In re Allergan Inc. Stockholder Litigation, No. 9609, 2014 WL 5791350 (Del. Ch. Nov. 7, 2014). This opinion of the Delaware Court of Chancery addresses issues related to director’s duties of disclosure as well as ripeness in the context of corporate litigation. But as Frank Reynolds of Thomson Reuters writes, in an article that he has graciously shared with us, this decision is also the latest iteration of a long-running dispute for control of Allergan, the maker of Botox, that has generated several lawsuits in at least two states.
The court’s opinion quoted from the complaint which referred to a duty of candor, which the court referred to as the duty of disclosure, without criticizing the synonymous reference. Specifically, the court explained:
Although Count II is captioned in the consolidated complaint as a claim for breach of the “fiduciary duty of candor,” there is no independent duty of disclosure under Delaware law. Instead, the duty of disclosure derives from the duty of care and the duty of loyalty.
The court further added that:
As Vice Chancellor Laster recently explained:
Directors of a Delaware corporation owe two fiduciary duties: care and loyalty. The “duty of disclosure is not an independent duty, but derives from the duties of care and loyalty.” The duty of disclosure arises because of “the application in a specific context of the board’s fiduciary duties . . . .” Its scope and requirements depend on context; the duty “does not exist in a vacuum.” When confronting a disclosure claim, a court therefore must engage in a contextual specific analysis to determine the source of the duty, its requirements, and any remedies for breach. (citations omitted).
The court raised the issue of ripeness sua sponte, in the context of a claim for a declaratory judgment regarding written consents of shareholders, and concluded that it would not give an advisory opinion.