United Food & Commercial Workers Union v. Zuckerberg
Delaware Court of Chancery
C.A. No. 2018-0671-JTL, 250 A.3d 862 (2020)
- Written by Matthew Celestin, JD
Facts
Mark Zuckerberg (defendant), the founder, CEO, board member, and controlling stockholder of Facebook, Incorporated (defendant) requested that Facebook’s nine-member board of directors reclassify Facebook’s shares to shift the majority of the company’s value to nonvoting stock. The board approved the reclassification, but after various Facebook shareholders sought an injunction, the board withdrew the reclassification. Thereafter, United Food and Commercial Workers Union (United) (plaintiff), a Facebook shareholder, filed a derivative action against Zuckerberg and other members of Facebook’s board (defendants), asserting that they violated their fiduciary duties by pursuing the reclassification, which ultimately harmed Facebook. The board members moved to dismiss, asserting that United failed to make a demand on the board or show that a demand would have been futile.
Rule of Law
Issue
Holding and Reasoning (Laster, J.)
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