Strayed from the Path: Dodiya v. Franklin and the Emerging Rules of the DGCL’s Section 144 Safe Harbors
On August 26, 2026, the Court of Chancery issued Dodiya v. Franklin, C.A. No. 2025-0932-LWW (Del. Ch. Aug. 26, 2026), concluding that the “striking breakdown in corporate governance” detailed in the complaint made the “predictable path to safe harbor” under amended Section 144 of the Delaware General Corporation Law (DGCL) unavailable at the pleading stage. Dodiya’s message for boards is simple: the safe harbors deliver powerful protection, particularly by virtue of the presumption of disinterestedness afforded to directors determined to be independent for listing standard purposes, but only to boards that (i) run a process that is not grossly negligent and (ii) provide materially accurate disclosure to stockholders.
Heightened Means Heightened: Chancery’s First Read of SB 21’s New Presumption Shuts Down Demand Futility
In Ayers v. Foley (available here), the Delaware Court of Chancery recently became the first court to interpret Section 144(d)(2) of the Delaware General Corporation Law (DGCL), the provision added by Senate Bill 21 (SB 21) in 2025 that affords a “heightened” presumption of disinterestedness to directors of listed companies whom the board has determined to be independent under stock exchange rules. Vice Chancellor Will held that the heightened presumption is not confined to Section 144’s safe harbors and applies with full force to the demand futility analysis under Court of Chancery Rule 23.1, and that overcoming it requires “substantial and particularized facts” of sufficient qualitative significance.
The decision illustrates the meaningful protections the amended statute now affords disinterested directors at the pleading stage, while confirming that directors who award compensation to themselves remain exposed to entire fairness review.
Concessions and Particularity: How a Derivative Challenge to a Discounted Insider Financing Failed at the Pleading Stage
In the recent decision Marstrand Partners, L.P. v. Israel Biotech Fund I, L.P., C.A. No. 2024-0421-KSJM (Del. Ch. May 27, 2026), Chancellor McCormick dismissed a derivative challenge to a steeply discounted insider financing after holding that the plaintiff failed to plead demand futility under Court of Chancery Rule 23.1. Although the plaintiff disputed the ability of only two directors to consider a demand impartially, the plaintiff failed to plead particularized facts showing either director was conflicted.
Facts, Not Labels: The Limits of Delaware Notice Pleading
In Caerus Group, LLC v. Chemicar Europe NV, No. 2025-0393-BWD, 2026 WL 668208 (Del. Ch. Mar. 10, 2026), the Delaware Court of Chancery issued a strong reminder that notice pleading does not mean no pleading. Vice Chancellor David dismissed claims arising out of a failed automotive-products joint venture because the pleadings substituted conclusions and speculations for facts and therefore could not pass muster under Rule 12(b)(6). Chemicar underscores that the Court of Chancery will closely scrutinize the level of factual detail provided in determining whether a complaint is viable or merely a conclusory grievance, particularly where standards like entire fairness, gross negligence, or knowing participation are in play. (more…)
Kitchen-Sink Pleading Will Not Fly In Delaware
Vice Chancellor Glasscock recently affirmed in BV Advisory Partners, LLC v. Quantum Computing Inc., C.A. No. 2022-0719-SG, that more is not always better when it comes to pleading claims. In ruling on motions to dismiss filed by all defendants, the Court dismissed six Defendants for failure to plead personal jurisdiction under Rule 12(b)(2), and also dismissed eight of ten causes of action pled against the remaining Defendants for failure to state a claim under Rule 12(b)(6). In each of the Court’s holdings dismissing both Defendants and causes of action (summarized below), the Court identified the various ways in which Plaintiff relied to its detriment on conclusory allegations and impermissible bootstrapping. This ruling serves as a reminder to litigants that the Court of Chancery is well-equipped to strip down complaints bloated by tangential claims and theories of liability that are not sufficiently supported by alleged facts.
