A Delaware trial court recently applied the newly minted “meaningful linkage” standard to conclude that multiple lawsuits concerning the merger of CBS and Viacom are not “related” in the context of directors and officers (D&O) liability insurance. The decision in National Amusements, Inc. v. Endurance American Specialty Insurance Co., Case No. N22C-06-018-SKR CCLD (Del. Super. Ct. Feb. 17, 2025), illustrates the fact-intensive nature of the “relatedness” inquiry and how litigants can expect courts to examine the issues under the Delaware standard.

Background

The dispute in National Amusements centered around whether separate litigations—cases initiated in 2016 regarding the control of CBS and another in 2019 concerning the merger of CBS and Viacom (which is now Paramount Global)—were related claims.

In 2016, shareholders of Viacom alleged that Shari Redstone manipulated an allegedly incapacitated Sumner Redstone to make decisions that harmed the company’s value. That lawsuit, among others, was eventually settled or dismissed.

In 2019, litigation arose concerning the merger of CBS and Viacom, both of which were controlled by National Amusements. This time, shareholders alleged that actions by the directors and officers of Viacom, Shari Redstone and National Amusements violated their fiduciary duties and led to an unfair deal for Viacom shareholders. The shareholders allegedly received inadequate consideration from the merger. That litigation also eventually settled.

National Amusements maintained four D&O policies for the 2017 to 2018 policy period. Those policies renewed for 2018 to 2019. Endurance issued the primary policy, with Ironshore, Starr and National Union each issuing excess follow-form policies.

A coverage dispute emerged over whether the 2019 litigation was “related” to the 2016 litigations. Following discovery, the insured moved for summary judgment, which the court granted.

The Court’s Analysis: Interrelated Claims and “Meaningful Linkage”

The central issue before the court was whether the 2016 and 2019 lawsuits were interrelated claims. The D&O policies addressed related claims as follows: “All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts of the Insureds shall be deemed to be one Claim, and such Claim shall be deemed to be first made on the date the earliest of such Claims is first made.” In assessing whether the claims as presented here met the policies’ relatedness definition, the court was guided by the “meaningful linkage” standard articulated by the Delaware Supreme Court in Alexion Pharmaceuticals, Inc. Insurance Appeals, discussed in this prior post. Application of that standard required consideration of multiple factors.

The primary factor, commonality of conduct, looks to whether the claims involve the same alleged wrongful acts. While the 2016 and 2019 actions all involved Shari Redstone and her alleged overexerting influence, the court found the conduct at issue in the more-recent 2019 litigation to be distinct. The 2016 cases concerned Shari Redstone’s influence over Sumner Redstone’s decision-making. In contrast, the 2019 litigation concerned alleged conduct that occurred during the CBS/Viacom merger.

The second factor looked to the parties involved. Here, there was substantial overlap in the parties in all the actions, but Sumner Redstone, a critical defendant in the 2016 action, was not a defendant in the 2019 action. 

The third factor looked to the relevant time periods. Whereas the 2019 action challenged the merger in 2019, the 2016 actions focused on decisions made in or around 2016. Even though the 2019 complaint referenced conduct dating back to 2016, the court found this factor slightly favored finding the claims as not meaningfully linked.

The fourth factor looked to the relevant facts. Here again, despite some overlap, the court found the factual evidence in each case was mostly distinct. The primary 2016 case focused on Sumner Redstone’s capacity and Shari Redstone’s allegedly improper influence on the companies’ boards, while the 2019 action relied on merger-related evidence, including valuation of CBS and Viacom and the merger negotiations.

The fifth and final factor, the claimed damages, also distinguished the two sets of claims. The 2016 actions primarily requested declaratory and injunctive relief to rectify the corporate governance decisions whereas the 2019 action sought monetary damages to compensate for the inadequate consideration received by the Viacom shareholders.

Based on the weight of these factors, the court ruled that the claims were not meaningfully linked, and thus were not “related claims” for purposes of D&O insurance coverage.

Key Takeaways

The National Amusements decision provides important lessons on the “related claims” issue:

1. The Burden on Insurers to Undermine Relatedness: The court acknowledged Delaware Supreme Court precedent that “meaningful linkage” should be applied in a coverage context “broadly, where possible, to find coverage” and that any ambiguity favors coverage. In circumstances where the policyholder contends that claims are not related, that puts an insurer in the tough position of carrying the burden to show claims are related. That hill becomes even more difficult to climb considering relatedness is already a fact-intensive inquiry where evidence oftentimes can go either way.
2. Relatedness Is Neither Pro-Insurer Nor Pro-Policyholder: In this case, the company argued against and the insurers in favor of relatedness. But that is not always the case. Policyholders may see themselves on different sides of the related claims argument for various reasons, including the number of claims, applicable retentions and coverage limits. In either case, this decision provides a roadmap for future Delaware relatedness disputes.
3. Understanding the Scope of “Related Claims”: The decision reinforces that D&O policies will not automatically treat separate claims as related simply because they involve the same individuals or entities. A careful analysis of the underlying wrongful acts and legal theories alleged in the purported related claims is crucial. As it stands, the “related claims” determination remains a fact-intensive inquiry.
4. The Impact of Extrinsic Evidence: The insurer defendants in this case tried to introduce allegedly “inconsistent” extrinsic evidence that National Amusements and Shari Redstone represented that the 2016 and 2019 actions were related when they sought indemnification from Viacom before filing this suit. However, under Delaware Supreme Court precedent, the court can rely on policyholder statements about the separate actions when insurance coverage was not at issue only if there is any remaining doubt about relatedness. Since no doubt remained after weighing the different factors, the court concluded it could not consider the extrinsic evidence.

Conclusion

Related claims issues under D&O policies continue to be the subject of insurance coverage disputes in Delaware courts. By understanding the court’s reasoning and the factors it considered in this case, policyholders can better navigate future disputes with insurers and take steps to protect their interests in coverage litigation.