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In the immediate aftermath of the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, which revitalized so-called Caremark claims for breach of the duty of oversight, one question I was asked was whether claimants might seek to assert breach of the duty of oversight claims in the context of cybersecurity and data privacy issues. Claimants did, in fact, subsequently raise Caremark claims in connection with the high-profile date breaches at Marriott and SolarWinds, but in each case, the Delaware Chancery Court granted the defendants’ motions to dismiss (as discussed here and here, respectively), raising questions about the viability of duty of oversight claims in the cybersecurity context.

Notwithstanding the less than promising track record for these kinds of claims, in a recent article, NYU Law Professor Jennifer Arlen argues that cybersecurity-related claims for breach of the duty of oversight should support Caremark liability in at least one class of cases – that is, cases relating to companies for whom cybersecurity is a “mission critical legal risk” and in which it is alleged that the company had inadequate cybersecurity that risked (and later caused) substantial harm to businesses and government agency customers, and that the company had misled the customers through statements that were designed to defraud the customers into believing that the company’s cybersecurity systems were materially better than they were. Professor Arlen’s March 18, 2025, post on the Harvard Law School Forum on Corporate Governance about Caremark claims in the cybersecurity context can be found here.Continue Reading Cybersecurity and the Duty of Oversight

John McCarrick

Readers of this blog have no doubt followed both the recent ongoing controversy over whether companies should leave Delaware for supposedly friendlier jurisdictions as well as the legislation recently introduced in the state’s General Assembly to try to address some of the legal concerns behind the leaving Delaware initiative. In the following guest post, and in the context of these issues, John McCarrick, a partner at the Robinson & Cole law firm in New York, takes a look at recurring Delaware issues that in his view are of significant concern to D&O insurers. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.Continue Reading Guest Post: DExit Drama and D&O Insurance Issues

The directors’ and officers’ liability environment is always changing, but 2024 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2025 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2024, with a focus on future implications. Please note that on Wednesday, January 15, 2025 at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2024. Registration for the webinar can be found here. I hope you can join us for the webinar.Continue Reading The Top Ten D&O Stories of 2024

Tim J. Leech

Recent case law developments in Delaware’s courts underscore the importance for corporate boards to monitor “mission critical” operations at their companies. These developments have important corporate governance implications, as I detailed in a September blog post (here). In the following guest post, Tim J. Leach, FCPA FCA Managing Director Risk Oversight Solutions Inc. takes a deeper look at the corporate governance implications from the recent duty of oversight/duty to monitor case law. I would like to thank Tim for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Tim’s article.Continue Reading Guest Post: “Mission Critical”: Director Liability Ticking Time Bomb

Michael W. Peregrine
Ashley Hoff

There is no doubt that the upcoming change in Presidential administration will have important implications across a wide range of issue. In some cases, the change will present unique challenges for corporate boards. As boards work their way through these changes and challenges, they will also face an altered corporate compliance oversight environment. In the following guest post, Michael W. Peregrine and Ashley Hoff of the McDermott Will & Emery LLP law firm consider the implications of this changed environment for corporate boards. I would like to thank Michael and Ashley for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the author’s article.Continue Reading Guest Post: The Board’s Post-Election Oversight of Corporate Compliance

In what is one of the largest settlements in a breach of the duty of oversight lawsuit, the parties to the Walmart Opioid-Related Shareholder Derivative lawsuit have agreed to settle the case for $123 million. The settlement is also one of the largest-ever derivative lawsuit settlements. As discussed below, the Walmart settlement is the latest in a series of jumbo settlements in opioid-related breach of the duty of oversight claims. The settlement is subject to court approval. A copy of the parties’ October 13, 2024, Stipulation of Settlement can be found here.Continue Reading Walmart Opioid-Related Duty of Oversight Derivative Suit Settled for $123 Million

In last Thursday’s post, I noted recent case law developments in which federal court breach of the duty of oversight claims against the boards of Wells Fargo and Abbott Laboratories had survived motions to dismiss, at least in part. I also noted that these decisions have important implications for board governance processes and documentation. As I have continued to consider the implications of these recent decisions and other developments concerning the so-called Caremark duties relating to board members’ fiduciary duties of oversight, I developed further thoughts on the steps well-advised boards will want to take to put themselves in a better position to defend themselves against these kinds of claims. I have set out my thought below.Continue Reading Corporate Governance, Board Risk Management, and Duty to Monitor Case Law Developments

As I have noted in several recent posts (most recently here), over the last several months Delaware’s Chancery Court has appeared increasingly skeptical of breach of the duty over oversight claims, seemingly underscoring the oft-stated proposition that so-called Caremark claims are among the most difficult to sustain. However, a recent decision out of the Northern District of California, applying Delaware law but arguably ruling contrary to the recent Delaware Chancery Court trends, sustained at least some of the breach of the duty of oversight claims alleged against Wells Fargo board of director in connection with discriminatory lending allegations against the company. As discussed in detail below, the Wells Fargo decision could have interesting implications for the evolving body of duty of oversight case law.Continue Reading Breach of the Duty of Oversight Claims Against Wells Fargo’s Board Sustained in Part

For many years, Delaware’s courts emphasized that duty of oversight claims (often known as Caremark claims) are “possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.” However, in a line of cases beginning with the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, Delaware courts have sustained various plaintiffs’ assertion of breaches of the duty of oversight. This in turn encouraged more claimants to file duty of oversight claims, a development that clearly has alarmed the Delaware courts. The more recent result has been a series of cases in which the Delaware Chancery Court has emphatically shot down would-be duty of oversight claims.

The latest of these decisions is a ruling in a case involving the directors of Centene Corporation, in which Vice Chancellor Morgan Zurn granted the defendants’ motion to dismiss the plaintiff’s breach of the duty of oversight claims against the Centene board, in an opinion that emphasizes the high bar for Caremark liability. A copy of the July 12, 2024, opinion in Bricklayers Pension Fund of Western Pennsylvania v. Brinkley can be found here. A July 15, 2024, Memo from the Fried Frank law firm about the court’s ruling can be found here.  Continue Reading Del. Chancery Court Rejects Oversight Breach Claims Against Centene’s Board

From time to time, I am asked to speak directly to corporate boards of directors. I find these opportunities endlessly fascinating. Among other things, I learn so much from the directors’ questions. One frequently recurring question I get is:  what can directors do to avoid litigation or to be in a position better defend themselves if they are sued. The first thing I always talk about when asked these kinds of question is the importance of board minutes. Because this is one of my go-to talking points when I meet with boards, I was particularly pleased to see the recent post on the Harvard Law School Forum on Corporate Governance blog written by Leo E. Strine, Jr., the former Delaware Supreme Court Chief Justice and Chancellor, in which Strine highlights the importance of board minutes in corporate litigation. Strine’s comments are essential reading for anyone concerned with the liabilities of corporate directors. Strine’s April 4, 2024 article can be found here.Continue Reading The Importance of Board Minutes