Nov 3, 2026
In re Cloudflare: The Section 144 Safe Harbor Remains Strong, but Plaintiffs Pry Open the “Good Faith and Without Gross Negligence” Door a Little Further
The Delaware Court of Chancery's decision in In re Cloudflare, Inc. Stockholder Litigation reinforced the Section 144 safe harbor for conflicted transactions but highlighted that plaintiffs can still challenge transactions by demonstrating a lack of "good faith" on the part of special committees. The court found a reasonable probability that Cloudflare's special committee acted with a "controlled mindset" to placate founders despite a seemingly strong process, emphasizing the importance of genuine independence and robust adherence to process for special committees. This ruling suggests that future challenges to such transactions will likely focus on the factual intensive requirement of good faith and absence of gross negligence.
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