Sarasota Firefighters’ Pension Fund v. Inovalon Hldgs. Inc., C.A. No. 2022-0698-KSJM (Del. Ch. June 10, 2025)
In this decision dealing with a motion to dismiss following a remand from an appeal, the Court of Chancery addressed the issue of whether the plaintiffs failed to plead a non-exculpated claim against a group of outside director defendants for their role in approving an acquisition. The plaintiffs argued that it was reasonably conceivable that the defendants acted in bad faith, as they knowingly approved a proxy statement that failed to disclose their advisor’s conflicts, and they knowingly withheld material facts concerning their advisor’s market outreach. The Court reasoned that, on appeal, the Delaware Supreme Court found the information to be material. Crediting the plaintiffs’ allegations, it was reasonably conceivable that the defendants intentionally failed to disclose the information to hide flaws in the sale process. As a result, the Court denied the defendants’ motion to dismiss these claims.
