Biolase, Inc. v. Oracle Partners, L.P., No. 270, 2014 (June 12, 2014)

The Delaware Supreme Court affirmed a Court of Chancery decision that held a corporate director’s oral resignation to be valid under 8 Del. C. § 141(b).  8 Del. C. § 141(b) provides that “[a]ny director may resign at any time upon notice given in writing or by electronic transmission to the corporation.”  The appellant in this action argued for a strict interpretation of this language and urged the Supreme Court to adopt a special standard of review when evaluating whether a director resigned by oral statement or by other conduct.

The Supreme Court, however, found that the plaintiff’s claim lacked merit.  The Court pointed out that the Court of Chancery has long-held that the word “may” in 8 Del. C. § 141(b) is permissive and authorizes a director to resign by oral statement.  In reaffirming this sound interpretation, the Supreme Court recognized that since the Court of Chancery’s reading of the statute was announced in 1984, the General Assembly had amended the statute numerous times without ever signaling any disagreement with the interpretation.  The Court also found that the Court of Chancery was well equipped and clearly qualified to resolve complex corporate cases involving the composition of a board of directors.  Accordingly, the Supreme Court held that a special standard of review was unnecessary and that the director’s oral resignation was valid.