New Enterprise Overcomes Novel Ruling to Get Narrow Court Win

New Enterprise Associates can move forward with litigation over the sale of cloud computing startup Fugue Inc. even though its pledge not to challenge the deal is mostly enforceable, a Delaware judge said in a novel ruling Tuesday.

Vice Chancellor J. Travis Laster ruled for NEA on narrow grounds, saying it can pursue claims involving the “drag-along” transaction engineered by George Rich, the investor who recapitalized Fugue and flipped it. Despite handing NEA a preliminary victory, however, the judge devoted most of the 130-page ruling to novel legal propositions that were largely unfavorable for the venture firm’s case.

The crux ...