Important ruling on use of section 102(b) (7) exculpatory provisions expected in 2015.

• Position: Brief article

In In re Cornerstone Therapeutics, Inc., C.A. No. 8922-VCG, 2014 WL 4784250 (Del. Ch. Sept. 26, 2014), the Court of Chancery certified for interlocutory appeal its decision to deny a motion to dismiss disinterested director defendants when the company has a Section 102(b)(7) provision exculpating such directors from liability. The court denied the motion to dismiss because the plaintiffs were challenging a transaction subject to entire fairness review ab initio.

The court held that interlocutory review was appropriate because its decision (i) determined a substantial issue as it could result in the dismissal of the director defendants from the litigation, (ii) established a legal right in that it required the director defendants to be parties to the litigation, unable to assert their Section 102(b)(7) defense until after trial, and (iii) involved conflicting decisions of the Court of Chancery. The Delaware Supreme Court accepted the interlocutory appeal, which is...