A pension fund sues over Dropbox's Delaware-to-Nevada reincorporation

On 3 April 2025 the Plumbers & Fitters Local 295 Pension Fund sued Dropbox, Inc. and its leadership in the Delaware Court of Chancery (Plumbers & Fitters Local 295 Pension Fund v. Dropbox, Inc., C.A. No. 2025-0354-KSJM), before Chancellor Kathaleen St. Jude McCormick. The suit followed a books-and-records demand and challenged Dropbox's planned reincorporation from Delaware to Nevada. The plaintiff alleged that the move would benefit Dropbox's founder, chairman, CEO, and controlling stockholder, Andrew Houston, by reducing the company's exposure to Delaware's stockholder-protective corporate law.

The complaint, filed under seal, was reported as the first known court challenge to Delaware's Senate Bill 21 — the March 2025 amendments to the Delaware General Corporation Law that narrowed certain controlling-stockholder protections — raising both a fiduciary-duty theory and a constitutional challenge to SB 21. On June 9, 2025, Chancellor McCormick stayed the entire action. Her order explained that the constitutional questions pleaded in the complaint overlapped with questions the Delaware Supreme Court had already agreed to hear in a separate case, Rutledge v. Clearway Energy Group LLC: "At a minimum, the above-certified questions overlap with the Constitutional Questions." Delaware's Governor had moved to intervene "for the limited purpose of addressing the Constitutional Questions" — the constitutionality of Section 144 of the Delaware General Corporation Law as amended by SB 21 — without taking a position on certification. The order concluded: "This action is STAYED pending resolution of the Clearway Certified Questions."

On July 6, 2026, after obtaining documents through a Section 220 books-and-records demand, the plaintiff filed what The D&O Diary described as a "substantially expanded amended complaint." The amended complaint alleges that Dropbox pursued the Nevada reincorporation amid an AI-focused business transformation and pressure from activist investor Half Moon Capital, which had challenged both the company's strategy and Houston's voting control through Dropbox's dual-class structure, and that the reincorporation was part of a broader effort by Houston to strengthen his influence over Dropbox. It further alleges that the board's evaluation committee lacked independence and that stockholders received a materially misleading Information Statement about the reincorporation. Harvard's Forum on Corporate Governance reported that the amended complaint additionally alleges that after reincorporating to Nevada, Dropbox proposed charter amendments that would eliminate jury trials in certain corporate disputes — which the plaintiff says undercuts the company's stated rationale for leaving Delaware's Court of Chancery. The plaintiff seeks rescission of the Nevada reincorporation and restoration of Dropbox's Delaware domicile or, alternatively, rescissory and compensatory damages.

Separately, an August 2026 D&O Diary article referenced Delaware's response to the reincorporation trend as including "the enactment of SB 21" and, in the same sentence, "the Delaware Supreme Court’s decision upholding the statute" — but this archive found no source giving the date or reasoning of that ruling, so no further detail is asserted here.

The allegations in both the original and amended complaints are unproven. Whether the fiduciary claims are pleaded as a derivative action or as a direct/class claim is not confirmed here — reincorporation and controlling-stockholder challenges are frequently brought as direct or class claims rather than classic derivative suits. As of 19 September 2026, this archive found no ruling on the merits of the case, and there is no finding of liability against Dropbox of record.