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Post-Bankruptcy Regulatory Compliance Claims Against Corporate Officers Stand after ‘Caremark’ Claim Challenge
In Giuliano v. Grenfell-Gardner, 2025 WL 2502176 (Del. Ch. Sept. 2, 2025), Caremark claims were filed against former directors and officers of Teligent, Inc., a generic pharmaceutical company. The claims were brought by the plan administrator appointed by the Bankruptcy Court under Teligent’s plan of reorganization. The claims alleged that Teligent’s management and board had failed to establish or monitor systems ensuring compliance with FDA regulations, leading to repeated violations and ultimately, the company’s insolvency. Although alleged oversight claims are not uncommon, this case was unusual because the claims were not asserted derivatively by shareholders. Given the informational advantage enjoyed by the plan administrator, it was not surprising that the court found the complaint adequately pleaded Caremark claims against the named director defendants and two of the company’s officers.
Teligent was a New Jersey-based generic drug manufacturer that relied on FDA compliance for its business operations. The FDA’s approval of abbreviated new drug applications was essential for production and revenue. Despite this dependency, Teligent’s board lacked any committee or reporting system for FDA compliance. While it had an audit committee, the committee focused only on SEC matters and never discussed FDA oversight in any of its meetings from 2017 to 2021.
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