Rae Ra, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois, prepared this synopsis.


The Court of Chancery analyzed the newly amended 8 Del. C. § 144(d)(2) for the first time recently, in Patrick Ayers v. Foley, et al., C.A. No. 2025-0650-LWW (Del. Ch. June 15, 2026) (the “Opinion”), and held that the recent statutory amendments to Section 144 heighten the presumption of independence for certain directors beyond Section 144’s safe harbor provisions, “including when assessing director disinterestedness for purposes of Rule 23.1.” Opinion at 26-27.

In short, when a director is not a party to the challenged transaction and is deemed independent by the national exchange’s standards, for the purposes of a Rule 23.1 analysis, the statute raises the burden for a plaintiff to plead both substantial and particularized facts, and we focus on this narrow portion of the Opinion below. 

Background

In this derivative action, plaintiff challenged the board’s actions with regard to 1) a one-time equity grant to Foley, the company’s founder (the “Equity Grant”), and 2) compensation the non-employee directors awarded themselves (the “NED Compensation”).

Because this was a derivative suit where the plaintiff did not make a demand, the demand futility requirement of Rule 23.1 applied. And because the directors who approved the Equity Grant were deemed to satisfy the national stock exchange independence standards, the newly enacted Section 144(d)(2) applied, under which a plaintiff can rebut the presumption of disinterestedness with “substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.” 8 Del. C. § 144(d)(2).

Analysis

After explaining that the Equity Grant and the NED Compensation were separate transactions that each warranted separate analysis, see generally Opinion at 16-22, the Court began its application of the Zuckerberg test to the Equity Grant to assess demand futility. (Note: The defendants did not contest demand futility for the NED Compensation. See id. at 21-22.)

Under Zuckerberg prong three, the Court analyzed the independence of the three of the five challenged directors who qualified as independent under NYSE rules. Id. at 23.  The Court held that Section 144(d)(2) “is not confined to the safe harbors in Sections 144(a), (b), and (c)[,]” id. at 25, and ultimately, the plaintiff here failed to meet “this exacting standard” for pleading both substantial and particularized facts. Id. at 30.

  • Applying the principles of statutory interpretation, the Court held that Section 144(d)(2)’s “purposeful omission” of limiting language to within Section 144, id. at 26, as well as the statutory mandate for not only particularized but also “substantial” facts, id. at 27, demonstrated the legislature’s intent to strengthen the presumption of impartiality of directors beyond the Rule 23.1 standard.
  • Under this analytical framework, the plaintiff’s assertions–that the three challenged directors had business ties with Foley, received fees for their board service over the last decade, and engaged in co-investments–did not pass muster. Id. at 30-31. The “substantial” has to be understood in the “qualitative sense”, and the plaintiff “must plead specific, non-conclusory facts of sufficient qualitative significance to support a reasonable inference of a material interest or relationship that would impar the director’s objective judgment.” Id. at 28-29.

This opinion thus presents an important clarification of a recently amended Delaware corporate statutory provision and provides a lesson on the heightened burden of pleading standards to challenge the independence of certain directors.

Delaware Supreme Court Justice Karen L. Valihura recently presented the 2026 Weinburg Distinguished Lecture entitled “Legacies, Lessons and Launch Pads: Charting Delaware’s Course in a New Era, now available in an article format.

My own paraphrasing of a few takeaways: (i) the scholarly presentation included references to icons among prior court decisions in Delaware; (ii) how issues debated in the past can inform current issues in corporate law; and (iii) where we go from here—but you should read the whole article to get the full benefit of the learned insights.

The Delaware Senate approved the nomination of Vice Chancellor Morgan Zurn to become a Justice on the Delaware Supreme Court. Congratulations to Her Honor.

She takes over for Justice Valihura who did not seek re-appointment when her term ends this month. The process to fill the new opening for Vice Chancellor of the Court of Chancery has begun.

In addition to the Annual Review of Key Delaware Corporate and Commercial Decisions that I have compiled on these pages for the last 21 years, I periodically select cases for a semi-annual review. We recently presented these selected cases in a webinar with a PowerPoint.

