aiding and abetting claim in Delaware

2026To state a claim for aiding and abetting breach of fiduciary duty, a plaintiff must allege: “(1) the existence of a fiduciary relationship, (2) a breach of the fiduciary’s duty, . . . (3) knowing participation in that breach by the defendants, and (4) damages proximately caused by the breach.” In re Mindbody, Inc., S’holder Litig., 332 A.3d 349 , 389 (Del. 2024) (quoting Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001)). “[P]articipation in an aiding and abetting claim requires that the aider and abettor provide ‘substantial assistance’ to the primary violator.” Id. at 392. “[F]actors that

2026The first Restatement factor “goes to the first knowledge requirement for a finding of scienter under the ‘knowing participation’ element of an aiding and abetting claim: whether [SF Motors] acted ‘with the knowledge that the conduct advocated or assisted constitutes such a breach.’”50 The Supreme Court in Columbia Pipeline and Mindbody found that this factor weighed in favor of a finding of knowing participation.51 The aider and abettor in both cases—an acquiror—had first-hand knowledge of information omitted from a target company’s proxy statement and reviewed drafts of the proxy statement w

2026Mkts., LLC v. Jervis, 129 A.3d 816, 862 (Del. 2015). “[P]articipation in an aiding and abetting claim requires that the aider and abettor provide ‘substantial assistance’ to the primary violator.” Mindbody, 332 A.3d at 392. “[F]actors that shed light on whether a secondary actor has substantially assisted the primary actor in its wrongful conduct” include: • The nature of the tortious act that the secondary actor participated in or encouraged, including its severity, the clarity of the violation, the extent of the consequences and the secondary actor’s knowledge of these aspects; 45 • The amou

2025Jan. 11, 2002)). 210 Presidio, 251 A.3d at 275. 211 RBC, 129 A.3d at 862 . 43 And “the requirement that the aider and abettor act with scienter makes an aiding and abetting claim among the most difficult to prove.”212 “To prove scienter for an aiding and abetting claim, a plaintiff must prove two types of knowledge.”213 First, the defendant must “know that the primary party’s conduct constitutes a breach.”214 And second, the defendant must “kn[o]w that ‘its own conduct regarding the breach was improper.’”215 The “aider-and- abettor’s knowledge of the fiduciary breach in question and of the wro

2017The aiding and abetting claim was also premised on the alleged concerted effort among officers and directors to oust Morelli as CEO.39 The trial court made it clear that these claims, as related to Horne, arose from his conduct as CFO40; indeed, in at least one respect, the trial Court held that Horne’s conduct giving rise to the aiding and abetting claim was consistent with his fiduciary duties.41 I need not parse through the claims in any more detail than this; Horne clearly is entitled to mandatory indemnification for his successful defense of the non-contract claims asserted against him.42

2015Ch. 2006) (“Like the test for civil conspiracy, the test for stating an aiding and abetting claim is a stringent one, turning on proof of scienter—a plaintiff must prove: (1) the existence of a fiduciary relationship, (2) a breach of the fiduciary’s duty and (3) knowing participation in that breach by the non-fiduciary.”). 134 Def.’s Opening Br. 42. 135 Allied Capital Corp., 910 A.2d at 1038-39 . 136 Plaintiff argues that Kaneko was acting his “personal capacity” in his involvement with the transfer of the Song Held Shares.

2021Ch. 2004)); see also MeadWestvaco, 168 A.3d at 688 (“The knowing participation element of an aiding and abetting claim . . . turns on proof of scienter.” (alteration and internal quotation marks omitted) (quoting Lee, 2014 WL 6066108 , at *13)); Encite, 2011 WL 5920896 , at *25 (identifying “knowing participation” as “the central question” in considering an aiding and abetting claim on summary judgment, and acknowledging that the record must establish the defendant acted with the requisite state of mind). 29 participation in a . . . fiduciary breach requires that the third party act with the k

2020Time and discovery will reveal the depth of any fiduciary breaches. 88 Malpiede, 780 A.2d at 1098 ; see also In re MeadWestvaco, 168 A.3d at 688 (“To the contrary, the Complaint’s allegations paint a picture of genuine arm’s-length bargaining that is the antithesis of an aiding and abetting claim.”). 89 Compl. ¶¶ 16, 18. 90 Gilbert, 490 A.2d at 1058 . 91 Morgan, 2010 WL 2803746 , at *8; see also In re Essendant, Inc., 2019 WL 7290944 , at *18. 29 B.

