Delaware Law Series

Chancery Dismisses Claims Financial Advisor Steered Deal to a Favored Bidder—Envestnet

Posted by Gail Weinstein, Philip Richter, and Steve Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Wednesday, September 9, 2026

Board of Directors, delaware, Delaware law, Merger
More from: Adam Cohen, Colum Weiden, Gail Weinstein, Philip Richter, Roy Tannenbaum, Steven Epstein, Fried Frank

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and Co-Head of the M&A and Private Equity Practice, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Roy Tannenbaum, Adam Cohen, and Colum Weiden, all at Fried Frank, and is part of the Delaware Law Series; links to other posts in the series are available here.

In Berger v. Fox (“Envestnet”) (July 21, 2026), the Delaware Court of Chancery dismissed a suit challenging the $4.5 billion stockholder-approved take-private merger (the “Merger”) of Envestnet, Inc. (the “Company”) with affiliates of a private equity firm (the “Buyer”). The Plaintiffs claimed that the Company’s directors breached their fiduciary duties by (i) engaging a financial advisor (the “Financial Advisor”) that they knew was conflicted due to its extensive business relationships with the Buyer, and (ii) then permitting the Financial Advisor to steer the sale to the Buyer and away from two higher, unsolicited competing bids. They also claimed that the Financial Advisor aided and abetted the directors’ breaches. The Merger price was near the bottom of the Financial Advisor’s discounted cash flow valuation range for the Company and represented a 4.8% discount to the 52-week share price high.

Boeing Decision Appears to Narrow Potential Caremark Liability for Directors and Officers

Posted by Gail Weinstein, Philip Richter, and Steve Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on

Sunday, September 6, 2026

Caremark, Court of Appeals, Delaware Court of Chancery, Regulations
More from: Adam Cohen, Colum Weiden, Maxwell Yim, Fried Frank

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner and Co-Head of the M&A and Private Equity Practice, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Maxwell Yim, Adam Cohen, and Colum Weiden, all at Fried Frank, and is part of the Delaware Law Series; links to other posts in the series are available here.

In In re Boeing (Aug. 14, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, dismissed Caremark claims brought against directors and officers of The Boeing Company (the “Company”) after alleged manufacturing process defects led to a dramatic, mid-flight mechanical failure of a Boeing airplane, which followed two earlier catastrophic accidents due to alleged manufacturing defects in Boeing airplanes. The allegations included years-long, ongoing violations by the Company of manufacturing safety laws and regulations.

In two separate incidents in 2018 and 2019, a Boeing MAX 737 airplane crashed in mid-flight—resulting in hundreds of lives lost; the Company paying billions of dollars in fines and settlements; and the Company committing to regulators, the U.S. Department of Justice and stockholders to revamp its safety systems and culture. The recent incident occurred in 2024—when a Boeing MAX-9 737 airplane reached 15,000 feet, the mid-cabin door plug flew off, leaving a gaping hole in the airplane. The airplane made a safe emergency landing, and eight people sustained minor injuries. The Plaintiffs sued, claiming that Company directors and officers breached their oversight duties under Caremark by having ignored in bad faith numerous “red flags” of the Company’s continued airplane manufacturing safety issues. The court dismissed the case, holding that the Defendants did not face a substantial likelihood of liability under Caremark, and therefore demand on the Company’s board of directors (the “Board”) to bring the derivative lawsuit was not excused.

Delaware Chancery Court Cautions Against Reading Between the By-Lines

Posted by Adam O. Emmerich, David A. Katz, and Kevin S. Schwartz, Wachtell Lipton Rosen & Katz, on

Thursday, September 3, 2026

ATG Capital, Bylaws, Delaware cases, Delaware Chancery
More from: Adam Emmerich, David Katz, Kevin Schwartz, Wachtell Lipton

Adam O. Emmerich, David A. Katz, and Kevin S. Schwartz are Partners at Wachtell Lipton Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Emmerich, Mr. Katz, Mr. Schwartz, Theodore N. Mirvis, Elina Tetelbaum, and Loren Braswell, all at Wachtell Lipton.

