Followers of this blog are familiar with the consequences of the Cyan decision—a decision that has opened the floodgates to expensive, duplicative litigation against IPO companies in state court. We have high hopes that using the Grundfest Solution, concerning federal choice of forum provisions (also known as federal forum provisions), will help IPO companies by forcing Section 11 suits against them back in federal courts (and not in multiple state courts).
Unfortunately, at the end of 2018 in Sciabacucchi v. Salzberg, the Delaware Chancery Court struck down this solution as invalid under Delaware law. The defendant companies appealed.
I was in the gallery of the Delaware Supreme Court in Dover, Delaware, today to hear the arguments. The bench was hot—and that’s probably a good sign. I’m told that attorneys are typically allowed to go much longer before questions start, so the rapid questioning is a bit unusual. It was clear that the Court had done its work and is taking the case very seriously.
Bill Chandler, of the law firm Wilson Sonsini Goodrich & Rosati, did an excellent job responding to the Court’s questions. I’m cautiously optimistic that this case will go our way. We expect to see a written opinion from the Court in 60 to 90 days. I’ll have more on this case in a regularly scheduled D&O Notebook post next week.
I spoke with CNBC’s Contessa Brewer today as to the importance of this case and its potential impact on IPO companies. You can view the full interview here.