MONTH-IN-BRIEF (Feb 2024)
Delaware Court of Chancery Grants Defendants’ Rule 23.1 Motion to Dismiss Plaintiffs’ Derivative Action against Walgreens and Its Board for Failure to Plead a Valid Caremark Duty of Oversight Claim
Clem v. Skinner, C.A. No. 2021-0240-LWW (Del. Ch. Feb. 20, 2024)
By Pamela L. Millard, Potter Anderson & Corroon LLP
In an opinion granting defendants’ Motion to Dismiss, the Court of Chancery (the “Court”) held that despite Caremark suits “proliferating” in Delaware over the past several years, plaintiffs failed to overcome evidence proving that the Board of Directors (the “Board”) of Walgreens Boots Alliance, Inc. (“Walgreens”) actively oversaw certain corporate harms relating to Walgreens’ pharmacy business, and none of the directors faced a substantial likelihood of liability under the Zuckerberg standard for determining Rule 23.1 demand futility. The opinion provides important commentary around the outer bounds of Caremark duty of oversight claims, observing that of many recent Caremark claims filed in Delaware, “[t]he few deemed viable concern severe corporate trauma and rely on board records suggesting a complete failure to oversee related core risks.”