This Week in Chancery Court: Philip Morris Seeks to Intervene

Philip Morris USA Inc. will ask the Delaware Court of Chancery this week if it can intervene in a long-running dispute between two other Big Tobacco companies over a settlement meant to cover the public health costs of smoking.

Here’s more from the court’s calendar:

Monday: ITG Brands LLC v. Reynolds American Inc., Del. Ch., No. 2017-0129, oral argument 2/5/24.

At issue: Last October, Vice Chancellor Lori Will ruled that ITG Brands, the US unit of Imperial Brands Plc, had to compensate Reynolds American Inc. for annual payments Reynolds had to make to the state of Florida under a 1990s-era tobacco settlement for brands ITG bought from Reynolds in 2014. The amount of the damages owed to Reynolds will be determined at trial, as well as any reduction based on separate “profit adjustment” payments required from all parties to the settlement. Philip Morris wants to get involved in the case now “to protect its interests and prevent the existing parties from being unjustly enriched at its expense,” it said in a brief. Also a party to the Florida settlement, Philip Morris argues it’s been paying larger profit adjustment payments than Reynolds. ITG, which wasn’t a party to the Florida settlement, and Reynolds both oppose any intervention from Philip Morris.

Court action: Oral arguments on Philip Morris’s motion to intervene will be heard in Wilmington, Del.

Reynolds, Imperial Brands Unit Spar Over Florida Tobacco Damages

Tuesday: Seavitt v. N-able Inc., Del. Ch., No. 2023-0326, oral argument 2/6/24.

At issue: An investor sued N-able Inc. in March 2023, claiming the IT services company’s investment agreements with two private equity giants, Silver Lake Group LLC and Thoma Bravo LLC, improperly gave them control over N-able’s board of directors and matters the board is legally required to oversee. Both N-able and the investor have filed motions for summary judgment. Brian Seavitt, the investor, argues a “stockholders agreement” N-able signed with Silver Lake and Thoma Bravo will allow the private equity firms “to maintain their improper control over the Company’s business and affairs even in situations where their economic ownership and voting power dwindles well below a majority.” N-able says “well-settled” Delaware law states that a board’s “rights to manage a corporation include the right to enter into contracts limiting the corporation’s future actions.”

Court action: Oral arguments on the motions for summary judgment will be heard in Wilmington, Del.

N-able Inc. Sued Over Silver Lake, Thoma Bravo Investment Deals

Wednesday: Trifecta Multimedia Holdings Inc. v. WCG Clinical Serv. LLC, Del Ch., No. 2023-0699, oral argument 2/7/24.

At issue: The founder of Trifecta Multimedia Holdings Inc., a health care technology business, sued WCG Clinical Services LLC last July, claiming it bought and shuttered the smaller company as part of a scheme to avoid a $69 million post-deal payment. The lawsuit accuses WCG of duping Trifecta’s founder Dave Young into deferring nearly one-third of the $214 million total transaction price, then deliberately missing revenue targets that would have triggered three “earnout” payments. WCG wants the case dismissed, arguing in a brief that it’s Trifecta that missed its milestones, and its claims of fraud are conjured “from thin air.” Trifecta and Young say WCG’s argument for dismissal side-steps “well-pleaded allegations in favor of an alternative narrative,” according to an answering brief.

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

Leonard Green-Backed WCG Clinical Faces $69 Million Deal Lawsuit