Marchand v. Barnhill
Delaware Supreme Court
212 A.3d 805 (2019)
Stock in Blue Bell Creameries plummeted after listeria-contaminated ice cream killed three people. Shareholder Jack Marchand II (plaintiff) sued, alleging Blue Bell’s directors (defendants) failed to implement appropriate food-safety compliance protocols. In the year before the outbreak, management received 10 listeria reports that supposedly never reached the board. After reviewing Blue Bell’s books and records, Marchand said the board meeting minutes for that year never mentioned the listeria reports. Marchand also claimed the board had no committee charged with monitoring food safety, did not regularly devote a portion of meetings to food-safety compliance issues, and lacked any protocol or expectation that management would give the board key food-safety reports or summaries. In sum, Marchand alleged the board made no effort at all to implement a mandatory board-level reporting system of any kind. Amounts of bacteria over legal limits appeared in tests in January 2015 and spread to Blue Bell products by February, and the outbreak spiraled out of control. The directors moved to dismiss, claiming Marchand had not alleged anything showing bad faith, a prerequisite to holding directors liable. The judge dismissed the claims against the directors. Marchand appealed.
Rule of Law
Holding and Reasoning (Strine, C.J.)
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