By: Jacey Manno
Introduction:
On December 2, 2024, the Delaware Supreme Court issued its opinion in the case In re Mindbody Inc., Stockholder Litigation.1 This decision redefined the standard of proof required for an aiding and abetting claim against a third-party bidder.2 This opinion elevated the standard of proof a plaintiff needs to meet to succeed on an aiding and abetting claim against a third-party bidder. After issuing this opinion, the Delaware Supreme Court reinforced this elevated standard with its decision in In re Columbia Pipeline Group Inc., Merger Litigation, which was released on June 17, 2025.3 The question that arises from these two decisions is: will there ever be a fact scenario to warrant a successful claim of aiding and abetting against a third-party bidder?
Standard of Proof before Mindbody:
The Court in Malpiede established that a successful aiding and abetting claim requires a plaintiff to prove the following four elements: “(1) the existence of a fiduciary relationship, (2) a breach of a fiduciary duty, . . . (3) knowing participation in that breach by the defendants, and (4) damages proximately caused by the breach.”4 The element of knowing participation requires the third-party bidder to act with scienter.5 Further, the third-party bidder must have acted “intentionally, knowingly, or with reckless indifference.”6 “To establish scienter, the plaintiff must demonstrate that the aider and abettor had ‘actual or constructive knowledge that their conduct was legally improper.’”7 This standard made it easier for plaintiffs to prove knowing participation on the third-party bidders, compared to the new standard established in Mindbody.8
Standard of Proof Established Through Mindbody:
Mindbody affirmed the required elements of an aiding and abetting claim that the Court in Malpiede stated.9 The Supreme Court in Mindbody “focus[ed] [their] analysis on the ‘knowing participation’ inquiry.”10 Here, the Supreme Court heightened the standard for knowing participation. The Court agreed with Malpiede that the third-party bidder must know “that the primary party has breached its fiduciary duty . . . .”11 But, the Supreme Court then went on to further explain that the knowledge of the primary party’s breach, alone, is insufficient to support a claim of aiding and abetting.12 The Court now requires the third-party bidder to “know that its own conduct regarding the breach was legally improper . . . .”13 Not only did the Mindbody decision expand the knowing portion of aiding and abetting, but it also elaborated on the participation requirement.14
Before escalating on the concept of participation, the Court noted “[w]hen an aiding and abetting claim is brought against a potential acquirer negotiating at arms’-length, participation should be the most difficult to prove.”15 The Court’s rationale for that statement rests in the fact that Delaware law protects arm’s-length negotiations, and as a result, a third-party bidder should not be liable for attempting to get the best sale price.16 The Supreme Court explained what constituted participation in the aiding and abetting sense for a third-party bidder.17 The Court determined that participation is proved through “substantial assistance.”18 The Court determined that the factors associated with “substantial assistance” defined in the Restatement (Second) of Torts § 876(b) are helpful in determining whether participation is met.19 The Court noted that “[t]he relevance of each factor depends on the facts of the case, and not all factors are relevant in all situations.”20 Finally, the Court states that “[the] substantial assistance requirement can also be understood as requiring active participation rather than ‘passive awareness.’”21
Given the expansion of the necessary knowledge needed by the third-party bidder, and the participation requirement, the Court in Mindbody caused the standard of proof needed for an aiding and abetting claim to become more stringent compared to the previously established standard. This notion is supported in Columbia Pipeline where the Supreme Court stated: “the requirement that an aider and abettor act knowingly—that is, with knowledge that the primary party’s conduct constitutes a breach of fiduciary duty and its own conduct is legally improper—‘makes an aiding and abetting claim among the most difficult to prove.’”22
Post Mindbody Case Application:
A decision enhancing the standard of proof needed for a claim begs the question of how the heightened standard will affect the outcome of aiding and abetting claims against third-party bidders going forward. The answer to this question comes from the cases following the Mindbody decision. After Mindbody, Rust v. Rust was the first case decided by the Court of Chancery that applied the expanded standard.23 In Rust, the court ruled that there were no alleged facts to support a reasonable inference that Bryn Mawr, as appointed Trustee, knowingly participated in the defendants’ alleged breach of fiduciary duties as co-managers of an LLC that the plaintiff had an interest in.24 In Rust, the decision of whether to let the aiding and abetting claim survive a motion to dismiss was contingent on the standard of knowing participation laid out in the Mindbody decision.25 This case is the first example of the effect the heightened standard established in Mindbody had on cases moving forward.
