## Facts

- James McRitchie, a Meta Platforms, Inc. stockholder, sued Meta’s directors and officers and Mark Zuckerberg (alleged controller), asserting claims grounded in Delaware fiduciary duty law.
- McRitchie alleged that modern prudent investors hold diversified portfolios and that investors benefit most when the overall market performs well, not merely when one company outperforms the market.
- He contended Meta’s leadership managed the company to improve Meta’s firm-level financial performance even when Meta’s conduct created “negative externalities” (economy-wide and social harms) that could reduce the value of diversified investors’ other holdings.
- Based on that premise, McRitchie argued that the defendants breached fiduciary duties by prioritizing Meta’s standalone value rather than stockholders’ portfolio-wide welfare as diversified market participants.
- In the alternative, McRitchie argued that if existing Delaware law did not recognize such a portfolio-wide duty, Delaware law should change to do so.
- Defendants moved to dismiss for failure to state a claim, arguing Delaware fiduciary duties are owed to the corporation and its stockholders in a firm-specific sense, not to stockholders as diversified investors across the market.

## Issues

1. Under Delaware law, do corporate directors owe fiduciary duties to stockholders as diversified investors in the market as a whole, or only to the corporation and its stockholders as stockholders of that particular corporation?
2. May the Court of Chancery revise Delaware fiduciary duty doctrine in an individual case to adopt a “diversified-investor” or portfolio-wide model for large, market-significant corporations?
3. Does a complaint state a fiduciary-duty claim when the alleged breach depends on a duty Delaware law does not recognize?

## Decision

- The Court of Chancery granted the defendants’ motion to dismiss.
- The court held Delaware fiduciary duties are firm-specific: directors owe duties to the corporation and “its” stockholders, meaning stockholders in their capacity as investors in that corporation.
- The court declined to adopt the plaintiff’s proposed diversified-investor, portfolio-wide model through trial-court adjudication.

## Legal Principles

- Under Delaware’s standard formulation, directors owe fiduciary duties to the corporation and its stockholders, understood as the stockholders of the specific corporation the directors serve.
- Fiduciary obligations turn on capacity: a person can relate to a corporation in multiple roles (e.g., stockholder, employee, customer, creditor), but directors’ fiduciary duties run to stockholders only in their capacity as stockholders of that firm.
- Delaware precedent assumes a single-firm model for fiduciary duties; a pleading that requires recognition of a different, portfolio-wide duty fails to state a claim under existing law.
- The Court of Chancery, as a trial court, will not restructure core fiduciary duty doctrine based on policy arguments where controlling precedent points the other way; such a change must come from the Delaware Supreme Court or the General Assembly.
- Stockholders who want a corporation to pursue objectives other than firm-level value can attempt private ordering (for example, through charter provisions or other governance arrangements), but the default fiduciary framework remains firm-specific.

## Conclusion

McRitchie v. Zuckerberg reaffirmed that Delaware fiduciary duties run to the corporation and its stockholders as stockholders of that particular firm, not to investors as diversified holders of market-wide portfolios. Because the complaint’s theory depended on a portfolio-wide duty inconsistent with Delaware’s firm-specific fiduciary model, the Court of Chancery dismissed the action at the pleading stage and left any fundamental change in the doctrine to higher authority or legislation.


McRitchie v. Zuckerberg, 315 A.3d 518 (2024)