The Delaware Chancery Court recently issued Vice Chancellor Laster’s opinion in Akorn, Inc. v. Fresenius Kabi AG, C.A. No. 2018-0300-JTL (Del. Ch. 1 Oct. 2018) (PDF here). You can find plenty of information about this case elsewhere, including in this item on Reuters.
It will take some time to unpack what this opinion means for contract drafters. What caught my eye is that the court resisted, of course, the temptation to distinguish between different efforts provisions.
From a more crass perspective, I noticed that the Vice Chancellor cited the fourth edition of A Manual of Style for Contract Drafting eight times; cited seven times my article A Legal-Usage Analysis of “Material Adverse Change” Provisions, 10 Fordham J. Corp. & Fin. L. (2004) (PDF here); and cited my article Understanding “Best Efforts” And Its Variants (Including Drafting Recommendations), 50 Practical Lawyer, Aug. 2004, at 11 (PDF here).
The court also noted that Lou R. Kling & Eileen T. Nugent, Negotiated Acquisitions of Companies, Subsidiaries and Divisions cites my MAC article “with approval.” That’s nice to know, as Kling & Nugent is the foundation for everything I write that relates to M&A.
Those two articles date from my prehistory. For the general reader, they’ve been superseded by MSCD. But they have the virtue of being readily accessible. And with its footnotes and level of detail, the MAC article is more akin to scholarship. To be honest, it’s been years since I’ve looked at that article. When I revisited, it, my thought was, as usual, Did I write that freaking thing?
Since my exposure to the pharma industry is pretty tangential, I haven’t been following this dispute. It’s quite remarkable–the opinion, for all its 246 pages, is quite the page-turner and discloses a pretty sordid set of facts.
My own particular drafting take-aways here include the uncredited (to you) observation you make in MSCD about the two-edged meaning of “execute,” which leads you to recommend always using “sign” to mean, well, sign (and “perform” to mean perform); and the discussion over how “material” in some contexts just means non-trivial (for which I believe you recommend using the phrase…wait for it…”non-trivial”).
On a completely different and non-drafting point, I was slightly surprised the VC just breezed by the legal reason why a Delaware court is OK applying a choice-of-law clause stipulating Delaware law and venue when neither the parties nor the transaction have any relation to Delaware. Should at least have cited the statute, pro forma.
Interesting. I haven’t yet had a chance to look at it closely.