Majority Disinterested/Independent Board and Direct Litigation

In Orman v. Cullman (794 A2d 5, 2002), the Chancery Court considered the pleading requirements to overcome the business judgment presumption in the context of direct litigation. Importantly, in the absence of a controlling shareholder, plaintiffs must plead facts sufficient to call into question the ability of a majority of the board to act in the best interests of the corporation. In the absence of such disability on behalf of a majority of the board, the court will presume that the board, as a whole, was capable of making a disinterested decision.  This approach in the context of direct litigation is consistent with - though not identical to - demand futulity pleading requirements under Zuckerberg that we see in derivative litigation.