Overview

In a precedent-setting derivative decision, the Delaware Court of Chancery held that a board of directors’ and senior officers’ failure to respond in good faith to clear red flags of workplace sexual misconduct may give rise to viable breach of fiduciary duty claims under Delaware law. In an opinion penned by Chancellor Kathleen J. McCormick, the court denied motions to dismiss claims against certain directors and officers of eXp World Holdings Inc., ruling that the plaintiffs had pled sufficient facts to support allegations that the company’s fiduciaries had breached their oversight obligations and that the chief executive officer (CEO) had breached his duty of loyalty by concealing information and retaining employees implicated in the alleged misconduct. Los Angeles City Employees’ Retirement System v. Glenn Sanford, et al., C.A. No. 2024-0998-KSM (Del. Ch. Jan. 16, 2026).

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