The selection of these cases is necessarily subjective, and I typically favor those cases that have not already been widely discussed in the trade publications or elsewhere online, as well as those that have practical usefulness for those of us “in the trenches”. I invite comments or suggestions for other cases to include–if not now, then for my annual review.

As the Editor-in-Chief of the National Law Review‘s publication called the Delaware Corporate and Commercial Law Monitor, I’m pleased to share the latest edition that has now been published. The newsletter includes articles from authors around the country on the titular topic. My role for this publication is in addition to my full-time practice and maintaining this blog–now in its 21st year–as well as upholding my rich family life and participation in various religious, cultural, professional and community organizations.

Our new podcast series by Wilmington Managing Partner Francis G.X. Pileggi, Esq. and Partner Chauna Abner, offers practical insights on fiduciary duties, shareholder disputes, corporate governance issues, and other high-stakes business litigation matters arising in the State of Delaware and beyond.

In our inaugural episode, Francis and Chauna welcome veteran trial lawyer Jonathan Blank of McGuireWoods LLP to the show for a discussion on what every non-Delaware attorney needs to know about litigating in the Delaware Court of Chancery. From the unique role of Delaware counsel to the importance of collaboration in high-stakes corporate disputes, this episode offers practical insights from lawyers who have navigated some of the nation’s most complex corporate and commercial litigation.

Listen to the full episode on Spotify here: No Such Thing as “Local Counsel” in Delaware Court of Chancery (feat. Jonathan Blank from McGuireWoods) – Delaware Corporate Litigation Insights: A Lewis Brisbois Podcast | Podcast on Spotify

The idea for this topic came from an article we wrote on these pages with a similar title that compiled court decisions and commentary on the topic.

A recent ruling of the Delaware Court of Chancery addressed the standards for enforcing scheduling orders and explained the circumstances in which they might be modified. In Volt Energy Utility, LLC v. Elliott, C.A. 2024-0385-PAF, Order (Del. Ch. Mar. 4, 2026), the court instructed that: “Scheduling orders are not merely guidelines but have the same full force and effect as any other court order.” Id.

The factual context for this order denying a motion to amend the scheduling order was a lack of clear communication among counsel about scheduling issues. The court also observed that a common provision in scheduling orders allows a deposition of a trial witness not previously disclosed to be taken within 14 days. This is designed to promote fairness to allow a party who is not calling the witness to take the deposition to avoid being blindsided at trial–even though that might not be explicit. In this case however, the movant sought to use that provision to depose its own proposed trial witness. Another point made by the court in this case is that a non-natural person may not serve as a trial witness, but one party attempted to use that provision for something other than its intended purpose.

The order cites to Court of Chancery Rule 6 (b)(1)(B) for the requirement that good cause must be shown to extend the time to complete discovery on a motion made after the time has expired if the party failed to act because of excusable neglect. Excusable neglect generally focuses on “(1) Whether a party has demonstrated reasonable diligence; and (2) Whether the opposing party will be improperly prejudiced by an extension.” Id. (citation omitted).

The court explained that: “If a party cannot meet a deadline, the onus is on the party to be forthcoming and transparent about the situation and the reasons for it. . . . Attorneys shirk their obligations to the court and make matters worse when they fail to communicate with the other side, allow problems to escalate, and miss critical deadlines.” Id. (citation omitted).

The court concluded that the facts of this case demonstrated neglect that is not excusable, and that is prejudicial based on the imminent trial date. Although the motion to amend the scheduling order was not successful, the court denied a request for fee shifting because the motion was not the product of bad faith.

Previously on these pages over the last 21 years or so, I have highlighted decisions of the Delaware Supreme Court and Delaware trial courts, as well as a law review article by a Vice Chancellor, all of which provide additional reminders of the importance of complying with deadlines in scheduling orders and explanations of the standards to seek modification of them. See, e.g, here, here, here, here, and here.

