When a company takes action through its board in violation of its certificate of incorporation, may a plaintiff stockholder bring suit against the company directly for breach of its certificate—the most important of corporate contracts between the company and its stockholders—or is a direct claim for breach of fiduciary duties against the board for causing the company to violate its certificate proper?

The Delaware Supreme Court has ruled that “where a dispute arises from obligations that are expressly addressed by contract, that dispute will be treated as a breach of contract claim … [and] any fiduciary claims arising out of the same facts that underlie the contract obligations [are] foreclosed as superfluous,” in Nemec v. Shrader, 991 A.2d 1120, 1129 (Del. 2010). In short, when the right at issue is not one “attached to or devolved upon all the company’s common shares generally, irrespective of a contract … the nature and scope of the directors’ duties when causing the company to exercise its [contract] right [are] intended to be defined solely by reference to that contract.”