Delaware Court of Chancery Addresses Officer Oversight Obligations
In a January 25, 2023 opinion (In re McDonald’s Corp. Stockholder Derivative Litig., C.A. No. 2021-0324-JTL), the Delaware Court of Chancery clarified that corporate officers’ fiduciary duties encompass a duty of oversight. As with directors, the duty of oversight requires that officers: (1) make a good faith effort to put in place reasonable information systems to generate the information necessary to address risks and report upward to higher level officers or the board; and (2) not consciously ignore red flags indicating that the company may suffer harm. The Court of Chancery also clarified that officers will not be held liable for violations of the duty of oversight unless they are shown to have acted in bad faith, as opposed to mere gross negligence.
Trial Judgment “Knocks The Stuffing” Out Of Putative Derivative Suit Relating To Opioid Distribution
Last month, Delaware’s Court of Chancery issued two significant decisions in a stockholder litigation involving AmerisourceBergen Corporation (the “Company”) and its wholesale distribution of prescription opioids in the United States. Together, the decisions provide companies and their directors and officers with further guidance regarding the viability of so-called Caremark claims alleging breaches of fiduciary duties.
