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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Morris James Blogs
Court Of Chancery Explains Standard Of Review Of Special Litigation Committee Report
This may be the definitive decision on how to review the conclusion of a board of directors to accept the recommendation of a Special Litigation Committee report on whether to pursue derivative litigation. Once a stockholder demand is made, as the decision points out, the type of review changes, particularly in regard to the level of deference the Court will give to the SLC’s conclusion not to pursue the litigation. The ultimate issue is not whether the Court actually agrees with that conclusion, but whether it is a rational decision based on the SLC’s findings. If it is, the Court will dismiss the litigation.