Saxena White Secures Landmark Decision in Delaware Litigation Concerning Contractual Control Rights

The decision, landed Saxena White on Law360′s Legal Lions of the Week

In March 2023, Saxena White filed suit on behalf of its client alleging that a Stockholders Agreement entered into by Moelis & Company and its founder improperly granted the founder pre-approval rights over many essential corporate actions, ranging from, among other things, a sale of the company, to the adoption of the company’s annual budgets and business plans, to the hiring and firing of senior executives.  On February 23, 2024, Vice Chancellor J. Travis Laster granted summary judgment in favor of Plaintiff West Palm Beach Firefighters’ Pension Fund, ruling that the provisions of the Stockholders Agreement at issue violated Section 141(a) of the Delaware General Corporation Law, which provides that “the business and affairs of every corporation . . . shall be managed by or under the direction of a board of directors[.]”  In ruling that the provisions were invalid, Vice Chancellor Laster’s 132-page opinion held that the provisions “have the effect of removing from the directors in a very substantial way their duty to use their own best judgment on virtually every management matter.”