Larry asks some provocative questions below, and I think this post addresses the first question and the last question. Um, where is Van Gorkom? I searched the opinion -- no "Van Gorkom." There's not even a "Gorkom."
So, the Supreme Court of Delaware issues an opinion in an appeal that has everyone asking "Is Van Gorkom Dead?" and does not even cite Van Gorkom? And, in the opinion, the court notes, inter alia, that directors do not need to see documentation of transactions they are approving if someone describes those documents to them. That characterization of the facts of the Disney case sound very similar to the facts of Van Gorkom, although those facts, twenty-one years ago, resulted in a different judicial decision. That sounds a lot like the court is rejecting Van Gorkom without saying so. Also telling is the fact that the court never cites Van Gorkom for anything, which is odd for a breach of duty case. So, why doesn't the court explicity overturn Van Gorkom? Why create a blip in the common law that must be explained? I suspected that the court would distinguish the Disney case from Van Gorkom based on the fact that the Ovitz contract was a mere employment matter and that even though the aggregate dollar amount seemed high, the amount was still small compared to the size of the company's budget. Van Gorkom involved the sale of the company, a fundamental change that requires more attention than an employment contract. But the court did not distinguish the facts, but instead analogized them and implied that a different result under the same facts would be erroneous.
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