The Developing Theory of Good Faith in Director Conduct: Are Delaware Courts Ready to Force Corporate Directors to Go Out-of-Pocket After Disney IV?
01 January 2006Denver University Law Review
Over 10 years ago, the Delaware courts began a cautious exploration of the notion of good faith and the potential expansion of corporate directors' fiduciary obligations. This article examines the historical development of the fiduciary duty of good faith and director liability under Delaware law, including the Chancery Court's 2005 decision, In re The Walt Disney Co. Derivative Litigation. After over 10 years of litigation, in June 2006, the Delaware Supreme Court upheld the Chancery Court's finding that Disney directors did not breach their fiduciary duties and could not be held personally liable for the hiring and eventual severance payment of over $130 million to Disney’s ex-president, Michael Ovitz.
This article was cited by the Delaware Supreme Court in its June 8, 2006 opinion.