Labaton Keller Sucharow represents stockholder-plaintiffs in a putative class action challenging a proposed conflicted-controller recapitalization of Cloudflare, Inc. (Cloudflare or the Company).  Cloudflare’s two co-founders and controlling stockholders as well as seven other members of the board of directors (collectively Defendants) are accused of designing the recapitalization transaction to maintain the founders’ control of the Company while providing them with immediate liquidity.

Cloudflare is a leading global technology company that primarily acts as a reverse proxy between website visitors and a customer's hosting provider, improving performance and protecting against malicious traffic. Cloudflare went public in 2019 with two classes of stock: Class B shares carrying 10 votes each and Class A shares carrying one vote.  Since Cloudflare’s IPO, the co-founders’ voting control has eroded to 50.3% as of June 2026, with mathematical control projected to transfer within months. 

Plaintiffs allege that Defendants pursued the recapitalization transaction to prevent the issuance of additional securities from further diluting the co-founders’ control. Under the plan, for each of the co-founders’ Class B shares exchanged they would receive (i) a Series FF preferred share carrying nine votes and no economic rights and (ii) a Class A share with one vote; the Company would then issue one no-vote Class C share for every outstanding Class A share to all stockholders.  The proposed recapitalization would allow the co-founders to generate $4.7 billion before losing majority control, which control itself is valued in excess of $2 billion.  The case further alleges that the planning process was flawed from the start and that the special committee formed to consider the proposal did not act in good faith and repeatedly bent to the co-founders’ wishes. 

Plaintiffs sought a preliminary injunction to stop the recapitalization from becoming effective pending a full trial.  On October 14, 2026, the court granted Plaintiffs’ preliminary injunction motion, finding that the special committee did not act in good faith throughout the process and that the Company and its stockholders would suffer irreparable harm if the transaction were to become effective. After granting the preliminary injunction, the court certified an interlocutory appeal, which will be briefed on an expedited basis and is scheduled for argument before the Delaware Supreme Court on December 22, 2026. 

The case is In re Cloudflare, Inc., Stockholders Litigation, Consolidated C.A. No. 2026-0772-JTL (Del. Ch.).  The Firm represents Plaintiffs New England Teamsters Pension Fund and Ronald Mumme.