Delaware's Premier Blogger Wins Important Motion Before Delaware's Judge Walsh Imposing the Caremark Fiduciary Duty on Corporate General Counsel
Davey and Zack are now 6 1/2 months, and finally consistently sleeping through the night! The temperature in Chicago has also finally hit 60 degrees in Chicago, for only the seventh time this year. Put 'em together, add another great post from my good friend Francis X. Pileggi, the Lou Gehrig of legal blogging, and--without making any vows--it's time to dust off the blog and awaken from my blogging hibernation. Thanks to those who've reached out to me in the interim with their kind words, comments, suggestions, and encouragement.
Here's a link to Francis's recent post on his Delaware Corporate and Commercial Litigation Blog about a decision handed down by one of the country's preeminent bankruptcy judges, Judge Peter J. Walsh, in Miller v. McDonald (In re World Health Alternatives, Inc.), 2008 WL 1002035 (Bankr. D. Del. 4/9/08) (pdf). In this decision, Judge Walsh refused to dismiss this complaint filed by Francis and his colleagues against Brian Licastro, the former vice-president of operations and in-house general counsel of World Health Alternatives. The opinion is a must read because--
- it explicitly extends the so-called Caremark duties to officers of a corporation, and in particular here, to the VP-operations and in-house general counsel, who was alleged "responsible for failing to implement any internal monitoring system and/or failing to utilize such system as is required by Caremark and Araneta"; (Op. at 26.)
- it sustains, by a narrow margin, a corporate waste count against the VP/GC, despite his not having personally benefited from the alleged waste, based on the allegation that he was "aware of the alleged corporate waste and took no action, as fiduciaries, to prevent such conduct"; (Op. at 33.)
- it upholds a negligent misrepresentation count against the VP/GC alleging that "if [he] properly performed his duty as in-house counsel, these misrepresentation[s] [in public filings] would not have been made and the resulting harm [resulting in a $2.7 million payout in a shareholder class action] would have been avoided. (Op. at 36-37.)
On January 14, 2007, I linked to various 27 bankruptcy-related cases discussed on Francis's blog. Time for an update linking to the next 27 bankruptcy-related posts by Francis since then:
- Delaware Supreme Court Rules: Creditors Have No Direct Claims Against Directors Of Corporation in Zone of Insolvency
© Steve Jakubowski 2008
Many thanks for your very kind comments and prodigious links. You are the Justice Cardozo of the blogosphere and a paradigm for others to emulate.
Welcome back from your hiatus. Happy to hear that Davey and Zach are doing well.