Although related to compliance with discovery rules in general, in addition to compliance with deadlines in scheduling orders, the following quote from the 2018 Chancery decision in the matter styled In Re Examworks Group, highlighted on these pages at the foregoing hyperlink, is relevant to this topic and eminently worth repeating:

“If participants suspect that others are not following the rules, then the process deteriorates. People who follow the rules feel like chumps when others seem to be cutting corners or breaking rules and getting ahead. People who otherwise might not think of pushing limits become more aggressive if they think everyone else is doing it. It is this broader, systemic interest that the Delaware Supreme Court seems to have had in mind when stressing the courts must address discovery abuse not only to protect litigants, but also to protect the public and the bar.” See footnote 57.

This post was prepared by Rae Ra, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois.

In William J. Brown v. Matterport, Inc., et al., C.A. No. 2021-0595-LWW (Del. Ch. June 1, 2026) (“Letter Decision”), the Court of Chancery addressed on remand the limited issue of determining post-judgment interest in an action.

Plaintiff argued that, under 6 Del. C. § 2301, a fixed rate of 10.50% was “mandated,” while Defendants argued that a fixed 5.25%, the same interest as the pre-judgment rate, was appropriate to prevent a windfall to the plaintiff. Letter Decision, at 2.

The Court rejected both values, and instead held that “[a]pplying a floating rate compounded quarterly appropriately accounts for the economic realities and significant fluctuations in interest rates[.]” Id. at 3.  Clarifying that the “statutory legal rate serves as a benchmark, not an inflexible rule,” id. at 2, the Court explained that a “fixed 10.50% rate would create an inequitable windfall for [Plaintiff]” while a “fixed 5.25% rate would not fully compensate [Plaintiff]” for his losses.  Id. at 2-3.

The takeaway here is that the Court of Chancery is not statutorily limited from exercising in its discretion to determine an appropriate interest rate.  Here, the Court did just that, with mindfulness toward both equitable and practical concerns.

The Delaware Court of Chancery recently analyzed whether the ultimate non-resident decisionmaker for a blockholder director was subject to personal jurisdiction in Delaware, based on a provision in the Delaware Long-Arm Statute that may trigger jurisdiction, not only for an action taken within Delaware, but for an “omission” that occurred in Delaware. In Zync, Inc. v. Porsche Investments Management, S.A., C.A. No. 2025-0284-JTL (Del. Ch. May 26, 2026), the court found that the omission at issue did not satisfy the necessary connection with Delaware. See generally recent Chancery decision highlighted on these pages about the duties generally of blockholder directors.

Key Background Facts

The Company involved, Zync, Inc., was a startup in the automotive industry and secured an investment from a subsidiary of Porsche AG, which resulted in Porsche gaining a right to appoint a member of the Company’s board of directors. Under a governance agreement, the Company agreed not to take specified actions without the affirmative vote of the Porsche Director. The Porsche Director could not take action without the consent of his superior within the Porsche organization by the name of Thiem.

Thiem refused to give his approval to the Porsche Director for two separate proposals for financing through venture capital and private equity sources. As a result of the refusal to give approval for the two financing deals, the company shut down.

The Company claimed that Thiem aided and abetted the Porsche Director’s breaches of fiduciary duty and interfered with the two separate financing deals. The Company invoked the conspiracy theory of jurisdiction.

Key Legal Principles

The court explained that the Delaware Long-Arm Statute authorizes the exercise of personal jurisdiction over a nonresident “who in person or through an agent . . . causes tortious injury in the State by an act or omission in the State,” citing to 10 Del. C. § 3104(c)(3). The Company argued that “but for” the refusal to approve the financing deals, which would have required a filing with the Delaware Secretary of State, such as for a Certificate of Designation for preferred stock, the filing would have constituted a Delaware act sufficient to support personal jurisdiction over someone like Thiem, who aided and abetted a breach of fiduciary duty.

The Company argued that the actions that prevented a filing with the Secretary of State resulted in an omission in Delaware sufficient to subject the person who controlled the blockholder director, Thiem, to jurisdiction in Delaware.

The court found that to support personal jurisdiction, “the omission must either be part of a cause of action or have a sufficiently close nexus to the tortious injury. The omitted filing with the Delaware Secretary of State clears neither hurdle.” Slip op. at 4.

