On January 25, 2023, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery denied a motion to dismiss a derivative suit brought by stockholders asserting breach of fiduciary duty claims against a former officer of McDonald’s Corporation (the “Company”).  In Re McDonald’s Corp. Stockholder Derivative Litig., Case No. 2021-0324-JTL (Del. Ch. Jan. 25, 2023).  Plaintiffs alleged that defendant, who served as the Chief People Officer responsible for human resources at the Company, breached oversight duties by “consciously ignoring red flags” regarding sexual harassment at the Company.  The Court acknowledged that Delaware courts had not previously “expressly held that officers . . . owe oversight duties” comparable to the duty of oversight owed by directors under In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996).  But the Court sustained the claim, noting that “[t]his decision clarifies that corporate officers owe a duty of oversight.”  The Court also found that plaintiffs adequately pled a claim against defendant for breach of the duty of loyalty based on specific purported acts of sexual harassment in which he allegedly engaged.

On November 30, 2022, Vice Chancellor Glasscock of the Delaware Court of Chancery granted a motion to dismiss claims asserted against directors who served as members of the special committee (the “Special Committee”) of Isramco Inc. (the “Company”) for failure to plead a breach of the duty of loyalty in connection with a take-private merger. Ligos v. Tsuff, et. al., C.A., No. 2020-0435-SG (Del. Ct. Ch, Nov. 30, 2022). Plaintiff asserted that the Special Committee lacked independence because it was selected by the Company’s controlling stockholder, who also allegedly controlled the company with whom the Company merged, Naptha Israel Petroleum Corporation Ltd. (the “Buyer”) and allegedly negotiated in bad faith. Vice Chancellor Glasscock held that even with the “plaintiff-friendly inferences” required on a motion to dismiss, there was no reasonably conceivable basis for Plaintiff’s claims.