Episode 322 -- Checking in on Caremark Cases
Over the last ten years, we have seen a marked shift from the Delaware Chancery Court chipping away at corporate board member liability claims. In a number of seminal cases involving Boeing airplane crashes (In re the Boeing...more
We constantly hear about the importance of “accountability,” meaning that organizations and individuals have to be held accountable for misconduct or failures to act. The focus on accountability is a positive trend,...more
On September 27, 2022, U.S. District Judge Kevin McNulty of the District of New Jersey dismissed a consolidated derivative action allegedly brought on behalf of Cognizant Technology Solutions Corporation against certain...more
What do all these new decisions from the Delaware courts mean. They certainly mean the Delaware courts will be much more scrutinizing of Caremark claims going forward. The evolution of decisions from Marchand to Boeing shows...more
The Delaware Chancery Court is continuing its trend of permitting Caremark claims against corporate board members who fail to exercise proper oversight and monitoring of compliance programs. ...more
When the Delaware Supreme Court says of a Board of Directors collectively signed a company’s Annual Statement “with hands on their ears to muffle the alarms” you can rest assured the Board was seriously negligent in...more
The role of the Board of Directors has always been a key part of any best practices compliance program. The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have consistently said that a Board’s role...more
The Delaware Court of Chancery recently issued two opinions — Richardson v. Clark (MoneyGram) and Fisher v. Sanborn (LendingClub) — that dismissed stockholder derivative claims for breach of directors’ oversight duties...more
Corporate boards will continue to face higher risks of liability. As the last bastion of legal privilege and protection, the wall of protection is crumbling bit by bit. Eventually, corporate stakeholders will demand that...more
Today, October 2, is the first Friday in October so I begin my annual month of Friday HorrorFest Film highlights. The great thing about this blog post series is that I get to re-watch these great old horror films. While I...more
I have written extensively about the Novartis International AG (Novartis) Foreign Corrupt Practices Act (FCPA) settlement, which was announced in late June. However, the enforcement action paled next to the Stipulation and...more
Over the past couple of blog posts, we have considered the guilty pleas by Blue Bell Creameries to charges that they distributed adulterated ice cream products and paid a criminal fine and forfeiture amount totaling $17.25...more
Health care provider boards of directors have been put on notice—given these two recent Delaware court decisions - Clovis and Marchand—that courts may be willing to significantly extend a corporate board’s Caremark duty to...more
On October 1, 2019, in In re Clovis Oncology, Inc. Derivative Litigation, a Delaware Chancery Court denied a motion to dismiss the plaintiffs’ claims under the Caremark decision against individual directors for failing to...more
Board oversight of significant company risk areas and legal compliance deserves renewed attention, as the Delaware Supreme Court recently ruled that monitoring practices that have previously been considered acceptable may...more
The Situation: Directors of a biopharmaceutical company face potential liability where they knew—or should have known—that the company was not complying with regulations governing a matter of critical importance to the...more
I have long predicted that corporate board members are in for a rude awakening. Corporate boards have to improve their ability and knowledge surrounding supervision and monitoring of a company’s ethics and compliance...more
In Marchand v. Barnhill et al. (“Blue Bell”),1 the Delaware Supreme Court on June 19 unanimously reversed the dismissal of a shareholder derivative lawsuit against the members of the board of directors and two officers of...more
Oversight of Innovation-Styled Joint Ventures - Several new developments highlight the special oversight obligations of directors in connection with health system investment in new technology ventures. ...more
It’s long been axiomatic that an effective compliance program cannot exist without a strong ethics and compliance culture, which in turn requires the proper “tone from the top.” Yet, when most companies think “top,” they...more
Earlier this summer, the Federal Financial Institutions Examination Council (FFIEC) released its highly anticipated Cybersecurity Assessment Tool (Assessment), which is designed to assist financial institutions in identifying...more
On the front page of the Saturday New York Times (NYT) was an obituary for Edward Thomas, who joined the Houston Police Department (HPD) in 1948 and finally retired in 2011 at the age of 90. As reported in the article,...more
The Justice Department’s aggressive enforcement program has had a profound impact on corporate governance. As a consequence, the last there has been a significant change in emphasis in the C-Suite, among general counsel and...more