Willkie Obtains Specific Performance in Delaware Chancery Court of Proxy Contest Settlement Agreement

First-of-its-kind post-trial opinion ordered pharmaceutical company Innoviva Inc. to add two nominees from Willkie client Sarissa to the company’s board of directors.

The Delaware Court of Chancery issued a first-of-its-kind post-trial opinion in favor of Willkie’s client Sarissa Capital Management ordering pharmaceutical company Innoviva Inc. to add two Sarissa nominees to the company’s board of directors. In its 72-page opinion, the Court found that Innoviva entered into a binding agreement to settle a proxy contest launched by Sarissa and that Innoviva’s attempts to renege on that agreement when it later learned it would win the proxy contest was “nothing but misguided opportunism.” As a result, the Court ordered Innoviva to comply with its obligations under the settlement agreement, to seat two Sarissa designees on its board.

Following a one-day bench trial, Vice Chancellor Joseph Slights ruled in favor of Sarissa and ordered specific performance of the oral agreement, finding that(1) Innoviva’s Vice-Chairman had both actual and apparent authority to bind Innoviva to the oral settlement agreement; (2) the parties’ negotiators manifested mutual assent to bind their respective principals to the agreement, which contained all essential terms to settle the proxy contest; and (3) the balance of equities clearly favored Sarissa and supported a grant of specific performance of the contract—compelling Innoviva to expand the size of its board by two and to appoint two of Sarissa’s nominees to fill those newly created seats.

The matter was handled by Willkie partners Martin Seidel and Sameer Advani, associates Alexander Cheney, James Fitzmaurice, John Joy, Christine Cea, Cole Mathews, and Joseph Niczky, and legal assistant Christopher Brancato.