Malone v. Brincat

Mercury Finance stockholders Doran Malone, Joseph Danielle, and Adrienne Danielle (plaintiffs) sued Mercury's directors and its auditor KPMG (defendants), alleging the directors intentionally overstated Mercury's financial condition in SEC filings and shareholder disclosures, causing the company to lose roughly $2 billion in value, and that KPMG aided that breach. The directors moved to dismiss, arguing they owed no fiduciary duty of disclosure absent a request for shareholder action, and the Court of Chancery agreed, dismissing the complaint with prejudice on the theory that no such duty existed without a shareholder-action request; the plaintiffs appealed.