Duty of Loyalty Board of Directors

News & Analysis as of

Court Of Chancery Dismisses Post-Closing Claims Under Corwin

Under the recent Corwin decision, a fully-informed vote by uncoerced and disinterested stockholders to approve a merger invokes the business judgment rule and effectively precludes almost any claim the merger was improper. ...more

Delaware District Court Examines An Officer’s Fiduciary Duties When Projecting Revenues

Revenue projections are an inexact science, but they should have some basis in fact. Where they are alleged to be without a basis in reality, and indeed contrary to reality, a court may, as here, find that an officer’s...more

Delaware Chancery Court Finds that Director Defendants Can Not “Merge Their Way Out of” Breach of Fiduciary Claims

On July 28, 2016, the Delaware Chancery Court allowed claims of unfair dealing against the Board of property management company Riverstone National Inc. to survive where the directors facilitated a merger that forestalled a...more

Court Of Chancery Explains When Caremark Claim Exists Based On Illegal Conduct

This decision explains when a Caremark claim exists based on illegal corporate conduct. The “substantial likelihood” of liability that justifies excusing a pre-suit demand on the board must involve a knowing violation of the...more

Delaware Law Updates – The Duty of Loyalty: Anything But ‘Hazy Jurisprudence’ on an Exacting, But Narrow, Standard

In a recent decision out of the Delaware Court of Chancery—In re Chelsea Therapeutics International Ltd. Stockholders Litigation., Consol. C.A. No. 9640-VCG—Vice Chancellor Glasscock was faced with a claim that the board of...more

Bankruptcy Court Opinion Clarifies California Law on Duties of Directors & Officers Upon Insolvency

It is not unusual in the lifecycle of a start-up for the company to hit road blocks and have cash flow issues. During these times, the board and its members will ask the company’s professionals what their fiduciary duties are...more

Court Of Chancery Explains When A Minority Stockholder May Have Actual Control Over A Deal

This is another in a series of decisions dealing with the allegation that a minority stockholder controlled a deal through its control of a majority of the board of directors....more

Court Of Chancery Applies Demand Analysis To Changed Board

This is an interesting decision because it applies the demand rules in a derivative case to an odd situation — when some but not all of the board members have changed between when the challenged conduct occurred and when the...more

Director Cybersecurity Risk Oversight and Actions

This article begins by providing an overview of the duty of directors to oversee risk, including cybersecurity risk, in the cyberattack context and then outlines actions that board of directors are taking as reported by...more

Southern District of Florida Case Challenging Bylaw Requiring Minimum Stake to Sue Dismissed

As we have previously discussed, there has been a growing trend of corporations’ adopting various types of bylaws to define the bounds of shareholder litigation. These include forum-selection bylaws and fee-shifting bylaws...more

Inside M&A - October 2015

Overview of SPACs and Latest Trends - A number of recent successful business combination transactions involving special-purpose acquisition companies (SPACs) led by prominent sponsors have driven a resurgence in the SPAC...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

"Delaware Supreme Court Reaffirms Important Protections for Corporate Directors"

A trio of opinions from the Delaware Supreme Court, each authored by Chief Justice Leo E. Strine, Jr., has reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored...more

"Dole Ruling Serves as Cautionary Tale for Take-Private Deals"

Earlier this year, in a consolidated breach of fiduciary duty and appraisal action, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a post-trial opinion that includes many important takeaways for...more

Update from Wilson Elser’s D&O Insurance Digest

Litigation Developments and Mega Settlements - Dole Food, Inc. Derivative Action – Delaware Chancery Court Finds D&Os Engaged in Fraud - Dole Food, Inc. shareholders sued Dole Chairman and CEO David Murdock and Dole...more

Chancery Court Provides Lessons on Conflicts of Interest in a Sales Process – Holds Only Financial Advisor Open to Liability

In an October 1st decision (In re Zale Corporation), the Delaware Chancery Court dismissed claims that Zale Corporation’s directors breached their fiduciary duties in connection with Zale’s agreement to merge with Signet. ...more

A WARNing to Directors and Officers — Failure to give proper WARN Act notice may breach your fiduciary duty

At first glance, Stanziale v. MILK072011, looks like someone suing over a bad expiration date and conjures up images of Ron Burgundy proclaiming “milk was a bad choice.” But in actuality Stanziale is much more interesting: it...more

Justice Friedman Allows Breach of Fiduciary Duty Claim to Proceed Against Corporate Directors Under Delaware Law

In AP Services, LLP v. Lobell et. al, No. 651613/2012, 2015 NY Slip Op 31115(U) (N.Y. Sup. Ct. June 19, 2015) (argued Feb. 21, 2014), Justice Friedman, applying Delaware Law, denied a motion to dismiss plaintiff AP Services,...more

Delaware Court Holds Interested Directors Liable for "Fairer Price" In Going Private Transaction

In one of the largest ever M&A-related recoveries for shareholders, Vice Chancellor J. Travis Laster ordered Dole Food Company, Inc.’s Chairman and CEO, David Murdock, and Dole’s former President, COO and General Counsel, C....more

CLIENT ALERT: Court Finds Dole Food Company Directors Liable; Awards $148M in Damages

In re Dole Food Company, Inc. Stockholder Litigation, Consolidated C.A. No. 8703-VCL - In re Appraisal of Dole Food Company, Inc., Consolidated C.A. No. 9079-VCL - In a much anticipated post-trial decision, the...more

In re General Motors Company Derivative Litig., C.A. No. 9627-VCG (Del. Ch. June 26, 2015) (Glasscock, VC)

In this memorandum opinion, the Court of Chancery dismissed a derivative complaint under Rule 23.1, finding that plaintiffs failed to show that the board of directors (the “Board”) of General Motors Company (“GM”) acted in...more

MSSP Final Rule ACO Eligibility Requirements, Application and Renewal Process

This is the second post in Health Care Law Today’s series on the final rule. This post addresses Eligibility Requirements, and the Application and the Renewal Process. ACO Eligibility Requirements - Under the...more

CLIENT ALERT: Delaware Supreme Court Establishes Rule Permitting Dismissal of Independent Directors From Entire Fairness Suits

In re Cornerstone Therapeutics Inc. S’holder Litig., No. 564, 2014 (Del. May 14, 2015) & Leal v. Meeks, No. 706, 2014 (Del. May 14, 2015) In these interlocutory appeals, the Delaware Supreme Court resolved a...more

Delaware Chancery Court Permits Shareholder to Bring Fiduciary Claim for Board’s Violation of a Stock Incentive Plan

On November 8, the Delaware Chancery Court denied a motion to dismiss a derivative action brought by a shareholder of Healthways, Inc. against the company’s president, Ben Leedle, Jr., and the board of directors for approving...more

In re Trados S'holder Litig., Consol. C.A. No. 1512-VCL (Del. Ch. Aug. 16, 2013) (Laster, V.C.)

A former common stockholder filed a purported class action for breach of fiduciary duty arising out of the transaction, alleging that the former Trados directors breached their duty of loyalty by favoring the interests of the...more

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