Segway Inc. v. Cai
Delaware Court of Chancery
C.A. No. 2022-1110-LWW (2023)
- Written by Jamie Milne, JD
Facts
Segway, Inc. (plaintiff) sold personal transportation devices known as segways. In 2015, Segway was acquired and became a subsidiary of Ninebot (Beijing) Tech Co. (Ninebot). The same year, Segway hired Judy Cai (defendant) as Segway’s vice president of finance. In late 2015, Cai became Segway’s president. Cai continued to act as Segway’s in-house accountant, managing tax matters and compiling and reviewing financial information prepared for Ninebot’s management team. Between 2015 and 2020, Segway’s sales declined and its accounts receivable grew. In 2020, Segway laid off most of its employees and closed its headquarters. After the closure, Cai, too, was terminated. As Segway’s financial information was integrated into Ninebot’s systems, questions arose about Cai’s representations of Segway’s financial condition. Segway came to believe that Cai had known or should have known about Segway’s declining sales and increasing accounts receivable but had concealed and failed to address those issues. Consequently, Segway sued Cai for breaching her duty of oversight, a component of the fiduciary duty of loyalty. Cai moved to dismiss the complaint, arguing that the facts did not support a breach-of-oversight claim.
Rule of Law
Issue
Holding and Reasoning (Will, J.)
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