2024Delaware trial courts have held that participation in an aiding and abetting claim requires that the aider and abettor provide “substantial assistance” to the primary violator.82 79 Malpiede, 780 A.2d at 1097–98 (citing Gilbert v. El Paso Co., 490 A.2d 1050, 1058 (Del.

2024As we explained above, when an aiding and abetting claim is brought against a third-party acquirer negotiating at arms’-length, participation should be the most difficult to prove.132 This is because Delaware law protects arms’-length negotiations and “a bidder’s attempts to reduce the sale price through arm’s-length negotiations cannot give rise to liability for aiding and abetting.”133 However, liability can still attach for third parties who “create or exploit conflicts of interest in the board” or “where the bidder and the board conspire in or agree to the fiduciary breach.”134 As noted ab

2024When an aiding and abetting claim is brought against a potential acquirer negotiating at arms’-length, participation should be the most difficult to prove.77 This is because Delaware law protects arms’-length negotiations and “a bidder’s attempts to reduce the sale price through arm’s-length negotiations cannot give rise to liability for aiding and abetting.”78 A buyer may be liable to a target’s stockholders if the buyer “attempts to create or exploit conflicts of interest in the board” or 75 Id. 76 RBC, 129 A.3d at 865–66; see also Singh v. Attenborough, 137 A.3d 151, 153 (Del. 2016) (“In fa

2021Singh, 137 A.3d at 152–53. “[T]he requirement that the aider and abettor act with scienter makes an aiding and abetting claim among the most difficult to prove.” RBC, 129 A.3d at 865–66.

2018See In re Rural Metro, 88 A.3d at 100 41 H.

2014To demonstrate the “knowing participation” element of an aiding and abetting claim, it must be reasonably conceivable from the well-pled allegations that “the third party act[ed] with the knowledge that the conduct advocated or assisted constitute[d] . . . a breach [of fiduciary duty].” 87 Knowing participation has been described as a “stringent” standard that “turn[s] on proof of scienter.” 88 The alleged aider and abettor, not the fiduciary, must act with scienter. 89 In In re Telecommunications, Inc. 86 In re Rural Metro Corp. S’holders Litig., 88 A.3d 54, 80 (Del.

2015Adhering to the trial court’s amorphous "gatekeeper” language would inappropriately expand our narrow holding here by suggesting that any failure by a financial ad-visor to prevent' directors from breaching their duty of care gives rise to an aiding and abetting claim against the advisor. 192 .See, e.g., Malpiede, 780 A.2d at 1097-98 (finding "that the plaintiffs’ aiding and abetting claim fails as a matter of law because the allegations in the complaint do not support an inference that [the alleged aider and abettor] knowingly .participated in a fiduciary breach”); Santa Fe, 669 A.2d at 72 (a

2000Corp. Shareholder Litig., Del.Supr., 669 A.2d 59, 72 (1995) (setting forth the elements of an aiding and abetting claim).

2021Defendants argue that Plaintiff’s claim fails because Charles is the managing member of Manager, and Manager is alleged to have committed the breach of fiduciary duties. “[L]ike civil conspiracy, officers and agents cannot aid and abet their principal or each other in the commission of a tort.”129 But there is an exception 127 See Compl. ¶ 64. 128 E.g., Gotham P’rs, L.P. v. Hallwood Realty P’rs, L.P., 817 A.2d 160, 175 (Del. 2002) (quoting Fitzgerald v. Cantor, 1999 WL 182573 , at *1 (Del.

2014Sept. 30, 2013) (dismissing an aiding and abetting claim because the breach of duty claims had also been dismissed, and holding that “a claim for aiding and abetting a breach of fiduciary duty or contractual fiduciary duty requires an underlying breach that was aided or abetted.”); see also Gotham P’rs, L.P. v. Hallwood Realty P’rs, L.P., 817 A.2d 160, 172 (Del. 2002) (“The elements of a claim for aiding and abetting a breach of a fiduciary duty are: (1) the existence of a fiduciary relationship, (2) the fiduciary breached its duty, (3) a defendant, who is not a fiduciary, knowingly participat

2020For an aiding and abetting claim to survive a motion to dismiss, the Complaint must allege facts that show a reasonable conceivability of: “‘(1) the existence of a fiduciary relationship, (2) a breach of the fiduciary’s duty, . . . (3) knowing participation in that breach by the defendants,’ and (4) damages proximately caused by the breach.” 121 I have already found it reasonably conceivable that both GPB and Gentile owed and breached fiduciary duties to the detriment of the Partnerships, 120 Compl. ¶¶ 17, 20. 121 Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001) (quoting Penn Mart Realty C

