Oderah Nwaeze Comments on Uptick in Delaware Investor Lawsuits

In the article, “Investor Scrutiny Lawsuits Snarl Business Court’s Breakneck Norm,” business litigation partner Oderah Nwaeze spoke to Bloomberg Law about a recent increase in lawsuits in Delaware’s Chancery Court. 

According to the article, the spike in lawsuits have left the court deluged and now dealing with more urgent matters, like litigation over corporate cases. The publication noted that while judges have begun cracking down on frivolous litigation by tightening standards for merger challenges, these efforts also fortified a rule requiring shareholders to demand internal investigations before bringing many non-merger cases.

To skip that step, an investor must show the board faces significant legal exposure or other conflicts. That used to be a “formulaic” enterprise, but a records case “can really help you make that argument,” said Nwaeze said.

Nwaeze pointed to other recent rulings expanding the universe of records subject to disclosure. He explained that, if a company “follows typical corporate governance,” a judge will likely stick to formal materials, but if it “plays fast and loose,” that puts emails and text messages on the table. 

Nwaeze also noted that a potential solution may arrive after new rulings relay clearer standards that streamline litigation by getting parties “reading from the same script.”