A recent but little-known decision by a Delaware court may have substantially expanded the state’s jurisdiction over the directors of a Delaware corporation. Delaware has long had a director-consent-to-service statute: 10 Del. C. Section 3114 (the consent statute). Under that statute, consenting to serve as a director of a Delaware corporation also concomitantly gives consent to be sued in a Delaware court. However, the statutory language seemed to limit such suits to those involving a “violation of [the director's] duty in such capacity” as a director. Focusing on that language, for almost 25 years, Delaware courts held that the consent statute could only be used if at least one count of a complaint alleged the director-defendant had breached a fiduciary duty in his role as a director. Hence, absent such a claim, the consent statute was thought not to confer jurisdiction over a director by the Delaware courts.
The June 3 decision in Ting v. Silver Dragon Resources, Del. Super. C.A. No. N14C-12-067 WCC, however, may have changed Delaware law to make it possible to use the consent statute more broadly to sue a director of a Delaware corporation in Delaware courts. Ting upheld jurisdiction over a Delaware director with no contacts with Delaware “although no fiduciary duty claims were alleged” in the complaint. This raises the possibility that the director of a Delaware corporation may now be sued in Delaware for claims not arising out of his or her role as a director. That possibility is a major issue for Delaware law.
