By: Hanna Donohue[1]
In the intervening years since the “Me-Too” Movement of the late 2010s[2], sexual misconduct, harassment, and workplace discrimination does not seem to have improved. The halls of Congress[3], network talk shows[4], and activist marches[5] have all proven to be unsafe and unwelcome venues for women and people of color. Most cases of sexual harassment in the workforce go underreported.[6] Many organizations have struggled to adapt, as leaders face public backlash for mishandling these controversies.[7]
Delaware corporate law begins with the anchoring principle that the business affairs of each corporation should be managed by a board of directors.[8] Directors must adhere to fiduciary duties to “promote the value of the corporation for the benefit of its shareholders.”[9] Directors owe fiduciary duties of loyalty and care to the corporation itself, and to its shareholders.[10] The Delaware Court of Chancery, as a court of equity, is the epicenter of fiduciary duties.[11]
Delaware distinguishes between the standard of conduct and standard of review in evaluating whether directors have breached their fiduciary duties.[12] Standard of conduct refers to what directors are expected to do under the fiduciary duties of loyalty and care.[13] The standard of review is the test that the Court will apply to determine if directors have met their standard of conduct.[14] The standard of review depends on whether the board members:
“(i) were disinterested and independent (the business judgment rule), (ii) faced potential conflicts of interest because of the decisional dynamics present in particular recurring and recognizable situations (enhanced scrutiny), or (iii) confronted actual conflicts of interest such that the directors making the decision did not comprise a disinterested and independent board majority (entire fairness).”[15]
A recent case addressed the intersection of a corporate governance and sexual harassment.[16] The Court of Chancery was asked to decide a Motion to Dismiss for failure to state a claim under Rule 12(b)(6) and lack of personal jurisdiction.[17] A stockholder and director of a closely held corporation filed a complaint against Defendant Christopher Lundgren (“Lundgren”) for his breach of fiduciary duties in connection with Mr. Lundgren’s sexual harassment of two employees.[18] Lundgren utilized his position as Vice President and Secretary of the corporation to sexually harass employees of the corporation and expose employees to his reprehensible racist views.[19]
The former employes then filed charges with the Equal Employment Opportunity Commission (EEOC) and subsequent lawsuits in New York state court.[20] The suits ended in judgments totaling over $1.8 million: “approximately $1.35 million against the Company and Lundgren jointly, and over $235,000 against the Company and Lundgren each individually.”[21] Plaintiff brought the present case to hold Lundgren liable to the Company for those judgments, and other associated losses, because of Lundgren’s harassment, as a breach of the fiduciary duty of loyalty.[22] Plaintiff argued that this case parallels In re McDonald’s Corp, in which the Court found that a corporate officer accused of sexually harassing employees, was found in breach of the duty of loyalty.[23] In McDonald’s, the Court found that the senior officer breached his duty of loyalty by failing to properly oversee and maintain a safe workplace at the enterprise level.[24] The Plaintiff in Brola argued that the Lundgren similarly breached his duty of loyalty by creating a hostile workplace.[25]
Vice Chancellor Will did not agree with Plaintiff’s assertion of the breach of fiduciary duties and as such, the Motion to Dismiss the Complaint was granted.[26] The primary objective of Delaware corporate law is to protect the corporate decision-making process.[27] The Court failed to recognize a cognizable claim in requesting an expansion of the duty of loyalty.[28] The duty of loyalty refers to the divided allegiances to the corporation and its stockholders, meaning self-dealing, conflicted transactions, and bad faith.[29] The Court was not willing to expand the duty of loyalty to include workplace harassment.[30] “However deplorable, [Lundgren]’s harassment and bigotry were personal malfeasance, not a misuse of his corporate office.”
Workplace harassment is never acceptable and Lundgren’s actions and communications to his subordinates constitute harassment. The Court correctly held that this shareholder cannot recover from Lundgren for his harassment, as a breach of his fiduciary duties. The Court points to the important policy implications of maintaining the boundaries of fiduciary duties in the interest of limiting a deluge of future claims for lesser offenses.[31] The Court also correctly pointed out that subsequent litigation over the same harassment claim would lead to traumatization of the victim for the purpose of “commodifying personal trauma” without the privacy protections of relevant employment statutes.[32] This matter was already properly adjudicated under state and federal laws and to permit this case to continue would allow this shareholder plaintiff, and others, to bypass important jurisdictional restrictions for legal claims such as harassment.[33] The Court correctly extricated this matter from equity jurisdiction and protected Lundgren’s victims. Shareholders still maintain the power to nominate and remove directors that would subject the corporation to liability[34], but do not have an equitable remedy to capitalize off former directors and their bad behavior. Shareholders are encouraged to make more wise decisions in electing directors who align with the corporation’s values and treat employees with respect.
