Plaintiffs are eager to convert every corporate trauma into derivative claims, but they are anything but eager to confront the exacting standards for pleading and proving bad faith oversight under Caremark. Under Caremark and its progeny, directors are liable for failing to prevent corporate harm only under egregious circumstances in which they knowingly allow a corporation to violate or continue violating the law. Delaware courts routinely dismiss Caremark claims and have repeatedly emphasized that bad faith oversight is “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.”

So what is a plaintiff to do? In In re GoPro, Inc. Stockholder Derivative Litigation, C.A. No. 2018-0784-JRS (Del. Ch. Apr. 28, 2020), the plaintiffs recast their challenges to director oversight as challenges to director decisions and denied they were asserting Caremark claims. Vice Chancellor Slights was not convinced. He dismissed the claims under the theory the plaintiffs urged and under Caremark as well. “Although the plaintiffs disclaim any effort to plead a Caremark claim,” Slights observed, “it is difficult to ignore the allegations in the Complaint that walk and talk like Caremark.” GoPro adds to a growing body of cases that reject attempts to sidestep Caremark by portraying director oversight that falls short of preventing some corporate harm as affirmative misconduct instead.

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