Delaware corporate law demands neither omniscience nor infallibility from directors, but rather a good-faith effort.  The Delaware Court of Chancery reaffirmed that principle yesterday in a decision dismissing claims that current and former directors of Boeing breached their oversight duty in connection with the January 2024 midair blowout of a Boeing jet’s door plug.  In re The Boeing Co. Derivative Litig., C.A. No. 2024-1210-MTZ (Del. Ch. Aug. 13, 2026). 

Following the 2018 and 2019 Boeing 737 MAX crashes that tragically claimed the lives of hundreds on board, Boeing overhauled its oversight of aircraft safety.  Among other reforms, the board created an aerospace safety committee composed of independent directors with relevant expertise; the company formed a new safety organization that reported to the safety committee and Boeing’s chief engineer; and management presented on safety risks at each board meeting.  Despite those efforts, in January 2024, a Boeing 737-9 MAX lost a cabin door plug in midair, leaving a hole in the aircraft and causing minor passenger injuries before landing safely.  A group of Boeing stockholders brought a derivative lawsuit.  Their Caremark claims—named for the 1996 Court of Chancery decision requiring directors to make a good-faith effort to implement and monitor a system for overseeing significant legal and compliance risks—alleged that the board ignored red flags of systemic manufacturing problems and set unsafe production targets.

The Court dismissed the claims.  Caremark liability, it explained, cannot rest on mere negligence or even gross negligence.  Rather, it requires disloyal bad faith—a conscious disregard of duty such that “directors must know that they were not discharging their fiduciary obligations.”  Plaintiffs’ allegations fell short on every front, failing to support a rational inference that the directors acted in bad faith.  Rejecting plaintiffs’ theory that nearly every update the board received about Boeing’s manufacturing risks amounted to an ignored red flag, the Court observed that they sought to “recast[] the volume and depth of Boeing’s reporting from a best practice into evidence of disloyalty.”  The Court also found many of the purported red flags too disconnected from the January 2024 incident, explaining that a red flag must be “sufficiently similar” to the corporate trauma it precedes, not a general risk.  And the Court rejected plaintiffs’ contention that Boeing consciously shirked regulatory compliance for profit, noting that the pleading-stage record showed the company’s production plans were based on informed management assessments of risk and feasibility.

The decision is a welcome reminder that a good-faith effort to implement and monitor an oversight system, appropriately documented, remains a bulwark against Caremark liability.  Although recent years have seen a rise in Caremark claims—and the doctrine’s extension to corporate officers—liability exposure is rare where a company maintains a monitoring system tailored to its key legal obligations, operations, and risks, with board-level committees receiving reports on mission-critical risks, responding appropriately, and documenting those efforts.

This post is based on a Wachtell, Lipton, Rosen & Katz memorandum, “Delaware Chancery Reaffirms: Caremark Liability Turns on Bad Faith, Not Bad Outcome,” dated August 14, 2026, and available here.