This Comment undertakes the task of defining the scope of “essential and mission critical” risk categories in the context of directors’ duty of oversight. Although director oversight liability under Caremark seemed like an impossible standard, Delaware jurisprudence suggests a growing trend in Caremark claims surviving a motion to dismiss. Indeed, “within thirteen months in 2019–2020, four Caremark claims succeeded in surviving the motion to dismiss (Marchand, Clovis, Hughes, and Chou).” As of December 15, 2021, “five of 17 Caremark claims raised in the Court of Chancery have survived a motion to dismiss—an approximately 30% success rate. It remains to be seen whether the Delaware courts will continue to sustain Caremark oversight claims with increased frequency.”
This Comment, which proceeds in three Parts, proposes that emerging and atypical areas of risk in the context of directors’ fiduciary duty of oversight—specifically, cybersecurity and climate change—are not “mission critical” for most corporations. The directors of such corporations, therefore, are unlikely to face oversight liability for failure to address cybersecurity and climate change risks. In other words, it is unlikely that a Caremark claim, in this scenario, would survive a motion to dismiss. Ultimately, the standard for director oversight liability under Caremark has not changed post-Marchand.
Kelly O'Brien, Analyzing the Post-Marchand “Expansion” of Mission Critical Risks: Cybersecurity, Climate Change, and Caremark, 57 U. Rich. L. Rev. Online 109 (2023).