Albert J. Carroll of Morris James. Court of Chancery Grants Special Litigation Committee's Dismissal of 'Carvana' Derivative Action
In re Carvana Stockholders Litigation is another example of a board successfully employing this process to discontinue a derivative suit after directors weighed the pros and cons and made a good faith business judgment to dismiss.
May 15, 2024 at 09:00 AM
6 minute read
Contributors
Boards of Delaware corporations control the company's assets, which includes by default derivative claims for breach of fiduciary duty against the company's directors and officers. When derivative claims survive dismissal because demand is excused with respect to the full board, a powerful tool remains at the board's disposal to reassert control and, in the right conditions, elect to dismiss the claims: a special litigation committee comprised of independent and disinterested directors. In re Carvana Stockholders Litigation, Consol. C.A. No. 2020-0415-KSJM (Del. Ch. Mar. 27, 2024) is another example of a board successfully employing this process to discontinue a derivative suit after directors weighed the pros and cons and made a good faith business judgment to dismiss.
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