Document: Shocking Technologies, Inc. v. Michael, C.A. No. 7164-VCN (Del. Ch. April 10, 2012)
The Delaware Court of Chancery dismissed a claim brought by Shocking Technologies, Inc. (“Shocking”) against one of its directors seeking the director’s removal from Shocking’s board of directors by the Court prior to an adjudication of liability for breach of the fiduciary duty of loyalty. Under Section 225(c) of the Delaware General Corporation Law (“Section 225(c)”), the Delaware Court of Chancery is empowered to remove a director of a corporation if such director has been found by “prior judgment on the merits” to have breached his fiduciary duty of loyalty. Plaintiff argued, and the Court did not completely reject the proposition, that the Court had the inherent equitable power to remove a director for a breach of fiduciary duty in an action not brought in accordance with Section 225(c). However, the Court found that the action before it was not so unusual or pressing that it would be inclined to exercise any inherent equitable powers (if they existed) to remove a sitting director who had not been adjudicated liable of any wrongdoing. The Court also noted in a footnote that there was significant authority for the proposition that it not have the power to remove a sitting director other than as granted by statute.