On August 25, 2025, the Delaware Court of Chancery in Carroll v. Burstein dismissed a stockholder’s facial challenge to the advance notice bylaw of Stoke Therapeutics, Inc. (Stoke). An advance notice bylaw requires a stockholder to provide a company advance notice of its intention to nominate a director candidate or submit a proposal for approval by stockholders. The decision adds to the growing body of caselaw governing advance notice bylaws in the wake of Kellner v. AIM ImmunoTech Inc., 320 A.3d 239 (Del. 2024) (Kellner II), which held that a bylaw is facially invalid only if it cannot operate lawfully under any circumstance. In addition, Carroll offers an important reminder to companies of the need for careful bylaw drafting to promote clarity and foster sound corporate governance.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jodi E. Lopezhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJodi E. Lopez2025-12-10 09:04:172025-12-08 17:22:59Court of Chancery Reaffirms High Bar for Challenging Advance Notice Bylaws, but Emphasizes the Importance of Clear Drafting
In a recent Caremark decision, the Delaware Court of Chancery largely denied a motion to dismiss, holding that most of Regions Bank’s board purportedly ignored red flags raised in a whistleblower report concerning the bank’s unlawful overdraft practices — practices that later led to the company paying $191 million in penalties and remediation to the Consumer Financial Protection Bureau (CFPB). The court found a former in‑house lawyer’s draft complaint sent to the board was a true red flag, and it held that merely engaging outside counsel to investigate, without timely corrective action, does not automatically defeat an inference of bad faith at the pleadings stage. The opinion underscores that both documented, prompt board‑level escalation and timely corrective action are critical as to compliance risks that are central to the business.
Can a person steal property located in Delaware, and yet a Delaware court lack personal jurisdiction over the thief? For tangible assets like real property or money held in a Delaware bank, the answer would plainly be “no.” But, as the Court of Chancery recently held in a matter of first impression, the analysis changes when the property is cryptocurrency. In Timoria LLC v. Chaib Anis, et al., C.A. No. 2025-0883-JTL (Del. Ch. Oct. 6, 2025), Vice Chancellor Laster considered whether the Court could exercise in rem or quasi in rem jurisdiction over a cryptocurrency (Ether) held by foreign defendants — and concluded that although the digital assets were technically “located” in Delaware, that fact alone was not enough to satisfy due process.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Robert S. Velevishttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngRobert S. Velevis2025-11-17 09:02:102025-11-14 16:13:02Delaware Can’t Hold the Keys: Court of Chancery Limits Back-Door Personal Jurisdiction in Crypto Theft Case
In September, the Delaware Court of Chancery dismissed a lawsuit by minority shareholder United Atlantic Ventures, LLC (“UAV”) against Trump Media and Technology Group Corp. (“TMTG”), the operator of social media platform Truth Social, and several other individual Defendants, including President Donald Trump, Devin Nunes, Donald Trump Jr., and Kash Patel. In the 55-page opinion, Vice Chancellor Will found that the Court of Chancery need not decide whether the case should be stayed based on presidential immunity, because all of the claims were incompatible with Delaware law, insufficiently pled “conspiracy theories,” or better suited for Florida state court.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2024/10/MN-24015-Enhanced-Scrutiny-Blog-Imagery-Refresh_11.jpg606833James Heyworthhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJames Heyworth2025-11-13 10:55:412025-11-13 10:56:00Delaware Court of Chancery Finds No “Truth” to Minority Shareholder’s Allegations of a Lock-Up Conspiracy by Truth Social Operator, But Does Not Reach Presidential Immunity
This past summer, in a decision that attracted little attention, Vice Chancellor David in the Delaware Court of Chancery tossed Joel B. Ritchie v. G. Leonard Baker et al., a shareholder derivative suit filed on behalf of Corcept Therapeutics, Inc. against certain directors for alleged breaches of fiduciary duty related to off-label marketing practices. The Court dismissed the complaint under Court of Chancery Rule 23.1 because Plaintiff, who had not made a pre-litigation demand, failed to plead that the Board was unable to bring its business judgment to bear on assessing such a demand and, as such, the demand was not futile.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Andrew W. Sternhttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngAndrew W. Stern2025-11-10 09:04:072025-11-07 12:51:34Get Your Story Straight: Inconsistency in Plaintiff’s Allegations & Theories Dooms Complaint