In a significant decision for public companies facing activism, the Delaware Court of Chancery last week held that a board may not reject a director nomination notice based on disclosure requirements that are not explicitly spelled out in the corporation’s advance notice bylaws. In ATG Capital Opportunities Fund LP v. Lane et al., Vice Chancellor Lori Will found that Empery Digital, Inc. had improperly rejected the nomination notice of an activist investor, ATG Capital Opportunities Fund LP, notwithstanding the Empery board’s well-founded concerns that ATG Capital did not disclose it was acting in concert with another investor and had taken a large short position in Bitcoin ETFs to hedge its position in Empery. The Court concluded that the rejection was not based upon the plain language of Empery’s advance notice bylaws and therefore represented inappropriate interference with the stockholder franchise.

This litigation came after ATG Capital took a significant stake in Empery and nominated a slate of nine director candidates to the board. The Empery board considered the notice and determined that it was deficient both because ATG Capital did not disclose (i) that another investor was acting as a “participant” in ATG Capital’s solicitation and (ii) its short position in Bitcoin ETFs, and because the nominee questionnaires contained certain omissions and inaccuracies. Following receipt of a rejection notice, ATG Capital sued Empery to compel the company to allow the dissident nominees to stand for election.

Delaware Court of Chancery Reinforces Limits on Oversight Liability; Stresses Importance of Conscientious Board Oversight

Posted by Sharon L. Nelles, Leonid Traps, and Oliver W. Engebretson-Schooley, Sullivan & Cromwell LLP, on

Wednesday, August 26, 2026

bad faith, Board oversight, Business judgment rule, Caremark doctrine, compliance and risk management, delaware, Delaware Court of Chancery, Delaware law, directors’ duties, Duty of loyalty, Fiduciary duties, oversight liability
More from: David Rein, Leonid Traps, Oliver Engebretson-Schooley, Samuel Winick, Sharon Nelles, William Weinberg, Sullivan & Cromwell

Sharon L. Nelles, Leonid Traps, and Oliver W. Engebretson-Schooley are Partners at Sullivan & Cromwell LLP. This post is based on a Sullivan & Cromwell memorandum by Ms. Nelles, Mr. Traps, Mr. Engebretson-Schooley, David M.J. Rein, William S.L. Weinberg, and Samuel J. Winick, all at Sullivan & Cromwell LLP; and is part of the Delaware Law Series; links to other posts in the series are available here.

On August 13, 2026, in In re The Boeing Co. Derivative Litigation, Justice Morgan T. Zurn, recently appointed to the Delaware Supreme Court and sitting by designation in the Delaware Court of Chancery, dismissed Caremark failure of oversight claims asserted against current and former directors and employees of The Boeing Company.[1] Granting defendants’ motion to dismiss in full and with prejudice, the Court emphasized the deference accorded to directors of Delaware corporations under the business judgment rule and held that liability under Caremark does not arise where directors reasonably believe they are fulfilling their oversight duties.[2] S&C represents Boeing and the director and employee defendants in the litigation.

Delaware Court of Chancery Examines Fiduciary Duties of PBC Directors in a Change-of-Control Transaction For the First Time

Posted by Susan H. Mac Cormac, Michael Santos, and Michael G. O’Bryan, Morrison & Foerster LLP, on

Tuesday, August 25, 2026

Board of Directors, change-of-control transactions, delaware, Delaware law, DGCL Section 365, enhanced scrutiny, Fiduciary duties, M&A, PBC directors, PBCs, Public benefit corporations, Revlon
More from: Michael O'Bryan, Michael Santos, Spencer Klein, Susan Mac Cormac, Morrison & Foerster

Susan H. Mac Cormac, Michael Santos, and Michael G. O’Bryan are Partners at Morrison & Foerster LLP. This post is based on a MoFo memorandum by Ms. Mac Cormac, Mr. Santos, Mr. O’Bryan, Spencer Klein, Daniel Irvin, and Mariam Zahran, all at Morrison & Foerster LLP; and is part of the Delaware Law Series; links to other posts in the series are available here.

On July 29, 2026, the Delaware Court of Chancery dismissed with prejudice the stockholders’ complaint in Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P.,[1] holding that the plaintiffs failed to rebut the statutory safe harbor for directors of a public benefit corporation (PBC). This is the first Delaware Chancery decision to address the balancing test of PBC director fiduciary duties in a change-of-control context.