[1] Hanna Donohue is a third-year law student at Widener University Delaware Law and Staff Editor for Volume 51 of the Delaware Journal of Corporate Law. In addition to her studies, she is currently serving as the intern for Magistrate Jessie R. Benavides in the Court of Chancery. Hanna is expected to graduate in May 2026 and after graduation, she will be returning to the Delaware Department of Justice as a Deputy Attorney General.
[2] Jodi. Kantor & Megan Twohey, Harvey Weinstein Paid Off Sexual Harassment Accusers for Decades, N.Y. Times (Oct. 5, 2017), https://tinylink.net/xvuPl (In 2017, Hollywood producer Harvey Weinstein was found to have had a history of credible sexual harassment, unwanted physical contact, and intimidation for several decades. In 2020, Mr. Weinstein was found guilty of third-degree rape and first-degree criminal sexual act and sentenced to 23 years prison sentence in New York, which has been subsequently overturned and retried. Mr. Weinstein was also convicted of rape, forced oral copulation and sexual misconduct in California, and will serve 16 years after his New York sentence.).
[3] Robin Abcarian, Why Have So Many Men Failed to Learn The Lessons of Me Too?, L.A. Times (Apr. 19, 2026) https://tinylink.net/9U9CV.
[4] Larisa Epatko, NBC Host Matt Lauer Fired for ‘Inappropriate Sexual Behavior’, PBS News, (Nov. 29, 2017) https://tinylink.net/Vkw0H; Daniella Silva & Kahan Rosenblatt, Charlie Rose Fired by CBS, PBS and Bloomberg over Sexual Misconduct Allegations, NBC News (Nov. 20, 2017), https://tinylink.net/x2K9R; David Folkenflik, What Brought Dwon Bill O’Reilly, NPR (Apr. 20, 2017), https://tinylink.net/wXWUJ.
[5] Manny Fernandez & Sarah Hurtes, Cesar Chavez, a Civil Rights Icon, Is Accused of Abusing Girls for Years, N.Y. Times (Mar. 18, 2026), https://tinylink.net/LMkcg (Several women credibly accused now deceased Labor Rights activist Cesar Chavez of sexual misconduct. Many of the women alleged that Mr. Chavez groomed, sexually assaulted and/or raped them while they were underage.)
[6] Christina Nizamidou & Martin Sposato, Organizational Crisis Management: Addressing Professional Misconduct in Modern Workplaces, Humanities & Social Services Communications, 2 (Feb. 13, 2026).
[7] Holly Corbett, The #MeToo Movement Six Years Later: What’s Changed And What’s Next, Forbes (Nov. 16, 2023), https://tinylink.net/2bohx.
[8] Del. Code Ann. tit. 8, § 141(a).
[9] eBay Domestic Hldgs., Inc. v. Newmark, 1 A.3d 1, 34 (Del. Ch. 2010).
[10] Polk v. Good, 507 A.2d 531, 536 (Del. 1986).
[11] In re Trados Inc. S’holder Litig., 73 A.3d 17, 35 (Del. Ch. 2013) (“The breach of fiduciary duty claim seeks an equitable remedy that requires a finding of wrongdoing.”)
[12] Id.
[13] Id.
[14] Id. at 35–6.
[15] In re Trados Inc., 73 A.3d at 36.
[16] Brola v. Lundgren, 349 A.3d 1198 (Del. Ch. 2025).
[17] Id. at 1202.
[18] Id. at 1201.
[19] Id. (Lundgren sent one employee multiple offensive and sexually explicit messages, and then was excluded from meetings when she rebuffed Lundgren’s advances. Another employee was sent multiple “degrading comments” and “inappropriate requests that led to her resignation.”).
[20] Brola, 329 A.3dat 1201–02.
[21] Id. at 1202.
[22] Id. at 1201–02.
[23] Id. at 1205–06.
[24] Brola, 329 A.3d at 1206.
[25] Id. at 1203 (“Brola alleges that Lundgren exploited his supervisory authority to harass subordinates—a power that purportedly derives from his positions as a Credit Glory director and officer.”).
[26] Id. at 1208–09.
[27] Id.
[28] Id. at 1204–05. (“The core issue is whether corporate law can be broadened to encompass interpersonal workplace disputes. It cannot. Delaware law governs internal affairs—the discretionary management of business assets, oversight of enterprise-level risks, and fulfillment of the fiduciary promise.”)
[29] Brola, 329 A.3dat 1205.
[30] Id. at 1206.
[31] Id. at 1206–07. (The Court expressed concern that “every self-serving, reprehensible act” would open the door for a corporate officer to sue for breach of fiduciary duty of loyalty.).
[32] Id. at 1206–08. (“Equity must not sanction collateral litigation that exposes victims to unwanted scrutiny in the service of corporate recovery and attorneys’ fees.”).
[33] Brola, 329 A.3d at 1206–08. (“To sustain Brola’s claims would impose a precarious layer of fiduciary liability onto comprehensive legal frameworks and convert this court of equity into a general workplace disciplinary forum, adjudicating matters well beyond its purview.”).
[34] Del. Code Ann. tit. 8, § 141(k).
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