Bloomberg Law
Jan. 17, 2023, 10:35 AM

AmerisourceBergen Spat Gives Investors Edge in Corporate Suits

Jennifer Kay
Jennifer Kay
Staff Correspondent

A first-of-its-kind ruling in a case against AmerisourceBergen Corp. could give investors more time to hold corporate leaders accountable for their company operations.

The Delaware Chancery Court applied a new framework for evaluating allegations of wrongdoing over a long period of time: Treat the alleged instances of a wrongful act as part of a sequence, and then each instance gives rise to a separate statute of limitations.

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That means shareholders may have more leeway to file claims of a fiduciary breach of duty against the leaders or board members of drug companies, banking institutions, or other corporate entities, legal scholars say. Such claims, alleging that a board failed to engage in adequate oversight or ignored red flags over many years, are commonly referred to as Caremark claims.

The ruling “certainly allows investors to pursue claims internally regarding fiduciary breaches that might not have such a forgiving statute of limitations in different contexts for claimants who are outside the corporation,” said Silpa Maruri, partner and co-chair of the Delaware practice at Quinn Emanuel Urquhart & Sullivan LLP.

Vice Chancellor J. Travis Laster held last month that shareholders weren’t too late in filing their lawsuit against AmerisourceBergen’s senior leaders over the drug company’s alleged role in the opioid epidemic.

He allowed the pension funds leading the lawsuit to go after any AmerisourceBergen policy or decision after Oct. 20, 2016. The claims are timely because the wrongdoing allegedly continued until a $6 billion settlement in 2021, he said.

Statutes of limitation often constrain third-party claims of corporate wrongdoing, under certain tort reforms that restrict when individuals can bring litigation or the amount they can recover in damages. People who lost loved ones to opioid overdoses, for example, won’t benefit from Laster’s ruling.

But it could help investors filing Caremark claims, now that Laster has shed light on the standard for evaluating the statutes of limitation for those kinds of lawsuits.

If corporate leaders believed statutes of limitation protected them against third-party litigation that could hurt their bottom lines, now they should worry about investors who may be able to prevail with similar claims but under a different civil process, said Carliss Chatman, a professor of corporate law at the Washington & Lee University School of Law.

“If we have some repeat players, kind of in the same way that we had with the companies that were involved with opioids, having little red flags pop up over and over again for the last 20 years and just getting away with it, I could see that ruling helping plaintiffs in a difficult-to-discover, simmering breach of duty where the regular, ordinary third-party plaintiffs don’t have a cause of action,” she said.

Opioid Epidemic

AmerisourceBergen is one of three major wholesale distributors of opioid pain medication in the US. Shareholders claimed its senior leaders breached their fiduciary duty with decisions that they say helped fuel the nationwide opioid epidemic. The company has so far paid $6 billion to settle claims by states and local governments, and it also has spent $1 billion on its legal defense.

Among the red-flag policies Laster cited from 2016 through 2021 was an order monitoring program—designed to detect and prevent diversion of controlled substances—that year after year reported extremely low levels of suspicious opioid orders to federal authorities, even as legal scrutiny increased along with drug sales. For example, AmerisourceBergen received over 27 million opioid orders in 2019 but reported only 1,091 orders as suspicious—a rate of 0.004% of total orders that year, according to the opinion.

“It bears emphasizing that a starting date of October 20, 2016 for the actionable period does not mean that evidence from earlier periods is irrelevant,” he said.

The best approach is to treat those decisions as “a series of related decisions and conscious non-decisions as a sequence of wrongful acts, each of which gives rise to a separate limitations period,” Laster wrote.

“In terms of equities, efficiencies, and policy considerations, the separate accrual approach strikes an appropriate balance by respecting the important interests served by limitations periods while preserving a litigation vehicle that can provide accountability and generate compensation for injuries,” he said.

AmerisourceBergen ultimately prevailed in the case. Laster subsequently ruled the board’s actions to keep the addictive drugs off the black market were sufficient to avoid liability. The shareholder derivative lawsuit was “fatally undermined” by a ruling from a federal judge in West Virginia who determined AmerisourceBergen’s leaders had met their legal obligations, he said Dec. 22.

The plaintiffs have asked the court to reconsider that ruling, in light of a new US Department of Justice complaint against AmerisourceBergen.

Caremark Clarity

Laster’s opinion “provides clarity in an area where there was no clarity” regarding Caremark claims, Maruri said.

In a 1996 decision in In re Caremark International Inc. Derivative Litigation, the Delaware Court of Chancery found that directors can be held personally liable for company operations if they knowingly ignored many red flags for many years.

But Caremark claims can raise thorny questions about the statute of limitations. Laster devoted 20 pages of his Dec. 15 ruling to tracing the two main approaches courts have taken to the issue.

Judges often apply the “discrete act” rule, which treats all the wrongdoing allegations as a single, years-long bad act. Under that approach, judges start the statute of limitations clock from the very first allegedly wrongful act. In the AmerisourceBergen case, that would have ensured that the statute of limitations had run out before the pension funds filed their lawsuit in late December 2021.

He also could have gone to the other extreme, applying what’s called the “continuing wrong” approach that’s used in other contexts. Under that framework, all the corporate decisions would be considered part of a single scheme that continued until the most recent wrongful act, which is when the statute of limitations would start to run.

Laster instead decided on a “Goldilocks solution,” according to the opinion. This middle-ground framework sets a precedent for other jurisdictions when they’re evaluating such claims, Maruri said.

“It’s an intermediate approach,” she said. “It’s more investor friendly than it could have been in that the court could have adopted a discrete act approach in which the court would just look at the very first act of wrongdoing and decide whether or not the claim was cut off.”

Laster generally leans pro-investor, said Charles Elson, founding director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

“That’s what Delaware is about, really—unless you protect investors, no one invests. I think he takes that mission very seriously,” he said. “In this case, if he believed that extending the statute of limitations, if you will, would ensure better investor protection and better behavior, it probably explains why he did it.”

AmerisourceBergen hasn’t appealed the Dec. 15 ruling on the timeliness of the complaint. It’s hard to say how broad an impact Laster’s ruling might have without an opinion on the issue from the Delaware Supreme Court, Elson said.

Statutes of limitations exist for a reason, and if the defense argues they couldn’t have designed a compliance program around a risk they didn’t know existed, “it’s a very fair point,” Elson said.

The case is Lebanon Cty. Emp. Ret. Fund v. Collis, Del. Ch., No. 2021-1118.

—With assistance from Mike Leonard

To contact the reporter on this story: Jennifer Kay in Philadelphia at

To contact the editors responsible for this story: Alexis Kramer at; Cheryl Saenz at