Zapata Corp. v. Maldonado

William Maldonado (plaintiff), a Zapata shareholder, brought a derivative action on Zapata's behalf against ten of its officers and directors for breach of fiduciary duty. He did not first demand that the board sue, arguing demand would be futile because every director was a defendant. Zapata later added two new outside directors and appointed only those two to a special committee to investigate. The committee concluded the suit should be dismissed as not in Zapata's best interest. The Court of Chancery denied Zapata's motion to dismiss, and Zapata took an interlocutory appeal.

Whether, when a special litigation committee moves to dismiss a properly instituted derivative suit as contrary to the corporation's best interest, the Court of Chancery must first assess the committee's independence, good faith, and supporting bases, and then apply its own independent business judgment before ruling on the motion.