News & Analysis as of

Board of Directors Demand Futility

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Chancery Finds that Would-Be Caremark Plaintiffs Failed to Plead Demand Futility

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Bricklayers Pension Fund of W. Pa. v. Brinkley, C.A. No. 2022-1118-MTZ (Del. Ch. July 12, 2024) - In derivative cases where a stockholder-plaintiff has not made a pre-suit demand on the board of directors, demand futility...more

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Chancery Holds That Demand Was Not Wrongfully Refused When Considered by Working Group

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In re Kraft Heinz Demand Refused Derivative Stockholder Litig., Consol. C.A. No. 2022-0398-LWW (Del. Ch. July 19, 2024) - By making a demand, a stockholder-plaintiff tacitly concedes that the board can impartially consider...more

Morris James LLP

Court of Chancery Rejects ‘Caremark’ Liability for Imperfect Compliance With Legal Obligations

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Delaware corporations are not permitted to pursue profits by violating the law. Under Caremark and its progeny, directors’ fiduciary duties include the good faith obligation to oversee and monitor the corporation’s compliance...more

Hogan Lovells

In re Cognizant Technology: Third Circuit adopts de novo review for failure to plead demand futility

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In re Cognizant Technology Solutions Corporation Derivative Litigation, the United States Court of Appeals for the Third Circuit, sitting en banc, overruled its prior decision in Blasband v. Rales that applied an...more

Morris James LLP

Chancery Holds Plaintiff Fails to Meet Rule 23.1 Pleading Standard, Dismisses Action Arising From T-Mobile Data Hack

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Harper v. Sievert, C.A. No. 2022-0819-SG (Del. Ch. May 31, 2024). A stockholder plaintiff brought derivative claims alleging that current and former directors of T-Mobile US, Inc. were liable for aggregating customers’...more

Hogan Lovells

Clem v. Skinner: Court dismisses Caremark claims and warns of claims “doing more harm than good”

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In Clem et al. v. Skinner, the Delaware Court of Chancery granted a motion Caremark claims against the directors of Walgreens Boots Alliance, Inc.’s for failure to plead demand futility. The court found that demand was not...more

Morris James LLP

Chancery Dismisses Derivative Action Based on Plaintiff’s Failure to Allege Particularized Facts Demonstrating Demand Futility

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The power to bring a claim for breach of duty causing injury to a Delaware corporation resides with the board of directors. It is part of their duty under Section 141(a) of the Delaware General Corporation Law to manage the...more

Morris James LLP

Chancery Dismisses Caremark Action Based on Insufficient Allegations of Bad Faith

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Clem v. Skinner, et al., C.A. 2021-0240-LWW (Del. Ch. Feb. 19, 2024) - This Caremark decision involved the retail pharmacy company, Walgreens, and concerned billing practices for a particular insulin pen product that gave...more

A&O Shearman

Delaware Court Of Chancery Dismisses Derivative Claim For Breach Of Duty Of Oversight, Finding Failure To Establish Demand...

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On February 19, 2024, Vice Chancellor Lori Will of the Delaware Court of Chancery dismissed a derivative breach of fiduciary duty action against nominal defendant Walgreens Boots Alliance, Inc. (the “Company”) and its board...more

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Chancery Dismisses Double-Derivative Claims for Failure To Plead Demand Futility

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City of Hialeah Emps. Ret. Sys. v. Insight Venture Partners, C.A. No. 2022-0846-MTZ (Del. Ch. Dec. 28, 2023) - A venture capital fund invested in two different entities. One of the entities then acquired the other. In the...more

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Newman v. KKR: Suit dismissed by Delaware Chancery Court for failure to plead demand futility

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In Newman v. KKR, the Delaware Court of Chancery dismissed a shareholder suit against Transphorm, Inc.’s Board and KKR, the largest shareholder, for failure to plead demand futility. The plaintiff alleged that the Board...more

DarrowEverett LLP

AmeriSource Decision a Difficult Pill to Swallow for Securities Plaintiffs

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The opioid crisis has garnered nationwide attention for decades and has resulted in thousands of lawsuits, subjecting pharmaceutical distributors to billions of dollars in damages. AmerisourceBergen (“Amerisource”) — one of...more

Robson & Robson, P.C.

