August 13, 2005
after the fact thoughts on Disney
Posted by David Skeel

Hi, Everyone:  I managed to miss the excitement due to travel on Wed and technical incompetence on Thurs, but the exchange was terrific.  On the offchance folks aren't weary of mulling over the case, I thought  I'd post a distilled version of a couple of things I was intending to chime in on.

Generally, I thought Chancellor Chandler's opinion was extremely powerful and almost persuasive -- I say "almost" b/c I still am uncomfortable with the dearth of board involvement etc.

Reading the opinion, I had a much different impression than much of the news coverage, which tended to suggest that the opinion had strongly criticised the directors' performance.  Although there are a few lines of that sort, it seemed to me that the opinion had surprisingly little "shaming" language.  It was much less critical of the Disney board than I would have expected; the Chancellor emphasized the difference between the standard of conduct and the standard of review (in Mel Eisenberg's terms), but wasn't especially critical of the conduct.

Somewhat related, I was surprized that there wasn't more discussion of the legal standards.  Many of us are hoping that Disney will clarify Delaware's good faith standard, but the Chancellor didn't delve into this in any detail.  The decision was much, much more about the facts. Perhaps this is in part b/c the principal audience is the Del SCt; I suspect it isn't lost on Chancellor Chandler that the Van Gorkom decision overruled a chancery court decision that had held that the directors didn't breach their duty of care.

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