Delaware Win for Meta Platforms Inc. Preserving Corporate Law Protections Recognized in Litigators of the Week

• Litigation Daily recognized an important win for Meta in the Delaware Court of Chancery in its Litigators of the Week feature.
• Backing the arguments of an Orrick litigation team, Vice Chancellor J. Travis Laster issued a 101-page decision last week dismissing shareholder litigation against Meta and its officers and directors alleging novel claims that they breached their fiduciary duties by favoring firm-specific stockholders over diversified stockholders.
• The lawsuit, filed in 2022, asserted claims that Meta’s focus on investors invested in the company directly poses harm to investors with diversified portfolios. The judge rejected that legal theory, agreeing with Meta that Delaware law follows a “single-firm model.”
• Importantly, the Court found no support in Delaware precedent and corporate law for the diversified-investor model. “It is not reasonably conceivable that Delaware corporate law currently operates on a diversified-investor model,” the Court wrote in dismissing the case with prejudice. “Nor does this court have the freedom to adopt it, even assuming the concept was sound.”
• The decision sets important precedent for D&O fiduciary obligations and the protections they provide to companies doing business under Delaware law.

The Orrick team was led by partners Jim Kramer and Alex Talarides, and includes associates Todd Scott and Tristan Allen.