The dispute arose out of a financing transaction at MPower Financing, PBC, a Delaware PBC (the “Company”), in which two of the Company’s largest lenders obtained control of the Company. The plaintiffs alleged that the special committee formed to evaluate the transaction, although independent and disinterested, nonetheless breached its fiduciary duties and that the lenders aided and abetted the breach. The Court found that the plaintiffs failed to plead facts sufficient to rebut the safe harbor protecting PBC directors under DGCL Section 365(b). The Court also addressed the applicability to PBCs of Revlon, concluding that the duty to maximize the sale price of a corporation does not apply to the conduct of PBC directors, but leaving open the question of whether a modified form of enhanced scrutiny might still apply as a standard of review.

Splitting Caremark’s Atom

Posted by Ryan Bubb (USC) and Gabriel Cohen (U.S. District Court, Eastern District of PA), on

Monday, August 24, 2026

Agency costs, Board monitoring, Caremark, Corporate compliance, delaware, Delaware law, duty of obedience, Duty of oversight, Public enforcement
More from: Gabriel Cohen, Ryan Bubb

Ryan Bubb is a Professor of Law and the Director of Strategic Initiatives at the USC Gould School of Law, and Gabriel Cohen is a Law Clerk on the U.S. District Court for the Eastern District of Pennsylvania and will join Bernstein Litowitz Berger & Grossmann LLP in the fall. This post is based on their recent paper and is part of the Delaware Law Series; links to other posts in the series are available here.

In December 2025, Vice Chancellor Will dismissed a derivative claim against a director whose sexual harassment of employees had produced roughly $1.6 million in liability for the corporation. Such “interpersonal” conduct, she held in Brola v. Lundgren, was “not a matter of corporate internal affairs,” and “[t]he legal system provided a remedy for his wrongdoing through New York’s employment laws.” She warned against turning the duty of loyalty into “a general morality code” and inviting “doctrinal sprawl” that would reach “a breakroom fistfight, a defamatory social media post, or theft of office supplies.”

Delaware and New York State Courts Reject Unusual Theory Under the Securities Act

Posted by Amy D. Roy, Robert A. Skinner, and Cole A. Goodman, Ropes & Gray LLP, on

Monday, August 24, 2026

delaware, Delaware courts, Delaware law, GAAP, Investment Company Act, Mutual Fund Accounting, Mutual funds, NAV, Net Asset Value, New York Courts, Section 11, Section 12(a)(2), Securities Act, Securities litigation, Securities regulation
More from: Amy Roy, Cole Goodman, Robert Skinner, Ropes & Gray

Amy D. Roy and Robert A. Skinner are Partners and Cole A. Goodman is a Counsel at Ropes & Gray LLP. This post is based on their Ropes & Gray memorandum and is part of the Delaware Law Series; links to other posts in the series are available here.

In a pair of recent decisions, the Delaware Superior Court and the New York State Supreme Court each dismissed with prejudice nearly identical cases brought against the First Eagle and JPMorgan mutual fund complexes, respectively, relating to their application of industry standard accounting practices. Putting forth an unusual theory under the Securities Act of 1933 (the “Securities Act”), the lawsuits alleged that certain mutual funds’ registration statements were misleading because they failed to disclose that, under the funds’ accounting practices, the funds’ realized income and capital gains were temporarily treated as assets (rather than liabilities) prior to those earnings being distributed to fund shareholders (typically on a quarterly or annual basis). Plaintiffs argued that this allegedly undisclosed practice artificially inflated the funds’ NAV, which caused investors to suffer various forms of harm, including higher asset-based fees and increased tax liabilities. However, plaintiffs’ theories were not grounded in the relevant accounting guidance (ASC 946-320-25-4[1]), which does not (i) require that earnings be immediately classified as liabilities, or (ii) prescribe how frequently a fund should declare distributions.

Dropbox and the Evolving Governance Debate Over Corporate Domicile

Posted by Sarah Abrams, The OakBridge Team, on

Tuesday, August 18, 2026

Corporate Migration, delaware, Delaware law, Dropbox Litigation, Fiduciary duties, Shareholder litigation
More from: Sarah Abrams, The OakBridge Team

Sarah Abrams is the Executive Vice President at The OakBridge Team and the Co-author of The D&O Diary.

