A popular claim for plaintiffs in derivative litigation against directors of Delaware corporations has been that the directors breached their duty of oversight.  This theory has its genesis in Chancellor William T. Allen's decision in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996).  These claims remain popular notwithstanding Chancellor Allen's oft-quoted (by defendants) observation that "The theory here advanced is possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment."

I like to emphasize that many of the most famous Delaware cases involving director liabilities have yet to be adopted by California courts in published opinions.  Caremark is one of these cases.  The case is cited in Leyte-Vidal v. Semel, 220 Cal. App. 4th 1001 (2013).  It also makes an appearance in Robbins v. Alibrandi, 127 Cal. App. 4th 438 (2005) but the court cites it with respect to the standard of review to be applied to settlements.  This is not to say that California courts will not adopt Caremark, but one should not assume that they necessarily will.