Recently, in Witmer v. Armistice Capital, LLC, Delaware’s Court of Chancery dismissed a stockholder plaintiff’s derivative suit against Armistice Capital, LLC, a large investor in Aytu Biopharma, Inc., for, among other things, purported breaches of fiduciary duty and aiding and abetting fiduciary breaches, in connection with two transactions for which the plaintiff alleged Aytu overpaid, the investor improperly benefited, and the investor exercised control.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2025/02/MN-18360_Updated-Enhanced-Scrutiny-Blog-imagery_833x606_26.jpg606833Yolanda C. Garciahttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngYolanda C. Garcia2025-11-04 09:03:422025-11-04 09:59:08Potential Control Won’t Do: Court of Chancery Confirms Common Law Standards for Actual Control Regarding Challenged Transactions
In re The Trade Desk, Inc. Derivative Litigationdemonstrates the careful analysis the courts will engage in when conducting a Rule 23.1 demand futility challenge to assess both director independence and the likelihood of liability for the claims against the directors. This litigation was filed in 2022, and therefore was not impacted by the amendment of DGCL Section 144 earlier this year, which provided new procedural safe harbors for acts or transactions involving corporations and their directors, officers, controlling stockholders, and control groups. As a result, the court’s ruling and this post do not engage with the amended statute. Nevertheless, the court’s methodical analysis of director independence is informative of the factors that the Court of Chancery has found, and may continue to find, relevant to independence analyses. This ruling was affirmed on November 6, 2025 by the Supreme Court of Delaware on the basis of and for the reasons stated in the Memorandum of Opinion.
https://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.png00Jaime A. Bartletthttps://ma-litigation.sidley.com/wp-content/uploads/sites/3/2022/08/sidleyLogo-e1643922598198.pngJaime A. Bartlett2025-10-20 09:59:472025-11-17 12:26:17Delaware Court of Chancery Dismisses Derivative Challenge to The Trade Desk CEO’s Compensation Award Valued at $819 Million for Lack of Demand Futility
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.
Court of Chancery Reaffirms High Bar for Challenging Advance Notice Bylaws, but Emphasizes the Importance of Clear Drafting
On August 25, 2025, the Delaware Court of Chancery in Carroll v. Burstein dismissed a stockholder’s facial challenge to the advance notice bylaw of Stoke Therapeutics, Inc. (Stoke). An advance notice bylaw requires a stockholder to provide a company advance notice of its intention to nominate a director candidate or submit a proposal for approval by stockholders. The decision adds to the growing body of caselaw governing advance notice bylaws in the wake of Kellner v. AIM ImmunoTech Inc., 320 A.3d 239 (Del. 2024) (Kellner II), which held that a bylaw is facially invalid only if it cannot operate lawfully under any circumstance. In addition, Carroll offers an important reminder to companies of the need for careful bylaw drafting to promote clarity and foster sound corporate governance.
(more…)
Jodi E. Lopez
Los Angeles
jlopez@sidley.com
Deborah Sands
New York
dsands@sidley.com
When a Whistleblower Complaint Becomes a Board-Level “Red Flag”
In a recent Caremark decision, the Delaware Court of Chancery largely denied a motion to dismiss, holding that most of Regions Bank’s board purportedly ignored red flags raised in a whistleblower report concerning the bank’s unlawful overdraft practices — practices that later led to the company paying $191 million in penalties and remediation to the Consumer Financial Protection Bureau (CFPB). The court found a former in‑house lawyer’s draft complaint sent to the board was a true red flag, and it held that merely engaging outside counsel to investigate, without timely corrective action, does not automatically defeat an inference of bad faith at the pleadings stage. The opinion underscores that both documented, prompt board‑level escalation and timely corrective action are critical as to compliance risks that are central to the business.
(more…)
Jim Ducayet
Chicago
jducayet@sidley.com
Barret V. Armbruster
Dallas
barmbruster@sidley.com
Delaware Can’t Hold the Keys: Court of Chancery Limits Back-Door Personal Jurisdiction in Crypto Theft Case
Can a person steal property located in Delaware, and yet a Delaware court lack personal jurisdiction over the thief? For tangible assets like real property or money held in a Delaware bank, the answer would plainly be “no.” But, as the Court of Chancery recently held in a matter of first impression, the analysis changes when the property is cryptocurrency. In Timoria LLC v. Chaib Anis, et al., C.A. No. 2025-0883-JTL (Del. Ch. Oct. 6, 2025), Vice Chancellor Laster considered whether the Court could exercise in rem or quasi in rem jurisdiction over a cryptocurrency (Ether) held by foreign defendants — and concluded that although the digital assets were technically “located” in Delaware, that fact alone was not enough to satisfy due process.
