McRitchie v. Zuckerberg
Delaware Court of Chancery
315 A.3d 518 (2024)
- Written by Sean Carroll, JD
Facts
James McRitchie (plaintiff), a shareholder of Meta Platforms, Inc. (Meta), sued the directors and officers of Meta as well as Mark Zuckerberg as Meta’s controller (defendants), alleging that they breached their fiduciary duty to Meta’s diversified stockholders by managing the company in a way that focused on Meta’s financial performance, regardless of the performance of the market as a whole. McRitchie claimed that in the modern economy, prudent investors diversify their portfolios in such a way that they do well when the overall market does well. Essentially, McRitchie contended that Meta managed the corporation in a way that benefited Meta individually when Meta outperformed the market as a whole, but that Meta’s stockholders at large benefited when the market as a whole performed well. In the complaint, McRitchie focused on Meta’s negative externalities. McRitchie argued that this form of management violated the fiduciary duty and that if it did not, then the law should change so that it did violate the duty given the modern trend of diversified portfolios. Meta filed a motion to dismiss for failure to state a claim.
Rule of Law
Issue
Holding and Reasoning (Laster, J.)
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