CURRENT MONTH (March 2022)
Delaware Court of Chancery Confirms Delaware Is a “Sandbagging State”
By Sara Bussiere, Cadwalader, Wickersham & Taft LLP
In a recent post-trial decision in Arwood v. AW Site Services, LLC, the Delaware Court of Chancery found that a seller breached certain representations and warranties in connection with its sale of a waste management business. The buyer alleged that the seller engaged in improper billing practices, causing it to overbill its clients. In its defense, the seller argued that the buyer, who was given complete access to the company’s billing systems during pre-transaction due diligence, knew or should have known about the company’s billing practices and that certain representations were untrue, and, as a result, should be precluded from bringing a breach of representation and warranties claim. The Court rejected seller’s argument, stating, “In my view, Delaware is, or should be, a pro-sandbagging jurisdiction. The sandbagging defense is inconsistent with our profoundly contractarian predisposition.” The Delaware Supreme Court, however, has not definitively weighed in on “whether a party can recover on a breach of warranty claim where the parties know that, at signing, certain of them were not true[.]” Eagle Force Holdings, LLC, et al. v. Stanley V. Campbell, 187 A.3d 1209, 1236 n.185 (Del. 2018). Until it does, contracting parties would be prudent to expressly address this issue in their transaction documents.
Delaware Courts Face Weighty Choice of Law Questions
Over the last few years, the Delaware courts, including the Court of Chancery, have increasingly had to address the potential tension between Delaware courts and other states’ courts regarding consequential choice of law issues. In multiple cases in the last two years alone, Delaware courts steadfastly have applied the familiar “most significant relationship” test to choice of law questions, while still giving due consideration to other jurisdictions’ public policy interests. This balancing of Delaware and out-of-state interests is important, particularly given, as the courts have acknowledged, that parties often attempt to use Delaware choice of law provisions to “bypass the substantive law of sister states.” Delaware courts frequently rely on other states’ deference to Delaware’s laws regarding the internal affairs of Delaware business entities. Thus, parties’ use of Delaware choice of law provisions to circumvent the law of Delaware’s sister states creates a potentially problematic tension that the Delaware courts appear to appreciate and desire to avoid. That is, if Delaware courts expect other sovereigns to respect their “overriding interest in the interpretation and enforcement of [Delaware] entity laws [they] must show reciprocal respect” to Delaware’s sister courts.  So far, the Delaware courts have shown a tendency to do exactly that. Over the coming months and years, practitioners will want to monitor the Court’s guidance on choice of law questions to see how this tension is further addressed.
Business and Corporate Litigation Committee Honors Exceptional Women Business Litigators in Atlanta
The Women’s Business and Commercial Advocates Subcommittee is pleased to announce that it has selected and honors Ms. Adria L. Perez and Ms. Margaret H. Campbell as the Committee’s 2022 Women Lawyers that have through practice and mentorship, exemplified the mission of the Committee to “celebrate and to support the advancement of women business litigators.” These two outstanding lawyers were celebrated at a reception held in their honor at the Business Law Section Hybrid Spring Meeting in Atlanta on March 31, 2022.
Ms. Adria L. Perez is a partner in the Atlanta office of Kilpatrick Townsend. Ms. Perez is a courtroom lawyer with a practice emphasis on the representation of individuals and corporations in white collar criminal defense matters and government enforcement issues, as well as internal, criminal, and SEC investigations. As a leader and advocate for women pursuing careers as trial lawyers, Ms. Perez has served as president and on the board of directors of Atlanta Volunteer Lawyers Foundation and is a co-founder and advisory board member of the Georgia Latino Law Foundation.
Ms. Margaret H. Campbell is a partner in the Atlanta office of Ogletree Deakins. Ms. Campbell represents individuals and enterprises in high-stakes individual and collective employment matters and is highly sought after for her extensive experience in litigating complex class and collective actions. In addition to her many leadership roles in her law firm, she is a fellow of the Atlanta Bar Foundation and a member of the College of Labor and Employment Lawyers. Her commitment to women as courtroom lawyers is illustrated by her participation in the National Association of Women Lawyers, the Georgia Association of Women Lawyers, and the Women Lawyers Alliance.
Ms. Perez and Ms. Campbell richly deserve this honor and recognition as visible advocates, mentors, and role models for women wishing to pursue a career in the courtroom. Congratulations!
Holsopple, 241 A3d at 802 n. 4. ↑
See, e.g., Matter of Est. of Sullivan, 2021 WL 4203216, at *7 (Del. Ch. Sept. 16, 2021) (finding that Pennsylvania law applied to a dispute involving an individual life insurance policy because Pennsylvania had expressed a clear interest in the application of certain doctrines at issue); AG Res. Holdings, LLC v. Terral, 2021 WL 486831, at *5 (Del. Ch. Feb. 10, 2021) (applying Louisiana law because Louisiana has a “more compelling public policy interest in ensuring its laws are enforced with respect to the employment rights of its citizens working within the state.”). ↑