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Court Of Chancery Explains Pleading Standard For Claims Against Disinterested Directors

Posted In Directors
In Re Cornerstone Therapeutics Inc. Stockholder Litigation, C.A. 8922-VCG (September 10, 2014)  This is a great decision to read to understand the pleading standard that applies to a complaint that alleges a controlling stockholder transaction. Even in such a transaction, the disinterested directors are not liable absent proof of a breach of a non-exculpated breach of duty. However, that rule will only apply after a full record is made at trial [or possibly at the summary judgment stage]. At the initial motion to dismiss stage, all the complaint need allege is that entire fairness review is required because of the control the majority stockholder had over the transaction. On September 26, 2014, the Court certified an interlocutory appeal to the Delaware Supreme Court.