Issue No. 9 — October 5, 2026

Lead Matter

Dodiya v. Franklin — the safe harbor is not self-executing (Del. Ch. Aug. 26, 2026, C.A. No. 2025-0932-LWW)

An early decision applying amended Section 144's safe harbors to a challenged merger involving a conflicted director — with a mixed result. Whole Earth Brands was sold at $4.875 per share to an entity controlled by Martin Franklin, whose vehicles held about 20 percent of the company. The complaint alleged that his son, then interim chief executive and a director, passed confidential information to his father's vehicles without a confidentiality agreement — including a January 2023 Kroll goodwill-impairment analysis implying $9.73 per share, not a contemporaneous merger valuation; that those vehicles bought shares before bidding; that after discovering the leak the board restored the son's access to deal information; and that the proxy told stockholders he took no part in the process. At the pleading stage, Vice Chancellor Will held that the defendants could not invoke the board-approval and stockholder-vote routes under Section 144(a)(1) and (a)(2) on those facts. The board-approval route requires authorization in good faith and without gross negligence across the process; a disinterested majority is necessary but not sufficient, and an interested director's mere participation does not defeat the safe harbor — but the pleaded handling of a known leak could reasonably be conceived as grossly negligent. The stockholder vote was alleged not to be informed because the proxy's account of the conflicted director's role was allegedly misleading. The fairness route under Section 144(a)(3) was not resolved. The court dismissed the Section 203 and conversion claims and let fiduciary-duty claims proceed only against Michael E. Franklin and Irwin D. Simon; no liability was established. For venture-backed companies, an early map of what the safe harbors require when an insider is on the other side: a process that does not knowingly expose deal information to the conflicted fiduciary, and disclosure that accurately describes that fiduciary's role.

On The Docket

Rippling v. Deel — the September 25 order on Deel's counterclaims (N.D. Cal., No. 3:25-cv-02576)

Following the February 23 order covered in Issue No. 7, Judge Charles Breyer ruled on September 25 on Deel's amended counterclaims and on the affidavit of the former Rippling employee at the center of the case. The court denied Deel's motion to strike the affidavit, declining to reopen issues already decided; compelled arbitration of the counterclaims concerning alleged unauthorized access to Deel's service and stayed Deel's racketeering counterclaims and its federal and California computer-access counts in court pending that arbitration; dismissed certain domain-related counterclaims with leave to amend; and allowed part of Deel's false-advertising counterclaim to proceed while dismissing other advertising allegations, several with leave to amend. Rippling's federal racketeering and trade-secret claims continue. Deel denies Rippling's allegations and has characterized the suit as a smear campaign; Rippling disputes Deel's counterclaims in turn. All allegations on both sides remain untested.

Ayers v. Foley — an early reading of the new independence presumption (Del. Ch. June 15, 2026, 2026 WL 1723538)

An early Court of Chancery decision interpreting the 2025 amendments, in a derivative challenge to director compensation at a listed company. Vice Chancellor Will held that Section 144(d)(2)'s heightened presumption — that a director the board has found independent under exchange rules is presumed disinterested, rebuttable only by substantial and particularized facts — is not confined to the statute's safe harbors and applies to demand-futility analysis under Rule 23.1. The result was split: demand futility failed as to the chairman's equity grant, while claims concerning the directors' own annual compensation survived in part, the court confirming that directors who award compensation to themselves remain interested. Read with Dodiya, the pair marks the statute's two visible edges: pleading-stage protection for directors properly found independent, and a board-approval route under Section 144(a)(1) that may fail when well-pleaded facts support gross negligence or bad faith in the authorization process — a higher bar than ordinary carelessness, whose loss does not itself establish liability.

Ruling In Focus

Kim v. FemtoMetrix — the voting-agreement amendment that unseated a designee (Del. Ch. Aug. 8, 2025, C.A. No. 2025-0025-LWW)

A decision with direct consequences for investors whose board seats rest on a voting agreement. Avaco, a FemtoMetrix investor, held a Series B designation right and had placed its employee on the board; its designee could be removed without Avaco's consent only for cause, and the agreement could not be amended “with respect to any Investor” without that investor's consent unless the amendment applied to all investors “in the same fashion.” After Avaco sued the company in a commercial dispute, the company and other stockholders — without Avaco's consent — amended the agreement to disqualify “Conflicted Directors,” defined as anyone affiliated with a person in commercial litigation against the company; holders of more than 51 percent of the Series B and 70 percent of the common then executed a written consent instructing the company to remove Avaco's designee, which the company effected. On expedited cross-motions in a Section 225 action, Vice Chancellor Will upheld the removal: the amendment was facially neutral and applied to all investors in the same fashion, and Avaco's veto protected only the designation provision, not the removal and qualification provisions the amendment changed. A decided ruling on summary judgment, resting on this agreement's particular language — and a drafting question for any investor whose seat depends on a voting agreement.

Doctrine Watch

Designated directors under the amended statute

Two provisions of the 2025 amendments bear on designated directors, with different reach. Section 144(d)(2)'s heightened presumption of disinterestedness — applied in Ayers and Dodiya — by its terms covers corporations with securities listed on a national exchange and directors the board has found independent under exchange rules; it does not extend to private corporations. Section 144(d)(3) is different: a director who is not a party to the transaction is not, of itself, shown to be interested by the fact that an interested person designated or nominated the director — a point the Dodiya court invoked in passing, and one that may matter in private-company disputes, where fund-designated directors approving insider-led transactions are the ordinary case. For corporations the amendments reach, a challenge to an insider-led transaction cannot rest on the bare fact that a fund designated the approving directors; it must plead the material interest or relationship itself. It sits alongside the designee lines this publication has tracked (Issues Nos. 1, 2 and 6), and the amendments do not apply to actions pending by February 17, 2025. Their application in private venture-backed disputes remains to be developed; the Docket will track those decisions as they issue.

Also Tracking

Cloudflare — decision pending after the August 12 hearing (Issue No. 7) • TSVC — the September 1 preliminary-injunction motion, pending (Issue No. 3) • ATP — implementation of the recognition and funding orders (No. 25-12177-LSS) and the district-court appeal (D. Del. No. 1:26-cv-00495-JLH; Issue No. 5) • Musk v. OpenAI — the request for an appealable judgment on the tried claims (Issue No. 4) • SEC v. Gao — further proceedings concerning Gao's proposed final relief (Issue No. 2).