Can Closely Held Companies Investigate Shareholder Complaints Without Breaking The Bank?

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Last month, we tackled Pennsylvania’s “universal” demand requirement. As a refresher, unlike many states, Pennsylvania will not excuse the shareholder of a company who wants the company to sue its executives or directors from...more

Robson & Robson, P.C.

PA's “Universal Demand” Requirement: A Hazard For The Unwary Business Divorce Practitioner

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Attorneys that represent shareholders of publicly traded companies in securities litigation are intimately familiar with the pre-suit demand required by the corporate law of many states. ...more

A&O Shearman

Delaware Court Of Chancery Assesses The Application Of Timeliness Principles To Caremark Red Flags Claim And Applies “Separate...

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On December 15, 2022, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery denied a motion to dismiss claims as untimely in a derivative action brought by stockholders against the officers and directors of...more

Hogan Lovells

In re Carvana: Demand is futile when directors are “thick as thieves” with beneficiary of misconduct

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The Delaware Court of Chancery, in In re Carvana Co., No. 2020-0415-KSJM (Del. Ch. June 30, 2022), applied the recently adopted Zuckerberg test for demand futility and denied the defendants’ motion to dismiss. The court found...more

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Hamrock: No Caremark liability for natural gas explosion

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In City of Detroit Police & Fire Ret. Sys. on Behalf of NiSource, Inc. v. Hamrock, No. CV 2021-0370-KSJM, the Delaware Court of Chancery granted a motion to dismiss duty of oversight claims against an energy company’s...more

A&O Shearman

Delaware Court Of Chancery Dismisses Derivative Suit For Failure To Allege Substantial Likelihood Of Liability Sufficient To...

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On June 30, 2022, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery granted a motion to dismiss derivative claims for breach of fiduciary duty brought by a stockholder of an energy company (the...more

A&O Shearman

Delaware Court Of Chancery Declines To Dismiss Claims Related To Direct Offering At The Outset Of The Pandemic

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On June 30, 2022, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery denied a motion to dismiss stockholder derivative claims for alleged breaches of fiduciary duty against the CEO/Chairman of an...more

Proskauer - Corporate Defense and Disputes

Tractor Supply Gets Lift from Court with Diversity Suit Dismissal

Earlier this spring, yet another lawsuit alleging a company failed to adequately promote diversity was dismissed for a failure to properly allege demand futility. In City of Pontiac Police & Fire Ret. Sys. v. Jamison, the...more

Morris James LLP

Chancery Rejects Challenge to Director’s Appointment and Dismisses Derivative Claims

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Simons v. Brookfield Asset Mgmt., Inc., C.A. No. 2020-0841-KSJM (Del. Ch. Jan. 21, 2022) - If a derivative plaintiff does not make a pre-suit demand on the board, then under Court of Chancery Rule 23.1, the plaintiff must...more

Goodwin

Delaware Chancery Court Dismisses Derivative Claim for Failure to Show Demand Futility

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Delaware Chancery Court Dismisses Derivative Claim for Failure to Show Demand Futility; Federal Illegality of Marijuana Industry Bars Relief for Numerous Investor Claims; LIBOR Convictions of Former Deutsche Bank Traders...more

Hogan Lovells

Q4 2021 Quarterly Corporate / M&A decisions updates

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Below is our Corporate / M&A decisions update covering decisions in the fourth quarter of 2021. This update is designed to highlight selected important M&A, corporate, and commercial court decisions on a quarterly basis....more

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In re Kraft Heinz Company Derivative Litigation: Plaintiffs fail to plead demand futility - Quarterly Corporate / M&A Decisions...

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In re Kraft Heinz Company Derivative Litigation addresses demand futility in a case involving an insider stock sale. 3G Capital, Inc., a 24.2 percent shareholder in Kraft Heinz, sold 7 percent of its stake in August 2018...more

Morris James LLP

Delaware Corporate and Commercial Case Law Year in Review

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Our 2021 Top 10 list summarizes decisions from the Delaware courts likely to affect business transactions and business litigation going forward. Our criteria for selection are that the decision either meaningfully changed...more

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