Sounding The Bell For Proactive Risk Oversight

The Delaware Supreme Court recently sounded a warning bell for directors, reminding that as part of their duty of loyalty, they “must make a good faith effort to implement an oversight system and then monitor it.”¹ The case stems from the heavily publicized 2015 listeria outbreak involving Blue Bell Creameries, one of the nation’s largest ice cream manufacturers. The outbreak resulted in three deaths and caused the company to recall all of its products, cease production at all plants and dismiss over one-third of its employees. In a derivative suit brought against the Blue Bell directors, a stockholder alleged that the directors breached their duty of loyalty by failing to exercise their duty of oversight.