In re Good Technology Corp. Shareholder Litigation

2017 WL 2537347 (2017)

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In re Good Technology Corp. Shareholder Litigation

Delaware Court of Chancery
2017 WL 2537347 (2017)

  • Written by Heather Whittemore, JD

Facts

In early 2015, Good Technology Corporation (defendant), which was experiencing financial troubles, began pursuing an initial public offering or a merger. Good Technology hired J. P. Morgan (defendant) as its financial advisor. Several Good Technology directors held stock options that required a high-value initial public offering or merger to be profitable. Because the directors would personally benefit from a high-value initial public offering or merger, they refused to negotiate with certain prospective buyers and delayed Good Technology’s initial public offering. J. P. Morgan also advised the directors to postpose the initial public offering, possibly because a merger would be more beneficial to J. P. Morgan. In June 2015, Good Technology began negotiating a merger with Blackberry Corporation. J. P. Morgan supported a Good Technology merger with Blackberry because J. P. Morgan hoped to retain Blackberry as a client. The merger between Good Technology and Blackberry was finalized in October 2015. Evidence suggested that Blackberry purchased Good Technology at an unfairly low price because J. P. Morgan provided Blackberry with secret price guidance. Further evidence suggested that the delays caused by Good Technology’s directors earlier in the year also led to Blackberry’s unfairly low purchase price. A group of Good Technology shareholders (the plaintiff shareholders) (plaintiffs) filed a shareholder derivative suit in the Delaware Court of Chancery against Good Technology’s directors, alleging that the directors had breached their fiduciary duty by delaying the initial public offering and merger for their own economic interests. The plaintiff shareholders also filed a claim against J. P. Morgan, alleging that J. P. Morgan had aided and abetted the directors’ breach by manipulating the directors’ actions for its own advantage. Good Technology and J. P. Morgan asked the court for permission to move for summary judgment.

Rule of Law

Issue

Holding and Reasoning (Laster, J.)

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