Court of Chancery Rejects 'Caremark' Liability for Imperfect Compliance With Legal Obligations
In dismissing for failure to plead demand futility, Vice Chancellor Lori W. Will explained that that allegations of independent directors' knowledge of "imperfect compliance" did not provide a reasonable inference of bad faith "intentional lawbreaking."
October 09, 2024 at 09:00 AM
5 minute read
ContributorsDelaware 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 with laws and regulations that are material to its business. See In re Caremark International Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996). Recently, the Delaware Court of Chancery dismissed a derivative claim premised upon the notion that independent directors breached their fiduciary duties by failing to ensure compliance with a consent decree. See In re TransUnion Derivative Shareholder Litigation, 2024 WL 4355571 (Del. Ch. Oct. 1, 2024). In dismissing for failure to plead demand futility, Vice Chancellor Lori W. Will explained that that allegations of independent directors' knowledge of "imperfect compliance" did not provide a reasonable inference of bad faith "intentional lawbreaking."
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 2First Lawsuit Filed Alleging Contraceptive Depo-Provera Caused Brain Tumor
- 3The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 4The Growing Tension—And Opportunity—in Big Law Nonequity Tiers
- 5The 'Biden Effect' on Senior Attorneys: Should I Stay or Should I Go?
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250