Delaware Business Litigation Report

Chancery Rules That Separate Accrual Periods Apply to an Information Systems Caremark Claim in Walmart Opioid Litigation

Ontario Provincial Council of Carpenters' Pension Trust Fund v. Walton, C.A. No. 2021-0827-JTL (Del. Ch. Apr. 12, 2023)
To determine the limitations period under laches, a court must determine when a claim accrued. Delaware courts have considered three different approaches to claim accrual: the discrete act approach, the separate accrual approach, and the continuing wrong approach.

Here, the plaintiffs asserted bad-faith fiduciary duty claims against the directors for, among other things, their alleged failure to establish sufficient information systems. Plaintiffs alleged that the directors knew that they had an obligation to establish sufficient information systems to enable them to monitor Company compliance with the Controlled Substance Act and its obligations under a settlement with the Drug Enforcement Agency but consciously failed to make a good faith effort to put such information systems in place. In an issue of first impression in Delaware, the Court of Chancery analyzed the three different accrual methods and held that the separate accrual approach should apply to an information systems claim, meaning each day that the defendants' ongoing course of conduct continued constituted a separate violation for purposes of claim accrual. The Court reasoned that the separate accrual approach struck a proper balance because it prevented a single point of accrual causing all of the wrongdoing over a period of time to be barred by laches while barring stale claims extending back to the earliest possible point of accrual. In finding all the plaintiffs' claims timely at the pleadings stage, the Court also gave the plaintiffs the benefit of a lookback date prior to suit, when the plaintiffs began pursuing books and records related to their eventual breach of fiduciary duty claims and applying equitable tolling.

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