2018There are four elements to state “an aiding and abetting claim: ‘(1) the 120 Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998). 121 Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009). 31 existence of a fiduciary relationship, (2) a breach of the fiduciary’s duty, . . . (3) knowing participation in that breach by the defendants,’ and (4) damages proximately caused by the breach.” 122 “Knowing participation in a board’s fiduciary breach requires that the third party act with the knowledge that the conduct advocated or assisted constitutes [a breach of fiduciary duty].” 123 “[T]he requirement that th

2017To allow a plaintiff to state an aiding and abetting claim against a bidder simply by making a cursory allegation that the bidder got too good a deal is fundamentally inconsistent with the market principles with which our corporate law is designed to operate in tandem.”); In re Lukens Inc. S’holders Litig., 757 A.2d 720, 735 (Del.

2017To allow a plaintiff to state an aiding and abetting claim against a bidder simply by making a cursory allegation that the bidder got too good a deal is fundamentally inconsistent with the market principles with which our corporate law is designed to operate in tandem.”); In re Lukens Inc. S’holders Litig., 757 A.2d 720, 735 (Del.

2023Because, however, Plaintiffs’ disclosure theories are also relevant to the aiding and abetting analysis, a more thorough review is warranted. 574 Corwin, 125 A.3d at 305–06. 575 See, e.g., Dismissal Decision at *26; Xura, 2018 WL 6498677 , at *12–13; In re Lear Corp. S’holder Litig., 926 A.2d 94 , 114–15 (Del.

2017A. The Corwin Analysis In Corwin v. KKR Financial Holdings LLC,23 our Supreme Court held that when a “transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies.”24 This reasoning flows from Delaware’s “long-standing policy . . . to avoid the uncertainties and costs of judicial second-guessing when the disinterested stockholders have had the free and informed chance to decide on the economic merits of a transaction for themselves.”25 The so-called Corwin doctrine, however, only ap

2026Turning to whether the claims are direct or derivative, I must “look beyond the labels used to describe the claim, evaluating instead the nature of the wrong alleged.”96 Under Tooley v. Donaldson, Lufkin & Jenrette, Inc., this determination rests “solely on the following questions: (1) who suffered the alleged harm (the 91 Nemec v. Shrader, 991 A.2d 1120, 1129 (Del. 2010). 92 Id.; see Pl.’s Opp’n Br. 20-21. 93 See, e.g., Credit Agreement §§ 6.1, 11.14.2. 94 Am.

2022Compl. ¶¶ 199–05. 246 Nemec v. Shrader, 991 A.2d 1120, 1130 (Del. 2010). 44 connection with the Merger.

2025Ch. 2021) (stating that Delaware courts “reject[] the use of agency principles like respondeat superior to impose liability on a stockholder for the acts of its director representative”); see also USAirways Grp., Inc. v. British Airways PLC, 989 F. Supp. 482, 494 (S.D.N.Y. 1997) 41 Accordingly, Count V is dismissed.

2025Ch. 2021) (stating that Delaware courts “reject[] the use of agency principles like respondeat superior to impose liability on a stockholder for the acts of its director representative”); see also USAirways Grp., Inc. v. British Airways PLC, 989 F. Supp. 482, 494 (S.D.N.Y. 1997) 41 Accordingly, Count V is dismissed.

2023R. 8(a); Emerald P’rs v. Berlin, 726 A.2d 1215, 1220 (Del. 1999) (“All that is required is that the complaint give ‘fair notice’ of [the claims at issue].” (quoting Michelson v. Duncan, 407 A.2d 211, 217 (Del. 1979)); In re McDonald’s Corp. S’holder Deriv.

2020See Emerald Partners v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (issues not briefed are deemed waived). 31 in Bodie’s alleged breach of fiduciary duty.

2018There are four elements to state “an aiding and abetting claim: ‘(1) the 120 Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998). 121 Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009). 31 existence of a fiduciary relationship, (2) a breach of the fiduciary’s duty, . . . (3) knowing participation in that breach by the defendants,’ and (4) damages proximately caused by the breach.” 122 “Knowing participation in a board’s fiduciary breach requires that the third party act with the knowledge that the conduct advocated or assisted constitutes [a breach of fiduciary duty].” 123 “[T]he requirement that th

2015All of the recitations test for stating an aiding and abetting claim is a stringent one, turning on proof of scienter—a plaintiff must prove: (1) the existence of a fiduciary relationship, (2) a breach of the fiduciary‘s duty and (3) knowing participation in that breach by the non-fiduciary.‖). 501 Gantler v. Stephens, 965 A.2d 695, 708-09 (Del. 2009); Higher Educ.

