District Court Applies Stone v. Ritter in Rule 23.1 Case

Posted on September 11, 2009 by Corinne Amato

King v. Baldino, C.A. No. 08-54-GMS-MPT (D. Del. Aug. 26, 2009).

This memorandum order issued by Magistrate Mary Pat Thynge is an example of the continued judicial reluctance to impose liability on boards of directors for alleged failures in oversight responsibility, where the plaintiff fails to plead that the board was on notice, through “red flags,” of corporate misconduct. The Magistrate applied Delaware law on oversight liability as set out in Stone v. Ritter, 911 A.2d 362 (Del. 2006) to find that the plaintiff failed to plead demand futility and comply with Federal Rule of Civil Procedure Rule 23.1.

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