative footwear, apparel, and accessories, announced that, based on the preliminary vote count following its 2017 annual meeting, company stockholders have voted to re-elect all of Deckers' directors—John Gibbons, Karyn Barsa, Nelson Chan, Michael Devine III, John Perenchio, David Powers, James Quinn, Lauri Shanahan, and Bonita Stewart—to the Deckers board. The company's victory comes after a 10-month long proxy contest with San Francisco-based investment manager Marcato Capital Management, which manages funds that beneficially own approximately 8.4 percent of the outstanding common shares of Deckers Brands. In the challenge, Marcato attempted to replace several Deckers directors with its own candidates. Wilson Sonsini represented Deckers Brands in its proxy contest with Marcato.
Alerts
11.14.17
Delaware Court of Chancery Rejects "Lawyer-Driven" Section 220 Demand
On November 13, 2017, the Delaware Court of Chancery issued a short but potentially important opinion in Jack Wilkinson v. A. Schulman, Inc.,1 an action to inspect books and records brought under Section 220 of the Delaware General Corporation Law. Section 220 gives stockholders of Delaware corporations the ability to inspect certain corporate books and records provided they have a "proper purpose" for seeking such materials. This statute can provide an important tool for stockholders seeking to investigate allegations of corporate wrongdoing, but also can cause significant burdens on companies with little benefit to stockholders. The court's decision in Schulman represents an important effort to try to balance these considerations.
Client Highlights
10.12.17
Delaware Supreme Court Affirms Dismissal of Stockholder Lawsuit Against iHeartMedia and Clear Channel Outdoor Directors
On October 12, 2017, the Delaware Supreme Court affirmed the dismissal of a stockholder lawsuit brought against the directors of Clear Channel Outdoor Holdings, Inc. (CCOH), CCOH's parent company, iHeartMedia Inc. (iHeart), Bain Capital Partners, LLC, and Thomas H. Lee Partners, L.P. Wilson Sonsini represented nominal defendant CCOH and its directors in the matter.