Background
Altigen Communications, a Delaware corporation, acquired the assets of ZAACT, a business founded and led by Ryan Day. Under the asset purchase agreement, Day represented that he was unaware of circumstances reasonably expected to cause material customers to terminate or materially alter their relationships with ZAACT. Day later became Altigen’s Chief Strategy Officer.
Altigen alleged that, before closing and while serving as Chief Strategy Officer, Day knew that three material customers planned to reduce and ultimately end their relationships with ZAACT but did not disclose that information. After the customers reduced their business, ZAACT’s revenue and operating results declined. Altigen sued Day for breach of fiduciary duty; Day moved to dismiss on several grounds, including lack of personal jurisdiction.
The Court’s Holding
Vice Chancellor Laster granted Day’s Rule 12(b)(2) motion and dismissed the action for lack of personal jurisdiction. Altigen did not establish a valid basis to serve Day under Delaware’s officer-consent statute, 10 Del. C. § 3114(b), because a Chief Strategy Officer is not one of the statute’s specified offices and Altigen did not make a prima facie evidentiary showing that Day’s responsibilities functionally equated to, or substantially overlapped with, a covered role.
The court explained that the statute can reach a person who performs the functions of a listed role despite using a different title, but it does not automatically encompass the entire C-suite or every fiduciary. Altigen’s allegations about Day’s strategic-customer, talent, and employee-development responsibilities did not show that he functioned as the company’s president, CEO, COO, CFO, chief legal officer, controller, treasurer, or chief accounting officer. The Delaware long-arm statute also did not apply because Day’s out-of-state service as an officer of a Delaware corporation was not a Delaware-directed act. The court declined jurisdictional discovery and leave to replead, and did not reach Day’s remaining dismissal arguments.
Key Takeaways
- A corporate title containing “Chief” and “Officer” does not by itself trigger Delaware’s officer-consent statute.
- For a non-listed title, the plaintiff must show that the person’s duties functionally equated to or significantly overlapped with a role identified in Section 3114(b).
- A Delaware corporation can contract for consent to officer-status jurisdiction or select Delaware as the forum; Altigen’s agreements did neither.
Why It Matters
The decision narrows the practical reach of Delaware’s officer-consent statute to the senior roles specified by the General Assembly and their genuine functional equivalents. Fiduciary status, operational importance, and a senior-sounding title are insufficient on their own.
Companies seeking to litigate disputes with nonresident executives in Delaware should address jurisdiction expressly in employment and transaction agreements, including by obtaining statutory officer-status consent or a Delaware forum-selection clause.