In Gentile v. Rossette, read opinion here, the Delaware Supreme Court, in a rare reversal, disagreed with the Chancery Court’s view of a claim as derivative only. The Court summarized it this way:
The issue presented on this appeal is one purely of law: can SinglePoint’s former minority stockholders bring a direct claim against the fiduciaries responsible for the debt conversion transaction complained of, or is such a claim exclusively derivative? We hold, for the reasons discussed herein, that the claim is not exclusively derivative and can be brought by the (former) minority shareholders directly.
The complaint included dilution claims, but a subsequent merger eliminated the standing needed for a derivative suit. The Court explains in great detail the factual background as well as the applicable legal analysis involved and concluded that some claims, such as the one in this case, can be both derivative and direct claims. The categorization of such claims can often mean the difference between being barred from pursuing the claims, as a practical matter due to the requirement of pre-suit demand, or having standing to bring such claims. For anyone who admits to some lack of ease (at least until this case) in determining the distinction between the 2 categories of claims, there is some intellectual comfort in knowing that the smartest people entrusted with making these determinations can have honest disagreements about them.
My summaries of the trial court decision and the interlocutory appeal decision can be found here.