Overview
On November 2, 2022, the Delaware Supreme Court upheld a decision by the Court of Chancery that CorePower Yoga LLC (CorePower) must specifically perform their agreement to acquire the assets of 34 franchised yoga studios. CorePower entered into an agreement with Steptoe client, Level 4 Yoga, LLC (Level 4) to buy the assets in a series of staggered purchases across five states in 2020 with no closing conditions.
CorePower tried to renege on the agreement when the global pandemic forced many businesses to temporarily close. Level 4 sued CorePower and CorePower Yoga Franchising LLC after CorePower refused to follow through on the first round of closings. Throughout the course of litigation, Steptoe lawyers insisted that the that the language of the purchase agreement gave CorePower no way out of the deal. The Delaware Court of Chancery agreed after a full trial on the merits and determined that the company was obligated to close "both as a matter of contract and as a matter of common law," and awarded Level 4 damages for having to operate the studios in the interim. The Delaware Supreme Court adopted the lower court’s 88 page memorandum opinion in full.
Law360 quoted Michael Dockterman in a piece discussing the matter titled, "CorePower Again Ordered To Close Yoga Studio Deal." In it he said, "Level 4 is very pleased with today's order and looks forward to being paid in full both for the assets that CorePower contracted to buy nearly three years ago and for Level 4's damages in its careful stewardship of those assets through the pandemic."
Bloomberg Law also covered the case involving Level 4, "CorePower Loses Appeal Over $30 Million Deal Busted by Pandemic." The reporter wrote: "The decision brings an end to one of the last cases pending in Delaware over a merger busted by the pandemic, which undermined transactions worldwide in early 2020… The CorePower controversy was among the only cases to yield an order compelling closing." In fact, this is the only case tried to a verdict in favor of the seller in a pandemic-related controversy.
The Steptoe team led by Michael Dockterman, included John J. Byron, Cara Lawson and Betsy Zyrkowski.
Full coverage can be read on Law360 and Bloomberg Law [Subscription required].