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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

Regular readers know that a recurring topic on this site is the question of the proper scope of the contractual liability exclusion found in many professional liability and management liability insurance policies. In prior posts I have argued that insurers sometimes apply the exclusion overly-broadly so as to exclude matters I believe should otherwise be covered under the policy. A recent Delaware Superior Court decision once again considered these issues in the context of an underlying qui tam action alleging violations of federal law. As discussed below, the court concluded that the applicable policy’s contractual liability did not preclude coverage for the underlying claim. A copy of the Delaware Superior Court’s March 12, 2025, opinion in the case can be found here.Continue Reading Del. Court: Contract Exclusion Does Not Preclude Coverage for Qui Tam Action

The typical D&O insurance policy provides coverage, subject to all of its terms and conditions, for an insured’s payment of “Loss.” The policy typically provides that “Loss” includes settlements. But what happens if in settling a lawsuit a policyholder issues stock rather than paying cash? Does the stock issuance represent “Loss” within the meaning of the policy? In an interesting recent opinion, the Delaware Superior Court held that AMC Entertainment Holding’s issuance of stock in connection with the settlement of a stockholders’ claim did represent “Loss” within the meaning of the applicable policy. As discussed below, the court’s opinion raises some interesting questions. The Delaware court’s February 28, 2025, opinion can be found here.Continue Reading Is Stock Issuance in Connection with a Settlement “Loss”?

The 2019 merger between Viacom and CBS to form ViacomCBS (later renamed Paramount Global) generated extensive litigation that ultimately settled. The Merger — and the Merger-related litigation — followed events involving the two companies going back to 2016, and in fact there had been prior litigation back in 2016 as well. National Amusements, Inc. (NAI), which owned a majority of the voting shares of both CBS and Viacom, sought coverage for the defense and settlement of the 2019 litigation from its D&O insurers. The insurers contended that the 2019 post-Merger litigation and the 2016 lawsuits were interrelated, and therefore that the settlement was covered under policies in force in 2016, rather than under the policies in force in 2019.

In an opinion dated February 17, 2025, but only recently made public, the Delaware Superior Court granted NAI’s motion for summary judgment, holding that the 2019 Suit is not interrelated with the 2016 Suits, and therefore that costs associated with the 2019 Suit were covered under the 2019 Policy and not under the 2016 Policy. The court’s analysis, in which it concluded that the two sets of litigation were not “meaningfully linked,” is detailed and interesting, and helps to explain what factors are relevant in the analysis of the meaningfully linkage issue. A copy of the court’s opinion can be found here.Continue Reading Del. Court Holds Merger Litigation Not “Meaningfully Linked” to Prior Suits

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

As I have frequently noted on this site, Delaware’s courts have a well-earned reputation for being policyholder friendly. Accordingly, policyholders aiming to sue their insurers frequently seek to file their coverage lawsuits in Delaware. However, a recent ruling in a coverage dispute, in which the Delaware Superior Court concluded it lacked personal jurisdiction over two of the defendant insurers, underscores the fact that there are limits on the circumstances on which insurers can hauled into Delaware’s courts. The Delaware Superior Court’s February 19, 2025, opinion in the case can be found here. A February 27, 2025 LinkedIn post by Paul Curley of the Kaufman, Borgheest & Ryan law firm about the court’s ruling can be found here.Continue Reading Limits of Delaware Courts’ Personal Jurisdiction Over Non-Resident Insurers

As readers of this blog well know, a recent debate has been brewing over whether Delaware corporations should de-camp and reincorporate in another state, with Nevada and Texas often the preferred candidates. This debate gained momentum when Elon Musk called for states to redomesticate outside Delaware after the state’s courts struck down his ginormous Tesla pay package. As discussed here, in response to the DExit debate, Delaware legislators have now proposed a massive revision to Delaware’s corporate laws, among other things as a way to try to stop the perceived retreat of companies from Delaware. It now appears that opponents of the legislation are mounting an organized campaign to oppose the proposed revisions. It looks like the game is on for the proposed changes, as the bill sponsors prepare to try to move the legislation forward.Continue Reading Critics Launch Campaign Opposing Delaware SB 21

As readers of this blog undoubtedly are aware, one of the provocative topics that has emerged in recent months is whether companies incorporated under the laws of Delaware should redomesticate under another state’s law, with Texas and Nevada as the alternative states typically under discussion. This ongoing debate has gained momentum in recent days, as additional firms have signaled an intent to move on from Delaware. There have also been a number of other key developments, including the introduction of legislative initiatives and an important court decision, providing further context for the ongoing discussion. Because the discussion of this topic is unlikely to end any time soon, it is important to recognize and understand the recent developments.Continue Reading The Delaware Redomestication Debate Heats Up

In a closely watched case, the Delaware Supreme Court has reversed a lower court holding that a prior SEC subpoena and a later securities class action lawsuit were not interrelated. The Supreme Court held, contrary to the lower court, that the allegations in the subsequent securities suit were “meaningfully linked” to the alleged wrongful acts referenced in the insured’s prior notice of the subpoena. While the Supreme Court’s opinion provides clarification on important recurring “interrelatedness” issues, its ultimate holding may in the end provide relatively little guidance for other future wrestling with “interrelatedness” disputes. A copy of the Delaware Supreme Court’s February 4, 2025, opinion can be found here.Continue Reading In Reversal, Del. Sup. Ct. Holds Subpoena and Securities Suit Interrelated

Whether or not two or more claims are interrelated within the meaning of a D&O insurance policy is a recurring issue. The outcome of interrelatedness disputes often reflects the specific facts involved and the relevant policy language. In addition, the applicable law can also be a factor. A recent decision of the Delaware Superior Court reflects all these factors, and the case outcome at least raises the question whether the applicability of New York law to the dispute was determinative. The Court’s opinion, as updated and reissued on January 6, 2025, can be found here.Continue Reading Delaware Court, Applying NY Law, Addresses Related Claims Dispute