Burgeoning 'Caremark' Claims Likely to Drive Stockholder Demands
There has been a noticeable increase in the frequency of Caremark claims over the past four years, and this trend carries significant implications for companies' design of their oversight structures, as well as for the potential liability of directors and officers, according to Stephen Blake and Jordan Lamothe of Simpson Thacher & Bartlett.
March 09, 2023 at 02:51 PM
13 minute read
For decades, Delaware's legal framework for stockholder derivative claims targeted at corporate oversight—colloquially referred to as Caremark claims—was well-established. Caremark claims, which challenge failures to act rather than affirmative actions, could be brought against a company's board of directors, but the bar for liability was high. For over 20 years prior to 2019, no such claims survived a motion to dismiss, reinforcing then-Chancellor William Allen's statement in Caremark itself that such a theory is "possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment."
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