On May 9, a Delaware Chancery Court judge dismissed a derivative lawsuit seeking to hold former Twitter CEO Jack Dorsey and other board members at Block Inc. liable for the company’s purchase of Jay-Z’s music streaming service TIDAL. The decision stands as a reminder that even a poor business decision is not actionable on a derivative basis so long as a majority of disinterested and independent directors approved the action in good faith.
Block’s Purchase of TIDAL
California-based Block Inc. is a multinational technology conglomerate that facilitates payment processing for businesses and helps individuals transfer money electronically. Block’s net income in 2019 and 2020 was $375.4 million and $213.1 million, respectively. Jack Dorsey founded Block and took the company public in 2015. Dorsey is Block’s president, CEO, and chairman of the board of directors. According to Block’s public filings, Dorsey held around 50% of the company’s stockholder voting power at relevant times.
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