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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

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Photo of Delaware Business Litigation Report Carl "Chuck" N. Kunz, III
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Carl (“Chuck”) N. Kunz, III has nearly 25 years of experience representing all types of creditors in bankruptcy courts around the country and representing litigants clients …

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“Directors’ Decisions Must Be Reasonable, not Perfect” Home Depot’s Shareholder Derivative Litigation Arising from Data Breach Dismissed; Demand Was Not Excused Under Delaware Law

On November 30, 2016, a federal district court dismissed a shareholder derivative complaint against various current and former directors of Home Depot arising from the well-publicized data breach the company suffered between April and September 2014.  In re The Home Depot, Inc. Shareholder Derivative Litigation, Civil Action No. 15-CV-2999-TWT (N.D. Ga. Nov. 30, 2016).  The complaint asserted claims against the directors for breach of the fiduciary duty of loyalty and corporate waste under state law, and a federal law securities claim under Section 14(a) of the Securities Exchange Act.  The decision illustrates important principles of corporate law reflected in Rule 23.1 (under both state and federal law), governing when a plaintiff can bypass the board of directors to assert a derivative claim for injury to the company on the company’s behalf, rather than deferring to the board’s judgment about asserting such a claim, and how these principles may affect litigation arising out of data breaches and alleged failures of director oversight.  More ›