D&O Liability

Delaware courts have recently issued decisions that may impact the number and types of claims brought by shareholders of Delaware companies seeking to hold directors and officers personally liable under various claims, in particular in connection with the current economic crisis. Plaintiffs in these cases have invoked novel theories in an attempt to extend the boundaries of an existing corporate law doctrine, the fiduciary duty of corporate oversight. Plaintiffs have also attempted to energize another doctrine that has had limited, if any, viability until recently, namely the doctrine of corporate waste. Under both approaches, plaintiffs have achieved some success. In addition, plaintiffs have succeeded in obtaining a clear declaration from Delaware courts that officers do, in fact, have the same fiduciary duties as directors, which is likely to open new avenues for potential claims by shareholders.