The Delaware Supreme Court clarified the types of claims against independent directors that are eligible for a motion to dismiss regardless of the standard of review that applies to those claims. In re Cornerstone Therapeutics Inc. Stockholder Litigation, No. 564, 2014; Leal et al. v. Meeks et al., No. 706, 2014, opinion issued (Del. May 14, 2015). Namely, unless a breach of the duty of loyalty is adequately alleged, and if a company has an exculpation provision in its charter, independent directors can seek to have a suit against them dismissed if only money damages are sought. The context of this decision was a controlling shareholder transaction subject to the entire fairness standard.
In reversing two decisions of the Court of Chancery, combined for appeal, on this crucial topic of corporate litigation, Delaware’s high court provides guidance on an issue that was formerly the subject of disagreement among judges and practitioners alike. The opinion was authored by the Chief Justice, pictured at right.
Frank Reynolds of Thomson Reuters provides a helpful overview of the facts of the case and details about the court’s opinion, notwithstanding quotes in the article from yours truly.