The growing movement of public companies to reincorporate outside Delaware has transformed a policy debate into an increasingly significant source of corporate governance litigation. As companies have explored domiciles such as Nevada and Texas, Delaware has responded with legislative reforms, including Senate Bill 21 (“SB 21”), and judicial decisions that seek to clarify the standards governing these transactions.[1]

Against this backdrop, the recently amended complaint challenging Dropbox, Inc.’s reincorporation to Nevada raises important questions regarding the circumstances under which a reincorporation may be challenged as a breach of fiduciary duty.

The Sound of Silence

Posted by Mitu Gulati (University of Virginia), Stephen Choi (NYU), and Molly Ball (University of Virginia), on

Thursday, August 13, 2026

Contract Drafting, Deal Practice, delaware, Delaware law, Judicial Signaling, M&A, Sandbagging
More from: Mitu Gulati, Molly Ball, Stephen Choi

Mitu Gulati is the Warner-Booker Distinguished Professor of International Law at the University of Virginia School of Law, Stephen J. Choi is the Bernard Petrie Professor of Law and Business and Director of the Pollack Center at the New York University School of Law, and Molly Ball is a J.D. candidate at the University of Virginia School of Law. This post is based on their recent article.

In 2018, the Delaware Supreme Court dropped a footnote. In Eagle Force Holdings v. Campbell, Justice Valihura noted that the court had never actually decided whether a buyer who knows that some of the seller’s representations are false can still sue for breach after closing — the practice deal lawyers call “sandbagging.” Then-Chief Justice Strine, dissenting in part, confirmed, in his part of opinion, that Delaware had not yet decided the question.

Many M&A practitioners took the footnotes in Eagle Force as a signal that Delaware law was undecided on sandbagging. Because buyers rely on “pro-sandbagging” rules to protect their bargained-for representations and prevent sellers from opportunistically using the buyer’s due diligence as a shield against liability, the sudden ambiguity caused consternation among practitioners. Practitioners debated whether the signal from footnotes in Eagle Force meant that buyers needed to put in explicit pro sandbagging clauses in M&A contracts. Memos on this theme poured out, including from several prominent law firms including Ballard Spahr, Goodwin Procter, Mayer Brown, Paul Weiss, and Kramer Levin. The ABA ran CLE programming on it. A slide deck from a marquee panel of M&A lawyers at Northwestern’s Securities Regulation Institute put it bluntly: don’t assume silence is safe anymore — put an express pro-sandbagging clause in the contract.

The advice was nearly unanimous. And the market ignored it.

Legacies, Lessons and Launchpads: Charting Delaware’s Course in a New Era

Posted by Justice Karen Valihura (Wilmington Univerity), on

Wednesday, August 12, 2026

Business judgment rule, delaware, Delaware Corporate Law, Delaware law, Delaware Supreme Court, Director Independence, entire fairness, Fiduciary duties, judicial independence
More from: Karen Valihura

Justice Karen Valihura is a Distinguished Professor of Corporate Law and Founding Director of the Corporate Law, Governance and Practice Institute, Farnan School of Law, at the Wilmington University. This post is based on her 2026 Weinberg Distinguished Lecture, and is part of the Delaware Law Series; links to other posts in the series are available here.

It is a great honor for me to be part of the Weinberg Distinguished Lecture series. Thank you for inviting me. My remarks today are solely my own and are not made on behalf of the Delaware Supreme Court or any other person.

As I near the end of my twelve-year term, I have been reflecting on the amazing privilege and honor I have had serving as a Justice on the Delaware Supreme Court. I am so grateful to all who have been part of my journey. In thinking about how to describe it, I was recently inspired by NASA’s stunningly successful Artemis II Mission. That Mission – lasting only 10 days – had a successful launch, lunar fly by and a safe splashdown off the coast of San Diego. One of the Artemis II’s astronauts’ description of their “group activity” could also be used to very accurately describe working as a member of our collegial, collaborative Delaware Supreme Court. They described their “group activity” in terms of functioning as one, embracing mutual accountability, being dutifully linked, and in terms of joy-filled contribution and profound, brother-sister like camaraderie, exemplifying that high-stakes success requires prioritizing human connection.[1] These sentiments describe precisely my experience over the past twelve years, and truly, I have been blessed to have been part of this collegial Supreme Court.

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