The Mendes Hershman Student Writing Contest is a highly regarded legal writing competition that encourages and rewards law students for their outstanding writing on business law topics. Papers are judged on research and analysis, choice of topic, writing style, originality, and contribution to the literature available on the topic. The distinguished former Business Law Section Chair Mendes Hershman (1974–1975) lends his name to this legacy. Read the abstract of this year’s second-place winner, Samuel H. Hirsch of University of Miami School of Law, Class of 2025, below.
Over sixty years ago, the Supreme Court of Delaware suggested that absent suspicion of wrongdoing, directors of a Delaware corporation have no duty to set up procedures for gathering and responding to information about compliance with regulations. But over time, Delaware courts clarified that directors cannot simply turn a blind eye—they must keep themselves informed through systems designed to oversee regulated business activities. Recently, in the two-part decision In re McDonald’s Corp. Stockholder Derivative Litigation,[1] the Delaware Chancery Court expanded the duty of oversight to officers but reinforced that these suits are difficult to win a judgment on. The expansion of oversight duties to officers will result in better corporate management as the risk of personal liability to directors and officers increases. Also, the decision clarified that the mission-critical standard for Caremark claims established in Marchand v. Barnhill[2] is no longer the baseline; if directors and/or officers receive notice of any red flag, regardless of its mission-critical status, they are obligated to respond. Finally, a high hurdle to succeed on a Caremark claim will ensure corporate assets are not wasted.
In re McDonald’s Corp. S’holder Deriv. Litig. (McDonald’s I), 289 A.3d 343 (Del. Ch. 2023); In re McDonald’s Corp. S’holder Deriv. Litig. (McDonald’s II), 291 A.3d 652 (Del. Ch. 2023). ↑
Marchand v. Barnhill, 212 A.3d 805, 824 (Del. 2019). ↑