Similarly, the court in Borsody v. Gibson dismissed an aiding and abetting claim because the alleged aider and abettor did not meet the participation requirement, since substantial assistance requires active participation rather than passive awareness.26 The requirement of active participation was established by the Mindbody decision.27 In Borsody, the alleged aider and abettor did not join the board of directors until after the alleged breach occurred, making it unreasonable to conclude that the participation requirement was met by the accused.28 The aiding and abetting claim in Borsody was decided on the participation requirement that the Mindbody decision created.29 In Witmer v. Armistice Capital, LLC, the aiding and abetting claim was again dismissed for the plaintiff’s failure to plead that the alleged aider and abettors had knowing participation.30 In Sam I Aggregator LP v. Mars Holdco Corp, the aiding and abetting claim was dismissed for a failure to show that the alleged aider and abettor knew that their behavior was improper.31 In Sjunde AP-Fonden v. Activision Blizzard Inc., the court dismissed the aiding and abetting claim because the plaintiff failed to show that the alleged aider and abettor knew that the primary party was breaching their fiduciary duties.32 This decision rested on the standard set out by the Mindbody decision and was reaffirmed by the Columbia Pipeline decision.33 All the above referenced cases dismissed aiding and abetting claims due to the standard created by Mindbody.
Implications For the Future:
The decision in Mindbody and the following published cases support the idea of protecting third-party bidders and their right to negotiate for the best possible deal.34 The standard is strict for a party trying to prove aiding and abetting, yet it is forgiving of third-party bidders who chose not to act to put themselves ahead in negotiations. It remains to be seen if there will be a drop in aiding and abetting claims brought due to the heightened standard, but it seems plausible that if one is brought, it is unlikely to survive the motion to dismiss stage.35 It is unlikely to survive given the stringent standard established in Mindbody and reaffirmed in Columbia Pipeline, absent highly egregious conduct on the part of the third-party bidder. Therefore, the Delaware Supreme Court’s decision in Mindbody may have long-lasting effects on the manner in which third-party bidders conduct themselves, knowing that a claim for aiding and abetting has such a rigorous standard.
About the Author:
Jacey is a third-year law student at Widener University Delaware Law School. She graduated from West Chester University earning her bachelor’s degree with a major in Economics and a minor in Criminal Justice. During her final year of law school, Jacey serves as a Wolcott Fellow in the Court of Chancery in Delaware. After the completion of law school, Jacey plans to sit for the Delaware bar and begin as an Associate at Potter Anderson & Corroon LLP.
1 In re Mindbody, Inc., S’holder Litig., 332 A.3d 349 (Del. 2024).
2 Id. at 391.
3 Id.; In re Columbia Pipeline Grp., Inc., Merger Litig., 342 A.3d 324, 355 (Del. 2025).
4 Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001).
5 RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 862 (Del. 2015).
6 Id. (quoting Metro Commc’n Corp. BVI v. Advanced Mobilecomm Tech. Inc., 854 A.2d 121, 143 (Del. Ch. 2004) (citation omitted)).
7 Id. (quoting Wood v. Baum, 953 A.2d 136, 141 (Del. 2008) (citing Malpiede, 780 A.2d at 1075)).
8 See id.; In re Mindbody, Inc., S’holder Litig., 332 A.3d 349, 391 (Del. 2024).
9 Mindbody, 332 A.3d at 389.
10 Id. at 390.
11 Id. at 391.
12 Id. at 390–91.
13 Mindbody, 332 A.3d at 391.
14 Id. at 391–97.
15 Id. at 391.
16 Id. at 391–92.
17 Mindbody, 332 A.3d at 391–97.
18 Id. at 392.
19 Id. at 395–96.
20 Id. at 395.
21 Mindbody, 332 A.3d at 393 (citing Buttonwood Tree Value Partners, L.P. v. R.L. Polk & Co., Inc., 2017 WL 3172722, at *10 (Del. Ch. July 24, 2017)).
22 In re Columbia Pipeline Grp., Inc., Merger Litig., 342 A.3d 324, 357 (Del. 2025).
23 Rust v. Rust, 2025 WL 752327, at *1 (Del. Ch. Mar. 10, 2025).
24 Id. at *7.
25 Id.; Mindbody, 332 A.3d at 390–97.
26 Borsody v. Gibson, 2025 WL 1650395, at *9 (Del. Ch. June 11, 2025).
27 Mindbody, 332 A.3d at 394.
28 Borsody, 2025 WL 1650395, at *9.
29 Id.; Mindbody, 332 A.3d at 394.
30 Witmer v. Armistice Cap., LLC, 2025 WL 235077, at *18 (Del. Ch. Aug. 14, 2025).
31 Sam I Aggregator LP v. Mars Holdco Corp., 2025 WL 2375279, at *9 (Del. Ch. Aug. 15, 2025).
32 Sjunde AP-Fonden v. Activision Blizzard, Inc., 2025 WL 2803254, at *28 (Del. Ch. Oct. 2, 2025).
33 Id. at 25–28.
34 In re Columbia Pipeline Grp., Inc., Merger Litig., 342 A.3d 324, 360 (Del. 2025).
35 Sjunde, 2025 WL 2803254, at *27. (“And although both Mindbody and Columbia were issued on appeal from post-trial decisions, they were intended to inform the elements applied as the pleading stage as well.”).
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