Gibson Dunn discusses Supreme Court of Delaware Case Upholding Fee-Shifting Bylaws

A recent decision of the Supreme Court of Delaware may give Delaware corporations an important tool to discourage meritless shareholder litigation.  In ATP Tour, Inc. v. Deutscher Tennis Bund, No. 534, 2013 (Del. May 8, 2014) (“Op.”), the Court held that the directors of a non-stock corporation may permissibly adopt bylaws that shift attorneys’ fees and costs to unsuccessful plaintiffs in intra-corporate litigation, even where the intent of the fee-shifting provision is to deter litigation.

Background

The Supreme Court of Delaware’s opinion addressed certified questions from the U.S. District Court for the District of Delaware.  The underlying federal litigation … Read more