Issue No. 7 — September 21, 2026

Lead Matter

In re Cloudflare, Inc. Stockholders Litigation — argued, and awaiting decision (Del. Ch., C.A. No. 2026-0734-JTL and related actions)

The recapitalization challenge covered in Issue No. 2 has moved quickly. Cloudflare disclosed eight complaints by August 5, seven consolidated into a fiduciary action before Vice Chancellor Laster and one raising a separate charter-vote claim; stockholders approved the capitalization changes on June 30; the company has stated in its securities filings that it anticipates implementing them as early as September 2026, subject to the litigation; and on August 12 the parties argued the plaintiffs' request to block the transaction, with the company defending it as a fair effort to keep its longtime leaders engaged. The plaintiffs' filings calculate that the co-founders, who hold about 50.3 percent of the voting power, could sell roughly $667 million of stock before losing majority control under the existing structure and roughly $7 billion after the recapitalization — about ten times as much; the company disputes that characterization, contending the figure reflects shares the founders already own and that the company obtained service commitments, capital-at-risk requirements, and governance protections in exchange. Commentators have identified the case as an early test of the 2025 amendments' carve-out preserving judicial review, for purposes of injunctive relief, of certain control-related provisions. As of the most recent public reports, a decision was pending. The allegations and the parties' calculations remain their own; nothing has been adjudicated.

On The Docket

Carr v. New Enterprise Associates — a fund's conflict across its own portfolio (Del. Ch., C.A. No. 2017-0381-AGB)

A co-founder of medical device company Advanced Cardiac Therapeutics alleged that NEA — which became the controlling stockholder in 2014 through a Series A-2 financing in which it took nearly 90 percent of the round and more than 65 percent of the company on an as-converted basis — caused the company to grant Abbott a warrant on the same day NEA closed two other Abbott transactions involving other portfolio companies, allegedly pricing the company cheaply to serve the fund's broader relationship. On March 26, 2018, Chancellor Bouchard drew a distinction the pleadings made possible: because NEA was not alleged to control the company before the Series A-2 round, the fiduciary claim against it over that financing was dismissed, while an aiding-and-abetting claim over the round survived; NEA's alleged controller liability concerned the subsequent Abbott warrant. Certain other defendants were dismissed. The case settled, with the class settlement approved in April 2019; the allegations were never adjudicated. The pleadings frame a conflict specific to multi-company investors: a fund's incentives with a single strategic counterparty across several portfolio companies at once.

Rippling v. Deel — two venture-backed rivals in federal court (N.D. Cal., No. 3:25-cv-02576)

Rippling alleges that competitor Deel cultivated an employee inside Rippling to extract sales and strategy information, asserting federal racketeering and trade-secret claims against Deel and several executives; Deel denies the allegations, has characterized the suit as a smear campaign, and has asserted its own claims against Rippling. In a February 23, 2026 written order, Judge Charles Breyer granted Deel's motion to dismiss in part — dismissing Rippling's California state-law claims — while allowing the federal racketeering and trade-secret claims to proceed and denying the defendants' forum non conveniens, jurisdictional, service, and anti-SLAPP motions. Parallel proceedings in the Irish High Court produced March 2026 rulings removing individual Deel executives as defendants there and resolving discovery disputes. All allegations on both sides are untested. For the investors on both cap tables — neither company's investors are parties — the matter illustrates a fund-level exposure that sits outside any financing document: competitor litigation between portfolio companies.

Ruling In Focus

In re Nine Systems — a fair price does not by itself establish entire fairness (Del. Ch. Sept. 4, 2014)

After an eleven-day trial, the court held that a control group and its board designees breached their fiduciary duties in a 2002 recapitalization of a venture-backed technology company that heavily diluted non-participating minority holders — even though the price was fair, because the equity was worth nothing at the time. The process failed on its own terms: one participant alone valued the company, terms shifted after approval, a minority-affiliated director was excluded from the discussions, and one participant received a larger stake than the deal terms permitted. The remedy followed the split: no damages, because the price was fair, but leave to seek attorneys' fees — and on May 7, 2015, the court awarded $2 million in fees and expenses. Read against Trados (Issue No. 3), decided a year earlier, the pair marks the two poles that still govern inside rounds: the court weighs process and price together as one contextual judgment, and Nine Systems expressly distinguished its recapitalization from Trados's merger in reaching a different result.

Doctrine Watch

Fair price is not enough — the process line from Trados to Guilbeau

Delaware's entire fairness standard is unitary — the court considers process and price together — but the cases show that a fair price does not necessarily establish entire fairness, and that the remedy is what separates them. Trados (2013) found an unfair process and a fair price and, weighing the two, called the transaction entirely fair, because the common received the substantial equivalent of what it had. Nine Systems (2014) found a grossly unfair process and a fair price and, weighing the two, called the transaction not entirely fair — awarding fees rather than damages. Guilbeau (2026; Issue No. 2) carried the questions into the pleading stage: the court found grounds to question price as well as process — the financing used a valuation well below indications from other transactions, as alleged — sustained director claims, and dismissed the transaction-specific controller claim; it did not produce a fair-price/unfair-process outcome of the Nine Systems kind. The practical residue for sponsors is that a defensible valuation does not retire the process questions — who ran the deal, who was excluded, and what changed after approval remain part of the same judgment.

Also Tracking

Cloudflare — decision pending, and the company's stated September implementation target • ATP — implementation of the recognition and funding orders (No. 25-12177-LSS) and the district-court appeal (D. Del. No. 1:26-cv-00495-JLH; Issue No. 5) • TSVC — the September 1 preliminary-injunction motion (Issue No. 3) • Burgerville — the company's response (Issue No. 3) • Musk v. OpenAI — the request for an appealable judgment (Issue No. 4) • Rippling v. Deel — pending motions.