(more…)
Robert S. Velevis
Dallas
rvelevis@sidley.com
Delaware Court of Chancery Finds No “Truth” to Minority Shareholder’s Allegations of a Lock-Up Conspiracy by Truth Social Operator, But Does Not Reach Presidential Immunity
In September, the Delaware Court of Chancery dismissed a lawsuit by minority shareholder United Atlantic Ventures, LLC (“UAV”) against Trump Media and Technology Group Corp. (“TMTG”), the operator of social media platform Truth Social, and several other individual Defendants, including President Donald Trump, Devin Nunes, Donald Trump Jr., and Kash Patel. In the 55-page opinion, Vice Chancellor Will found that the Court of Chancery need not decide whether the case should be stayed based on presidential immunity, because all of the claims were incompatible with Delaware law, insufficiently pled “conspiracy theories,” or better suited for Florida state court.
(more…)
James Heyworth
New York
jheyworth@sidley.com
Matthew Henry
San Francisco
mhenry@sidley.com
Get Your Story Straight: Inconsistency in Plaintiff’s Allegations & Theories Dooms Complaint
This past summer, in a decision that attracted little attention, Vice Chancellor David in the Delaware Court of Chancery tossed Joel B. Ritchie v. G. Leonard Baker et al., a shareholder derivative suit filed on behalf of Corcept Therapeutics, Inc. against certain directors for alleged breaches of fiduciary duty related to off-label marketing practices. The Court dismissed the complaint under Court of Chancery Rule 23.1 because Plaintiff, who had not made a pre-litigation demand, failed to plead that the Board was unable to bring its business judgment to bear on assessing such a demand and, as such, the demand was not futile.
(more…)
Andrew W. Stern
New York
astern@sidley.com
Alexandra Bieler
New York
abieler@sidley.com
Potential Control Won’t Do: Court of Chancery Confirms Common Law Standards for Actual Control Regarding Challenged Transactions
Recently, in Witmer v. Armistice Capital, LLC, Delaware’s Court of Chancery dismissed a stockholder plaintiff’s derivative suit against Armistice Capital, LLC, a large investor in Aytu Biopharma, Inc., for, among other things, purported breaches of fiduciary duty and aiding and abetting fiduciary breaches, in connection with two transactions for which the plaintiff alleged Aytu overpaid, the investor improperly benefited, and the investor exercised control.
(more…)
Yolanda C. Garcia
Dallas
ygarcia@sidley.com
Vincent J. Margiotta
New York
vmargiotta@sidley.com
Delaware Court of Chancery Dismisses Derivative Challenge to The Trade Desk CEO’s Compensation Award Valued at $819 Million for Lack of Demand Futility
In re The Trade Desk, Inc. Derivative Litigation demonstrates the careful analysis the courts will engage in when conducting a Rule 23.1 demand futility challenge to assess both director independence and the likelihood of liability for the claims against the directors. This litigation was filed in 2022, and therefore was not impacted by the amendment of DGCL Section 144 earlier this year, which provided new procedural safe harbors for acts or transactions involving corporations and their directors, officers, controlling stockholders, and control groups. As a result, the court’s ruling and this post do not engage with the amended statute. Nevertheless, the court’s methodical analysis of director independence is informative of the factors that the Court of Chancery has found, and may continue to find, relevant to independence analyses. This ruling was affirmed on November 6, 2025 by the Supreme Court of Delaware on the basis of and for the reasons stated in the Memorandum of Opinion.
(more…)
Jaime A. Bartlett
San Francisco
jbartlett@sidley.com
Madison J. Ferraro
San Francisco
madison.ferraro@sidley.com
Categories
Archives
Meet the Team
Andrew W. Stern
astern@sidley.com
Charlotte K. Newell
cnewell@sidley.com
Elizabeth Y. Austin
laustin@sidley.com
Jaime A. Bartlett
jbartlett@sidley.com
Jim Ducayet
jducayet@sidley.com
Yolanda C. Garcia
ygarcia@sidley.com
James Heyworth
jheyworth@sidley.com
Alex J. Kaplan
ajkaplan@sidley.com
Jodi E. Lopez
jlopez@sidley.com
Jon Muenz
jmuenz@sidley.com
Ian M. Ross
iross@sidley.com
Hille R. Sheppard
hsheppard@sidley.com
Heather Benzmiller Sultanian
hsultanian@sidley.com
Robert S. Velevis
rvelevis@sidley.com
Robin E. Wechkin
rwechkin@sidley.com