Background
Former Tyson 2.0 officers Chad Bronstein and Nicole Cosby, along with former CEO Adam Wilks, sought advancement for expenses incurred in two Northern District of Illinois actions. Tyson 2.0 alleged that Bronstein and Cosby improperly pursued a competing Hulk Hogan-branded beer venture after leaving the company, including by using confidential information and soliciting company relationships.
The parties submitted entitlement to advancement on cross-motions for summary judgment before a Magistrate in Chancery. The Magistrate concluded that Tyson 2.0 had not established that separation-agreement releases barred advancement and that the Beer Case claims against Bronstein and Cosby arose by reason of their corporate status. Tyson 2.0 filed exceptions.
The Court’s Holding
Vice Chancellor David denied the exceptions and affirmed the Magistrate’s conclusions. Although advancement rights may be released contractually, the separation agreements selected Illinois law, and Tyson 2.0 did not meaningfully argue Illinois law before the Magistrate. Its attempt to raise supporting Illinois authorities for the first time on exceptions was waived, leaving the company unable to prove its affirmative release defense.
The court also held that the challenged Beer Case counts against Bronstein and Cosby arose “by reason of” their former corporate positions. The allegations concerned relationships, information, business opportunities, and personnel developed or accessed through their Tyson 2.0 roles. With no material factual dispute identified in the cross-motions, Rule 56(i) permitted judgment on the merits. The court also rejected Tyson 2.0’s challenge to fees-on-fees.
Key Takeaways
- A party asserting that a release bars advancement bears the burden of proving that defense under the agreement’s governing law.
- Arguments and authorities first raised through exceptions are waived.
- Post-employment claims can trigger advancement when they have a sufficient nexus to information, relationships, or opportunities obtained through corporate service.
Why It Matters
The decision reinforces Delaware’s broad “by reason of” standard for advancement. Labels such as post-employment competition or contract claims do not defeat advancement where the pleaded allegations substantially depend on a former officer’s corporate role.
It also illustrates the procedural consequences of cross-motions for summary judgment and of failing to develop a choice-of-law argument at the initial merits stage.