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Chancery Court Dismisses Breach of Fiduciary Duty Claims Against Target Company Directors Despite Unavailability of Corwin Defense

Posted by on Monday, May 4, 2020 in Delaware Corporate Law Bulletins, En Banc.

Robert S. Reder & Lorin Hom | 73 Vand. L. Rev. En Banc 111 (2020) |

“In Morrison III, Vice Chancellor Glasscock again dismissed the claims of fiduciary breach brought against all but one of the named target company directors, citing failure by plaintiff to adequately plead facts satisfying the high bar imposed by an exculpatory provision contained in the target company’s certificate of incorporation by virtue of § 102(b)(7) of the Delaware General Corporation Law (“Exculpatory Provision”). The one exception was the chairman of the board—who also was the company’s founder and a major stockholder—who was found to have acted in bad faith in connection with receipt of personal benefits from the transaction not available to other stockholders. Further, because the named target company officers did not benefit from the protections of the Exculpatory Provision, the Vice Chancellor was satisfied that plaintiff’s allegations of grossly negligent behavior were adequate to withstand dismissal of the fiduciary breach claims brought against these officers.”

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