Highlights of Court’s Reasoning

The court reviewed the familiar requirements for the exercise of personal jurisdiction under Delaware law, which is a two-step inquiry. In the first step, the court must determine whether a statute, like the Long-Arm Statute, supplies a valid method for serving and asserting jurisdiction over the non-resident defendant. If so, then the court must insure the assertion of personal jurisdiction comports with the Due Process Clause of the United States Constitution. In order to satisfy the second step, the non-resident defendant must have “sufficient minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Slip op. at 15.

The Company based its argument for jurisdiction over Thiem on the conspiracy theory of jurisdiction. The Company argued that the Long-Arm Statute provides for an “omission” to support jurisdiction if the omitted action would have had an effect in Delaware.

The Company argued that if the omission had not blocked the financing then the filing with the Secretary of State would have occurred, and due to Thiem’s blocking of the deal, the filing did not happen.

The court reviewed the familiar tests for establishing the conspiracy theory of jurisdiction which rests on “the legal principle that one conspirator’s acts are attributable to the other conspirators.” Slip op. at 16.

The Absence of any Delaware-Directed Act

The court explained that even though the acts of the blockholder director can be attributed to Thiem, the ultimate decisionmaker, for jurisdictional purposes—there still must a Delaware-Directed Act.

The court also observed that notwithstanding a choice of law provision applying Delaware law—simply because Thiem signed those agreements was not a jurisdiction-supporting act. Slip op. at 19. Although 6 Del. C. § 2708(a) provides that signing an agreement that selects Delaware law can establish a “significant material and reasonable relationship with the State,” those parties must still be “subject to the jurisdiction of the courts of, or arbitration in, Delaware and subject to the service of the legal process.” Slip op. at 19-20. But in this matter, Thiem did not sign the agreements in Delaware, he did not send them to Delaware, he did not negotiate them in Delaware, and he did not engage in any Delaware-related conduct.

The court reasoned that the act of appointing a director to the board of a Delaware corporation, or appointing a blockholder director, are not sufficient. Id.

The court noted that analogous to Section 18-109(a)(ii) of the Delaware LLC Act, in the corporate context: “the power to elect, otherwise select, or participate in the election or succession of a director of a Delaware corporation would not, by itself, establish personal jurisdiction over the power-holder.” See footnote 47.

The Concept of a Delaware-Directed Omission

The court provided the basis for its analysis to support its conclusion that the omission in this case did not satisfy the Long-Arm Statute, which requires an omission in Delaware that causes tortious injury in Delaware. The court added that: “The statute requires more than simply on omission in Delaware compared to what would have happened along an alternative timeline. The statute requires an omission that causes tortious injury.” Slip op. at 22.

The court referred to cases that require an omission giving rise to jurisdiction in the state generally involving a party present in the state who failed to act when under a duty to act, thereby causing tortious injury. For example, other courts have treated omissions as sufficient when part of a claim for fraud by omission, a tortious failure to warn, or conversion resulting from the failure to determine whether checks were forged. Slip op. at 22-23. Although the Long-Arm Statute does not appear to require that the omission be part of the cause of action, it requires a causal link between the omission and the tortious injury. The statute states that the claim must “arise from” and not merely be “related to” the omission. Slip op. at 23-34.

A sufficient nexus can exist if the Delaware-Directed Act of omission “set in motion a series of events which formed the basis for the cause of action before the court.” But the omission in this case of a filing with the Delaware Secretary of State was a collateral effect of the alleged breach of duty. The omitted filing did not form the basis of the company’s claim nor does it bear any causal connection to the Company’s injury. Slip op. at 24.

The court observed that it is easier to establish personal jurisdiction when a plaintiff bases its claims on a transaction that took place, rather than one that was prevented from taking place. Notwithstanding this asymmetry, based on action versus conscious non-action, that is the current status of the law.

Public Policy Observation

The court noted that with the proliferation of investor-level blocking rights, securing jurisdiction over a party who exercises those rights may become an obstacle but “Delaware lacks a statutory method of serving process and establishing personal jurisdiction that overcome it.” Footnote 59.