You're right to stress the fact that this is a summary judgment motion. I'd be very surprised if the defendants were ultimately held personally liable. This case is part of a growing genre of Delaware cases where a board process that is troubling but not appalling leads to a case that lasts a long time before the defendants finally win. Disney is the leading example. The cases tend to occur in situations that lie between those where the business judgment rule obviously applies and those where there is a clear traditional loyalty problem. These cases may well make sense as a way of encouraging more care while still avoiding personal liability.

Brett, I agree completely. And these standards have another beneficial feature: they encourage litigation in Delaware. If the defendants cannot get the case dismissed, the case has settlement value, which is a win for the plaintiffs. The fact that the defendants will not be personally liable is a win for them. Win-win!

I think both Gordon's post and the comments are very insightful.

Part of the problem was that 102(b)(7) was a botch job from the outset and judicial interpretations have not done a particularly good job of providing greater certainty and predictability.

The politics of the situation may not be amenable to it, for the reasons Gordon identifies (a win-win for both plaintiffs and defendants is also likely a win for Delaware), but it really is time for the Delaware legislature to revisit 102(b)(7).

A coherent liability limitation provision would make clear whether it is intended to come into play pre- or post-trial, and identify with specificity the kinds of director misconduct for which monetary liability may still be recovered.

Gordon is exactly on point. The issue is simply a matter of how the facts were presented and what was alleged in the complaint. Post-Stone v. Ritter, we know that an intentional failure to act (regardless of whether a director has a personal "interest" in the transaction) supports a loyalty claim. Moreover, Revlon has facets of care and loyalty. If directors don't act "reasonably" in obtaining the best price reasonably available, then perhaps they breached their duty of care. See In re Lukens, Inc. Shareholders Litig., Del. Ch., C.A. No. 16102, Mem. Op. at 21 (Dec. 1, 1999) (“A corporate board's failure to obtain the best value for its stockholders may be the result of illicit motivation (bad faith), personal interest divergent from shareholder (disloyalty) or a lack of due care.”). This is subject to exculpation under 102(b)(7) at trial (unless the complaint fails to allege facts from which one can infer a loyalty violation, in which case it might be dismissed earlier). But if directors intentionally abidicate that duty, then we have a loyalty violation. See Equity-Linked Investors, L.P. v. Adams, 705 A.2d 1040, 1054 (1997) (stating that “the board’s duty of loyalty requires it to try in good faith to get the best price reasonably available”); In re J.P. Stevens & Co., Inc. S’holders Litig., 542 A.2d 770, 781 (Del. Ch. 1988) (stating that “Revlon is explained as a breach of loyalty case (i.e., one in which the board appeared not to be acting in good faith for the shareholders’ benefit)”).

People are overreacting to Lyondell. The case was driven by its procedural posture.