On February 10, 2026, the Delaware Supreme Court, sitting en banc, affirmed a ruling by the Delaware Court of Chancery that restrictive covenants in employment agreements are subject to a reasonableness analysis regardless of whether a plaintiff seeks injunctive relief or monetary damages and granted summary judgment in favor of defendants. Fortiline, Inc. v. McCall, No. 300, 2025, 2026 WL 369934 (Del. Feb. 10, 2026). This decision clarifies an important distinction in Delaware law between restrictive covenants and forfeiture-for-competition provisions, with significant implications for employers seeking to enforce noncompete and non-solicitation agreements.

On February 3, 2026, the Delaware Supreme Court, sitting en banc, reversed a decision from the Delaware Court of Chancery that had dismissed claims for breach of restrictive covenants and breach of the implied covenant of good faith and fair dealing brought by a company against a former employee. N. Am. Fire Ultimate Holdings, LP v. Doorly, No. 142, 2025, 2026 WL 274647 (Del. Feb. 3, 2026). The Court ruled that consideration must be measured at the time a contract was formed, not at the time of its enforcement, and thus the automatic forfeiture of the stock units granted in consideration did not nullify the covenants.

On March 25, 2026, the Delaware Supreme Court, in a divided en banc opinion, affirmed a Court of Chancery order to comply with a Section 220 demand based on a petition that included post-demand evidence and hearsay. Paramount Global v. Rhode Island, No. 2024-0457 (Del. Mar. 25, 2026). The Court agreed that evidence arising after a books and records demand can be used to establish a credible basis “under exceptional circumstances” and that “sufficiently reliable hearsay” evidence is admissible for books and records demands.

On April 13, 2026, Vice Chancellor Bonnie W. David of the Delaware Court of Chancery granted defendants’ motions to dismiss derivative claims brought by stockholders of Tesla, Inc. (the “Company”) in Delaware. In re Tesla, Inc. Derivative Litigation, C.A. No. 2024-0631-BWD (Del. Ch. Apr. 13, 2026). The Company had redomesticated from Delaware to Texas and, at the same time, adopted a bylaw designating Texas as the exclusive forum for derivative litigation. The Court enforced the bylaw and dismissed the case even though the claims were brought and the alleged conduct at issue occurred prior to the formal adoption of the bylaw and the Company’s redomestication in Texas.

On February 27, 2026, the Delaware Supreme Court, sitting en banc, affirmed the constitutionality of Delaware Senate Bill 21 (“SB 21”), which amended Section 144 of the Delaware General Corporation Law (“DGCL”) to alter the standard of review applicable to certain controlling stockholder transactions.  Rutledge v. Clearway Energy Group LLC, No. 248, 2025, 2026 WL 548504 (Del. Feb. 27, 2026).  The decision resolves the constitutional uncertainty that had surrounded the amendments since their enactment and confirms that companies may proceed with confidence that compliance with the safe harbor provisions in SB 21 will provide the intended protections.