Publications

In his Corporate Litigation column published in the New York Law Journal, Joe McLaughlin writes about the pleading standard applicable to claims against disinterested directors alleged to have breached their fiduciary duties in connection with a controlling party transaction. This column examines In re Cornerstone Therapeutics, a recent Delaware Supreme Court case involving a minority shareholder challenge to a controlling party transaction, to which the “entire fairness” standard of review presumptively applies. Cornerstone ruled that where disinterested directors are protected by an exculpatory provision in the company’s charter, plaintiffs must plead with particularity that these directors violated a non-exculpated duty in order to survive a motion to dismiss – even where the “entire fairness” standard of review applies. This ruling provides comfort to disinterested directors that they will not lose the benefit of the charter’s exculpatory provision at the motion to dismiss stage if sued following a transaction with a controlling shareholder.

Yafit Cohn, an associate at the Firm, assisted in the preparation of this article.