Delaware Supreme Court’s Facebook Decision Restores Deference Given to Boards in Shareholder Litigation

Mark Foster and David Wiener authored an article for Corporate Compliance Insights discussing a recent Delaware Supreme Court decision that reverses the trend of directors’ exposure to potential liability in shareholder derivative litigation.

“In United Food and Commercial Workers Union v. Zuckerberg, et al., the Delaware Supreme Court articulated a clear ‘universal’ test for determining whether shareholders can proceed with derivative suits against corporate directors,” the authors wrote. “The test will likely reinvigorate the traditional deference given to boards of directors and help bolster directors’ defenses to strike suits, especially in litigation related to board-level corporate decisions. The decision also underscores the importance of courts rejecting conclusory allegations about directors’ alleged lack of independence from other directors.”

Read the full article.