One More Nail in the Coffin for Claims For Aiding and Abetting Breach of Fiduciary Duty

I've written before about the unsettled nature of North Carolina law on whether it's valid to assert a claim for aiding and abetting a breach of fiduciary duty.  It doesn't seem that there is much legal enthusiasm for allowing such a claim, but no Court, including the Business Court and the Court of Appeals, seems willing to come out and say that the claim is not recognized.

Judge Gale dismissed an aiding and abetting fiduciary duty claim last month in Tong v. Dunn, 2012 NCBC 16, but he skinned the cat in a different way than declaring the cause of action invalid.

Tong was suing his co-directors for their actions involving the sale of Engenious Software, Inc., the company on whose board they served.  He was claiming that Engenious -- the corporation -- had aided and abetted the directors in their breaches of fiduciary duty in accepting an offer he deemed too low for the company.

A corporation generally "cannot be said to conspire with its own directors," (Op. ¶ 28), so Tong argued that a director who was also an officer had aided the other directors in breaching their duties, and that her acts were imputed to the corporation.

Judge Gale wasn't biting on the distinction between directors and officers.  He held:

[a[s a general rule, the conduct of a corporate officer, within the scope of
employment, cannot expose the corporation itself to aider and abettor liability
because of the intra-corporate immunity doctrine, which recognizes that 'a
corporation cannot successfully conspire with its own officers, employees or agents.'

Op. ¶29 (quoting Tate v. Sallie Mae, Inc., 2011 WL 3651813, at *3 (W.D.N.C. Aug. 19, 2011).

The claim might have survived in Delaware, which Judge Gale observed recognizes a "limited exception to the intra-corporate immunity doctrine."  Op. ¶29  But in North Carolina, if Tong sticks in the Court of Appeals, there's not much chance of a plaintiff succeeding on a claim that a corporation aided and abetted its own officers or directors in breaching their fiduciary duties.

If you've noticed the lack of posting on this blog for the last couple of weeks, that's because of the visit of my son, who I had to spend a lot of time chauffeuring around town so he could visit his many buds, and my moving into a new house and all the distraction of that.  Oh, and there was also the season premiere on Sunday night of Game of Thrones and episode 2 of this season's Mad Men  to take into account.  But I am more focused now.  At least until next Sunday night.

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