Current Month (April 2026)
Supreme Court Declines to Review Eleventh Circuit’s Decision Addressing Scope of Arbitral Awards Under the FAA
By Leslie A. Berkoff, Partner and Chair of Dispute Resolution Practice Group, Moritt Hock & Hamroff LLP
On February 23, 2026, the U.S. Supreme Court declined to review the Eleventh Circuit’s decision in The Visionary, Books + Café, LLC v. Bank OZK, which addressed the scope of judicial review of arbitral awards under Section 10(a)(4) of the Federal Arbitration Act (the “FAA”).
In May 2021, The Visionary, Books + Café, LLC (“Visionary”) applied for a grant under a program administered by the U.S. Small Business Administration (“SBA”). The grant was approved, and the funds were sent to Bank OZK, Visionary’s bank (“Bank”). However, upon receiving the funds, certain facts concerning the account and transfer triggered an internal bank investigation, and the Bank put a hold on the account and subsequently reversed the ACH transaction. Visionary was unsuccessful in getting the SBA to reissue the ACH transaction.
Visionary commenced an arbitration proceeding against the Bank, claiming the Bank had tortiously interfered with its business by returning funds. and demanded over $7 million in assorted damages and fees.
The tribunal issued an award in favor of the Bank finding that it had acted in a commercially reasonable manner. In response, Visionary filed suit in Georgia state court seeking to vacate the award, invoking the Georgia Arbitration Code (“GAC”). Visionary argued that because the parties contracted for Georgia law to apply, GAC’s less deferential standards for award vacatur should apply. The Bank removed the case to federal court on diversity grounds and then moved to confirm the award under the FAA.
The district court denied Visionary’s application to vacate the award and granted the Bank’s motion to confirm, holding that the FAA, not the GAC, governed based on language in the agreement that failed to specify which law should apply to a review of arbitral awards; specifically, the agreement simply stated it was “subject to applicable federal laws, the laws of the state of Georgia and other applicable rules.”
The district court also rejected Visionary’s argument that the arbitrators had exceeded their authority in applying National Automated Clearing House Association rules to interpret the agreement. The court looked to the presumption in the FAA that arbitral awards should be confirmed if the arbitrators’ reasoning was sound and concluded that it was.
On appeal, the Eleventh Circuit, reviewing de novo, affirmed the district court and held that the standard for vacatur within the Circuit under Section 10(a)(4) of the FAA (which relied on the Supreme Court case of Oxford Health Plans LLC v. Sutter) required more than a showing that an arbitrator had committed an error or even a serious error to vacate.
Visionary petitioned the Supreme Court to review, seeking clarification of the proper scope of judicial review that lower courts must apply when asked to vacate an arbitral award under Section 10(a)(4) of the FAA. The Supreme Court denied Visionary’s petition, and as a result the Eleventh Circuit’s decision stands.
Delaware Supreme Court Affirms Consideration of News Reports of Post-Demand Events in Books and Records Action
By K. Tyler O’Connell, Morris James LLP
In Paramount Global v. State of R.I. Office of the Gen. Treasurer, __ A.3d __, No. 129, 2025, 2026 WL 820647 (Del. Mar. 26, 2026), the Delaware Supreme Court affirmed the Delaware Court of Chancery’s decision that a stockholder had a credible basis to suspect wrongdoing based in part on post-demand news reports with confidential sources. A Paramount stockholder made a books and records demand after news reports indicating the company’s ultimate controlling stockholder, Shari Redstone, took steps to block a company sale in favor of a sale of just her shares. Reporting on these developments continued after the demand. The Court of Chancery held the stockholder had a credible basis to suspect wrongdoing. The Delaware Supreme Court accepted Paramount’s interlocutory appeal and affirmed. The Supreme Court majority acknowledged the potential inefficiencies from allowing post-demand supplementation, but the Court also observed that a strict prohibition could create inefficiencies by, for example, requiring sending new or updated demand letters. The Supreme Court was “confident” in the Court of Chancery’s “ability to monitor its § 220 docket and take appropriate steps to discourage abusive practices by stockholder plaintiffs.” The high Court accordingly affirmed that there are some circumstances “when a stockholder can legitimately rely at trial [on] post-demand evidence, such as when a material event occurs after the demand but before trial and when the stockholder’s reliance on those post-demand events does not prejudice the corporation.” The Supreme Court similarly affirmed the Court of Chancery’s decision to consider hearsay in confidentially sourced news reports, where circumstances suggest the hearsay was sufficiently reliable. While agreeing it was proper to consider confidentially sourced hearsay news reports, a minority of Justices disagreed with allowing some consideration of post-demand evidence. In their view, the “better choice” would be to “bar admission of post-demand evidence,” which would among other things “discourage a premature race to the courthouse.”
Tyler O’Connell is a Partner at Morris James LLP in Wilmington, Delaware. Any views expressed herein are not necessarily those of the firm or any of its clients.
Delaware Court of Chancery Dismisses Tesla Derivative Actions Filed Right Before New Texas Forum Selection Bylaw
By K. Tyler O’Connell, Morris James LLP
In this recent decision, the Delaware Court of Chancery dismissed consolidated derivative actions that were filed shortly before Tesla’s June 2024 conversion into a Texas corporation. In re Tesla, Inc. Deriv. Litig., C.A. No. 2024-0631-BWD, 2026 WL 982336 (Del. Ch. Apr. 13, 2026). Shortly after Tesla notified stockholders of its proposal to convert to a Texas corporation with a mandatory Texas forum selection bylaw, Tesla stockholders filed derivative actions for alleged misconduct. Tesla was still a Delaware corporation when the cases were filed. The conversion and mandatory Texas forum selection bylaw were adopted shortly thereafter, before some defendants had even appeared in the Chancery action. Surveying precedent, the Court of Chancery reasoned that courts may consider the circumstances existing at the time a motion to dismiss for improper forum is presented. Stockholders buy shares knowing that corporations can amend their bylaws, including by adopting or amending a forum selection bylaw. The Court observed that non-Delaware courts applying Delaware law have enforced forum selection bylaws adopted after derivative claims were filed. Enforcement was particularly appropriate in this case, where the Texas conversion and bylaw were announced before any meaningful litigation activity. The Court also rejected the plaintiffs’ arguments that enforcing the bylaw was inconsistent with 8 Del. C. § 266(e), which prohibits a conversion from affecting the corporation’s “obligations or liabilities.” The Court again reasoned that a reasonable stockholder would understand that any Delaware forum “obligation” was subject to change via a bylaw amendment. The Court also rejected the plaintiffs’ arguments that alleged breaches of fiduciary duties in soliciting stockholders’ approval for the conversion rendered the bylaw unenforceable. Rather, the Court reasoned, a party cannot escape a forum selection clause by arguing that the agreement is unenforceable for reasons unrelated to the forum selection clause (e.g., fraud in the inducement). Accordingly, the Court of Chancery granted the defendants’ motions to dismiss.
Tyler O’Connell is a Partner at Morris James LLP in Wilmington, Delaware. Any views expressed herein are not necessarily those of the firm or any of its clients.
