Columbia Law School
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The universe regularly provides reminders to remain humble, including reminders that having expertise in one area does not make you an expert in adjacent areas. Former Attorney General Bill Barr recently provided one of those reminders with his opinion column
Caremark
To Whom Are Caremark Duties Owed?
A while ago, the National Center for Public Policy Research – a conservative organization that focuses its advocacy in the corporate and securities space – filed a lawsuit against Starbucks, arguing that its diversity equity and inclusion program ran
Substance and Process in Corporate Law
Corporate law – and judicial application of that law – considers two facets of a transaction: (1) whether a corporation’s management used processes that are fair to stockholders to reach its decision (“process”), and (2) whether the economic results of …
Compliance’s Next Challenge: Polarization
Last year marked the 20th anniversary of Congress’ enactment of the Sarbanes-Oxley Act, legislation that arose in response to Enron’s demise and the accounting scandals that followed, and which coincided with the successful and much-heralded prosecution of a …
The New Corporate Law of Corporate Groups
Large firms today are rarely organized as a single legal entity, but rather as corporate groups with numerous subsidiaries that have separate legal personalities. A debate has long raged over how to treat the legal boundaries between companies belonging to …
Operational Risk and the New Caremark Liability for Boards of Directors
In a new article, we identify a subtle and unrecognized shift in Caremark[1] cases that changes how the Caremark doctrine actually works. Caremark claims, which accuse corporate directors of breaching the fiduciary duty of loyalty by not making a …
Mayer Brown Discusses Five Steps for Directors to Consider About Risk Governance
Historically, directors have been protected from personal liability in connection with risk management by the high standard set in the seminal 1996 Caremark[1]case. In recent years, however, courts have held that certain plaintiffs have pled facts sufficient to …
Debevoise & Plimpton Discusses Delaware Chancery Decision Allowing Caremark Claim Against an Officer
In a January 25, 2023 decision (In Re McDonald’s Corp. S’Holder Litig., C.A. No. 2021-0324-JTL (Del. Ch. Jan. 25, 2023)), the Delaware Court of Chancery declined to dismiss claims that a corporate officer, who led the company’s human …
How Directors’ Oversight Duties and Liability under Caremark Are Evolving
Corporate law prohibits companies from pursuing profits through criminal misconduct. It uses the fiduciary duties imposed on boards under the Caremark doctrine,[1] and the threat of personal liability of directors for deliberate breach, to help motivate directors to make …
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 …
Mission Critical ESG and the Scope of Director Oversight Duties
How can shareholders hold directors accountable for paying insufficient attention to the broader interests of society? In the past few years, several ESG issues have become a source of major risk for companies and their shareholders. Even if the behavior …
Max Oversight Duties: How Boeing Signifies a Shift in Corporate Law
In September 2021, the Boeing 737 Max debacle turned into an important moment in corporate law. A Delaware court allowed a derivative lawsuit brought by Boeing shareholders to proceed, based on the theory that Boeing’s directors breached their oversight duties …
Skadden Discusses Recent Delaware Chancery “Caremark” Decisions
In 1996, the Delaware Court of Chancery issued its seminal decision in In re Caremark International Inc. Derivative Litigation,1 establishing the conditions for director oversight liability under Delaware law. Adopted a decade later by the Delaware Supreme Court in Stone …
The Board of Directors’ Duty of Oversight and Cybersecurity
Over the last several years, cyberattacks, including from foreign state actors, have affected thousands of companies and government agencies. Past corporate victims include Yahoo!, Home Depot, and LinkedIn. And the real world consequences of a cyberattack became vivid to the …
Weil Gotshal Discusses Boeing Decision and Board Oversight of Product Safety Risks
The Delaware Court of Chancery’s recent decision denying a motion to dismiss in In re The Boeing Company Derivative Litigation, 2021 WL 4059934 (Del. Ch. Sept. 7, 2021), reminds directors and their counsellors of the importance of board and …
Wachtell Lipton Discusses Boeing’s MAX Woes in the Boardroom
In an important decision this week, the Delaware Court of Chancery permitted a Caremark duty-of-oversight claim to proceed against the directors of the Boeing Company. Stockholder plaintiffs sued Boeing’s board, seeking to recover costs and economic losses associated with the …
Don’t Compound the Caremark Mistake by Extending It to ESG Oversight
Since the foundational decision in In re Caremark Intern. Inc. Derivative Litig.,[1] Delaware corporate law has required boards of directors to establish reasonable legal compliance programs. Although Caremark has been applied almost exclusively with respect to law and …
Sidley Austin Discusses Delaware Chancery’s Latest Guidance on Caremark Claims
The Delaware Court of Chancery provided its latest guidance on so-called Caremark claims in a New Year’s Eve opinion issued by Vice Chancellor Glasscock in Richardson v. Clark, an action brought derivatively by a stockholder of Moneygram International, Inc. …
What to Do About Poor Corporate Governance at Unicorns
Why are large private companies often characterized by poor corporate governance? WeWork provides a recent high-profile example. For reasons that now seem implausible, WeWork attracted billions of investment dollars. Perhaps it was the company’s “vision” or the sheer personality of …
Caremark and ESG
Climate change, economic insecurity and inequality, and worries that some companies and industries have grown too large, concentrated, and powerful have heightened concern about whether business entities conduct themselves in society’s best interests. The profound human and economic harm of …