This Week in Chancery Court: Juul Trial, Hertz, Winklevoss Twins

Juul Labs Inc. and a group of investment funds will face off in trial before the Delaware Court of Chancery this week over a proposed debt conversion.

Here’s a look at more from the calendars for the Chancery Court and the Delaware Supreme Court this week:

Monday: Cascia v. Farmer, Del. Ch., No. 2023-0520, oral argument 3/11/24.

At issue: A Hertz Global Holdings Inc. investor is suing affiliates of its private equity backers over their role in the car rental giant’s $2.8 billion stock buyback program. The shareholder derivative lawsuit filed last May, which also targets members of Hertz’s board, accuses Certares Management LLC and Knighthead Capital Management LLC of exploiting their influence over Hertz after its 2020 bankruptcy to gain a majority stake. The investment firms have asked the court to dismiss the complaint, which they call vague and “opaque.” The Hertz investor argues in an answering brief that the case should proceed, because the question before the court is simple: “May directors of a Delaware corporation use corporate funds to transfer control of a $5 billion corporation to a single significant stockholder, and thereby disenfranchise all other public stockholders, without obtaining anything at all in return? Under bedrock principles of both Delaware law and equity, the answer must be no.”

Court action: Oral arguments on the motion to dismiss will be heard in Wilmington, Del.

Hertz Investor Sues Certares, Knighthead on $2.8 Billion Buyback

Wednesday: IMO Jeremy Paradise Dynasty Tr., Del., No. 280,2023, oral arguments 3/13/24.

At issue: The brother of Skillz Inc. founder Andrew Paradise lost his case seeking to reform a trust holding stock in the eSports company over claims that the tech entrepreneur fraudulently seized control of it. Jeremy Paradise is now asking the Delaware Supreme Court to reverse Chancellor Kathaleen St. Jude McCormick’s opinion, which found he couldn’t prove a necessary element of his case—his intentions toward the trust—because he never even read the trust documents he signed. Andrew Paradise argues his brother’s appeal “ignores clear Delaware precedent addressing the requirements for reformation and the Court’s extensive factual findings,” according to an answering brief.

Court action: Oral arguments before the Delaware Supreme Court will be heard in Dover, Del.

Skillz eSports Founder’s Brother Loses Bid to Reform Stock Trust

Wednesday: D1 Jasper Holdings LP v. Juul Labs Inc., Del. Ch., No. 2023-1060, trial 3/13/24.

At issue: A group of investment funds sued Juul in October, seeking to stop it from converting debt into equity on terms allegedly favoring insiders, including hotel billionaire Nick Pritzker, siphoning value out of the vaping company. Vice Chancellor Nathan Cook fast-tracked the proceedings to trial, and the parties agreed that a preliminary injunction would be in place temporarily halting the proposed debt conversion, pending final resolution of the lawsuit.

Court action: A two-day trial opens Wednesday in Wilmington, Del.

Juul Sued Over Billionaire’s Alleged Scheme to ‘Plunder’ Company

Friday: Winklevoss Cap. Fund v. Shaw, Del. Ch., No. 2018-0398, hearing 3/15/24.

At issue: The Winklevoss twins’ long-running investment dispute with a magazine publisher may be drawing to a close. The court previously ruled that Cameron and Tyler Winklevoss didn’t have to counterclaims filed by Treats! LLC, a publisher of fine arts and other magazines, and its founder. Last year, Cook granted the twins’ motion for default judgment against Stephen Shaw and Treats!. He now will hear the twins’ arguments seeking the return of their $1.3 million investment, another $897,000 in damages, and an award of legal fees and post-judgment interest.

Court action: An evidentiary hearing for a determination of damages will be held in Wilmington, Del.

Winklevoss Twins Defeat Counterclaims in Investment Spat