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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

IN RE CORNERSTONE THERAPEUTICS INC, STOCKHOLDER LITIGATION. Raymond Leal, Yaoguo Pan, and Xiaosong Hu, Defendants Below-Appellants, v. Phillip Meeks, Ernesto Rodriguez, and Alan Hall, Plaintiffs Below-Appellees.

Headnote

In many cases, the entire board is not guilty of a violation of the duty of loyalty. Rather, only one or two directors may have been alleged to have engaged in bad acts. Nevertheless, plaintiffs will often sue the entire board of directors. The question then arises whether when a plaintiff challenges an interested transaction that is presumptively subject to entire fairness review, must the plaintiff plead a non-exculpated claim against the disinterested, independent directors to survive a motion to dismiss by those directors? Or must those directors remain in the suit. The Cornerstone opinion provides some guidance on this question.