2016No. 11216-VCS December 16, 2016 Page 10 here.21 The Supreme Court in RBC Capital Markets, LLC considered whether the engagement of a second investment bank that was engaged on a contingent fee basis would remedy the misconduct of the initially-engaged banker in connection with an aiding and abetting claim or would break the causal link between the first banker’s misconduct and the harm to Rural/Metro Corporation stockholders. 22 In El Paso, the Court considered the extent to which the engagement of a second banker on a contingent fee basis would cleanse the conflict of interest of the banker i

2015See also El Paso, 41 A.3d at 448 (stating that "it is difficult to prove an aiding and abetting claim”) (citations omitted); Binks v. DSL.net, Inc., 2010 WL 1713629 , at *’l0 (Del.

2014One of the necessary elements of an aiding and abetting claim is an underlying or predicate fiduciary breach.77 As a separate and independent reason for dismissing the aiding and abetting claim against Garrity, I note that, as an executive officer, i.e., the CFO of Aspen Group, Garrity himself owes fiduciary duties to the corporation, and 76 Crescent/Mach I P’rs, L.P. v. Turner, 846 A.2d 963, 972 (Del.

2008Crescent/Mach I Partners, L.P. v. Turner, 846 A.2d 963, 989 (Del.Ch.2000). 71 .

2023F. Aiding And Abetting Count VII asserts a derivative claim against Weiss for aiding and abetting “in the breaches of fiduciary duties committed by Pasko, Wander and 777 Partners.”112 An aiding and abetting claim has four elements: “(1) the existence of a fiduciary relationship; (2) the fiduciary breached its duty; (3) a defendant, who is not a 110 See Garfield, 277 A.3d at 360–62 (declining to dismiss an unjust enrichment claim as duplicative of a breach of contract claim). 111 In re Lear Corp. S’holder Litig., 967 A.2d 640, 657 (Del.

2020Consequently, because the only independent wrongfulness alleged by NuVasive is the aiding and abetting claim, NuVasive has failed to plead independent wrongfulness and its claim for tortious interference with prospective economic advantage is dismissed.” (emphasis in original)). 100 See In re Molycorp, Inc., 2015 WL 3454925 , at *11. 101 Compl. ¶ 175. 32 or mistake at the time of transfer.”102 Even for defendants who did not act with scienter, the absence of justification requirement suggests that the defendant must be at least “sufficiently aligned with [the] wrongdoer that [he] ought to disg

2014Although there is no requirement that knowing would have been important to a [Ramtron] stockholder considering whether or not to tender his shares to [Cypress] . . . .” Id. 70 Because Dent has not alleged adequately a disclosure violation, I also dismiss Count III of the Complaint for the remedy of quasi-appraisal, which is based on the allegation that Ramtron‟s stockholders were not provided with adequate information in the Proxy to make an informed decision as to whether or not they should seek appraisal.

2006See id. ("A third party may be liable for aiding and abetting a breach of a corporate fiduciary’s duty to the stockholders if the third party 'knowingly participates’ in the breach.”) (citing Gilbert v. El Paso Co., 490 A.2d 1050, 1057 (Del.Ch.1984)); Weinberger v. Rio Grande Indus., Inc., 519 A.2d 116, 131 (Del.Ch.1986) (dismissing aiding and abetting and conspiracy to breach fiduciary duty claim because the plaintiff did not establish the defendants knowingly participated in the breach). 148 .

2024The Restatement factors analyzed in Dole are the following: • The nature of the tortious act that the secondary actor participated in or encouraged, including its severity, the clarity of the violation, the extent of the consequences, and the secondary actor’s knowledge of these aspects; • The amount, kind, and duration of assistance given, including how directly involved the secondary actor was in the primary actor’s conduct; • The nature of the relationship between the secondary and primary actors; and • The secondary actor’s state of mind.104 Some Delaware trial courts have used the Restate

2024The Restatement factors analyzed in Dole are the following: • The nature of the tortious act that the secondary actor participated in or encouraged, including its severity, the clarity of the violation, the extent of the consequences, and the secondary actor’s knowledge of these aspects; • The amount, kind, and duration of assistance given, including how directly involved the secondary actor was in the primary actor’s conduct; • The nature of the relationship between the secondary and primary actors; and • The secondary actor’s state of mind.104 Some Delaware trial courts have used the Restate

2024As a result, his unjust 98 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (citation omitted). 99 In re Gen.