Observations on Clovis Oncology, Inc. Derivative Litigation

On October 1, the Delaware Court of Chancery denied a motion to dismiss a Caremark claim in In re Clovis Oncology, Inc. Derivative Litigation. Under In re Caremark Int’l Inc. Deriv. Litig., 698 A.2d 959 (Del. Ch. 1996), directors have a duty to exercise oversight and monitor a corporation’s operational viability, legal compliance, and financial performance. Clovis is the first decision to allow a Caremark claim to proceed beyond the pleadings since the Delaware Supreme Court’s June 2019 decision in Marchand v. Barnhill, which reversed a Court of Chancery decision dismissing a Caremark claim. The Clovis decision highlights (i) the importance of board level efforts to oversee compliance with governing law and regulatory mandates, particularly in situations where compliance issues are critical to a “monoline” company, and (ii) how stockholders are using books and records demands under 8 Del. C. § 220 to pursue fiduciary claims focused on those same compliance issues.

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 100 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.