Sullivan & Cromwell Discusses Delaware Decision on Caremark Liability for Cybersecurity Failure

On September 6, 2022, in Construction Industry Laborers Pension Fund on behalf of SolarWinds Corporation, et al. v. Mike Bingle, et al. (“SolarWinds”),[1] the Delaware Chancery Court granted a motion to dismiss a derivative suit against directors of SolarWinds Corporation, a provider of information technology infrastructure management software, for allegedly breaching their fiduciary duty of loyalty by failing to oversee the company’s cybersecurity risk, which, plaintiffs claimed, resulted in a major cyber breach in 2020.

Vice Chancellor Sam Glasscock III held that plaintiffs failed to allege demand futility with sufficient particularity, as required to pursue litigation derivatively … Read more