In Crashfund LLC v. FaZe Clan, investors in Wanderset Inc. sued successor e-gaming company, FaZe Clan. Wanderset investors claimed that their agreements with Wanderset granted them conditional rights to obtain stock proportionate to their investment upon a “change of control.” The investors also claimed that FaZe Clan refused to issue stock to them after a de facto merger with Wanderset in violation of the agreements. FaZe Clan was sued for, among other things, breach of contract. The investors alleged two theories:
- that the investors’ conditional right to stock in the event of a change of control entitled them to FaZe Clan stock after the de facto merger, or alternatively,
- that FaZe Clan, as the successor entity, was liable for consequential damages caused by Wanderset’s alleged breach of the investor agreements.
As we previously noted here, the SJC earlier this year issued its opinion affirming Judge Leibensperger’s decision in a matter arising out of the EMC-Dell merger. Taken together, those decisions set a landmark in Massachusetts corporate governance law by delineating the fiduciary duties of directors of Massachusetts corporations and differentiating them from Delaware’s precepts. EMC’s counsel, Tom Dougherty and Kurt Hemr, published an insightful Special Commentary about those decisions as a preface to the 2017 edition of CSC Lexis/Nexis Massachusetts Laws Governing Business Entities Annotated. We recommend the Special Commentary to our readers, which can be found here.
Note: Nutter filed an amicus brief with the SJC in this matter on behalf of the Associated Industries of Massachusetts.
In IBEW Local No. 129 Ben. Fund v. Tucci., the Supreme Judicial Court (SJC) affirmed a decision by Judge Leibensperger of the BLS dismissing a class action brought by EMC shareholders against EMC board members. The plaintiff alleged that the board members violated their fiduciary duties when they approved the sale of EMC to Dell for $64 billion. Affirming Judge Leibensperger’s decision, the SJC held that directors of a Massachusetts corporation generally have a unitary duty to act in the best interests of the corporation, rather than dual duties that run to both the corporation and its shareholders.