Aiding and abetting claims against a buyer for a target’s breach of fiduciary duties are meant to be rare. Yet to survive a motion to dismiss, plaintiff must show only that it is “reasonably conceivable” that buyer “knowingly participated” in the breach of fiduciary duties. This may explain why there were at least three cases last year in which aiding and abetting claims against a buyer survived a motion to dismiss.
Aiding and abetting claims can be particularly attractive to plaintiffs, because even if the underlying fiduciary duty breaches are exculpated duty of care claims, aiding and abetting claims against buyer and/or financial advisor will be allowed to proceed, providing plaintiffs with a path to collect damages from third parties where damages from directors (and their insurers) would not be available. And where breaches of duty of loyalty are implicated, buyer is likely to provide deeper pockets for recovery than any individual fiduciary, especially given limits on insurance that may exist in respect of such claims.
Partners Neil Whoriskey and Alan Stone analyze multiple cases from last year in which these types of claims against buyer survived a motion to dismiss, and discuss why buyers might wish to limit the circumstances in which they are required to litigate these claims for the Milbank General Counsel blog. Click to read the full post, “Buyers Beware – Aiding and Abetting Claims Based on Target’s Proxy Disclosure.”
