It is an all-too familiar accusation to many directors: If only you had done something more, the corporation could have avoided an injury or loss. Since the mid-1990s, Delaware courts have repeatedly recognized that attempting to pin personal liability on directors for their alleged inaction is “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment,” as in In re Caremark International Derivative Litigation, 698 A.2d 959, 967 (Del. Ch. 1996). Yet the playbook of many plaintiffs has not changed; when corporations experience trauma, plaintiffs take aim at their directors and officers, reflexively claiming that they are liable for failing to predict and prevent corporate losses. These claims are variously referred to as “failure-to-monitor,” “oversight liability,” or “Caremark” claims, and Delaware courts have looked on them with healthy skepticism. In 2017, two cases illustrated that Delaware courts continue to impose exacting pleading burdens on Caremark claims, especially when plaintiffs claim that they are excused from making a demand on the board before suing derivatively.
*May exclude premium content
Already have an account? Sign In Now
Interested in customizing your subscription with Law.com All Access?
Contact our Sales Professionals at 1-855-808-4530 or send an email to email@example.com to learn more.