"I see the bad moon arising, I see trouble on the way
I see earthquakes and lightnin', I see bad times today"*

Delaware had barely birthed changes to Section 144 of its General Corporation Law when the Plumbers & Fitters Local 295 Pension Fund filed a complaint challenging those changes.  The plaintiff seeks a declaration that the amendments to Section 144 are unconstitutional under the Delaware constitution.  The named defendants are Dropbox, Inc. and its directors.  Dropbox reincorporated from Delaware to Nevada on March 5 of this year, 20 days before Delaware Governor Matt Meyer signed the amendments to Section 144 into law.

Anthony Rickey at Margrave Law LLC kindly sent me a copy of the redacted class action complaint, which weighs in at more than 100 pages.   As to the constitutional issue, the plaintiff alleges:

The Delaware Constitution prohibits the General Assembly from limiting the Court of Chancery’s general equity jurisdiction to less than the English High Court of Chancery’s jurisdiction, as it existed in 1792, unless it provides a complete, adequate, and exclusive remedy at law in another tribunal. Thus, in order for the legislature to remove equitable matters from the Court of Chancery’s jurisdiction without violating the Delaware Constitution, two conditions must be met: exclusive jurisdiction must be conferred on some other tribunal and the new tribunal must be granted power to provide remedies equivalent to those available in Chancery.

If the plaintiff is correct, then according to John Jenkins at DealLawyers.com "other significant statutory provision of Delaware law may be at risk".  In particular, he notes "the ability of LLCs to avoid judicial review of provisions in their operating agreements purporting to waive fiduciary duties also may run afoul of Delaware’s constitution".  

_____________________
*John Fogerty, Bad Moon Rising.