This article was prepared by Frank Reynolds, who has been following Delaware corporate law and writing about it in various publications for more than 35 years.

The Delaware Chancery Court has ruled that Walmart Corp. shareholders did not wait too long to charge that their officers and directors violated their fiduciary duties and a settlement with federal drug regulators by letting Walmart misuse its opioid distributor role for 5,000 company pharmacies in Ontario Provincial Council of Carpenters’ Pension Trust Fund,et al. v Walton No. 2021-0827-JTL opinion issued (Del. Ch. April 12, 2023).

In his April 14 opinion, Vice Chancellor Travis Laster denied the defendant directors’ bid to dismiss based on laches, finding that plaintiffs were not on notice of the alleged wrongdoing until March 2020 because the Walmart board had hid its failure to reign in its alleged diversion and over-prescription of opioids that cost the company $3.1 billion in customer lawsuit liability. 

The vice chancellor’s April 14 ruling was similar to his recent decision in a related shareholder suit over the opioid liability of pharmaceutical giant AmerisourceBergen. Lebanon County Employees’ Retirement Fund, et al. v Collis, et al., C.A. No. 2021-1118-JTL (Del. Ch. Dec. 15, 2022).   In that case, as in this Walmart suit, Vice Chancellor Laster employed the separate accrual method to determine when each claim should have appeared on the derivative plaintiffs’ radar screens— and found in both cases that the claims were timely filed.

Update:  Passed timeliness test, failed pre-suit demand

However, as in the Amerisource suit, the Walmart timeliness ruling was a very short-lived victory for plaintiffs. In both cases, the plaintiff investors failed to show that the defendant directors were so conflicted by the threat of liability for causing opioid-related damage to the value of their companies that they could not objectively assess the merits of the shareholder charges.

All the AmerisourceBergen charges were dismissed one week after the timeliness ruling. Lebanon County Employees’ Retirement Fund, et al. v. Collis, et al., C.A. No. 2021-1118-JTL (Del. Ch. Dec. 22, 2022).  And the vice chancellor, in an April 26 decision, found that the Walmart shareholders’ claims failed the pre-suit demand test and must be dismissed — with the exception of charges that the officers and directors caused the company to repeatedly violate the federal Controlled Substances Act.  Ontario Provincial Council of Carpenters’ Pension Trust Fund, et al. v Walton No. 2021-0827-JTL opinion issued (Del. Ch. April 26, 2023). Those underlying charges by the U.S. Drug Enforcement Agency, are ongoing and could involve criminal penalties, he said.


Walmart, as the distributor for a national network of more than 5,000 company pharmacies, was accused in myriad later-consolidated lawsuits of over-prescribing and diverting massive amounts of drugs in a major contribution to a plague of opioid dependence.  After a bellwether suit in a multi-district litigation determined that Walmart caused $3.1 billion of a massive total national opioid damages judgment, three pension fund shareholders filed a derivative suit that charged Walmart fiduciaries brought about that liability by knowingly causing Walmart to fail to comply:

(i) with its obligations under the federal Controlled Substances Act and its implementing regulations,

(ii) with its obligations under the Controlled Substances Act when acting as a distributor of opioids, and

(iii) with its obligations under a settlement with the U.S. Drug Enforcement Agency.

The plaintiffs filed their initial complaint on September 27, 2021. On June 24, 2022, the defendants moved to dismiss the amended complaint in its entirety. The defendants argued that the claims were time-barred, that the plaintiffs had not established demand futility under Rule 23.1.

The vice chancellor ruled in the Walmart  April 12 timeliness opinion that at the pleading stage, the plaintiffs are entitled to inferences that 

(i) Walmart did not achieve compliance with its legal obligations under the DEA Settlement, 

(ii) Walmart’s directors and officers knew that Walmart was not complying) with its legal obligations, and 

(iii) Walmart’s directors and officers did not take action to cause Walmart to achieve compliance. 

The April 12 ruling

Vice Chancellor Laster concluded that, ‘The court can only apply the defense of laches at the pleading stage if it is clear from the face of the complaint that the claims are time-barred. Because of the uncertainties surrounding inquiry notice about the DEA Settlement Issues, the court cannot determine at the pleading stage those claims are time-barred. “

The April 26 ruling

However, in the demand ruling two weeks later, he found insufficient proof that a majority of the directors could not objectively consider the merits of the charges—other than the DEA controlled substances investigation.

The vice chancellor’s April 26 ruling on the Walmart demand issue cited both the approach and reasoning of his demand decision in the AmerisourceBergen case and the findings and conclusions of the MDL’s bellwether trial regarding individual liability for the harm to opioid users.  It will be summarized in detail in a future article.