August 11, 2005
Respectful Reservations Regarding Ruling?
Posted by Elizabeth Nowicki

Am I to understand that most, if not all, of you believe that yesterday’s Disney opinion represents … well… a 100% correct interpretation and application of the law that will be adopted and sustained across the board?  I say this with the utmost respect for Chancellor Chandler, as I am of the view that he is obviously a brilliant jurist.  But I have some concerns about the opinion, and I am not sure that it represents the final word on the duty of care and good faith.

Specifically, although the opinion was obviously thoughtfully and painstakingly written, there are points in the opinion where I respectfully disagree with the recitation of the law.  Further, taking the findings of fact in the opinion as a given, there are instances where the application of the law to the facts troubles me.  I am actually a bit surprised to have this reaction, because I fully expected that, either way this case was decided, there would be little room to question the opinion and ultimate holding.  (Basically I agree with what I think Profs. Bainbridge and Smith said – this case could have gone either way.)

In addition, plaintiffs’ counsel has indicated that the decision will be appealed, so this opinion might not be the final word in this case. Five years from now, yesterday’s opinion might be but a fuzzy memory, with the responsive Supreme Court opinion instead taking its place in our Corporations textbooks. (I am not suggesting that this will (or should) happen. I am only noting that it might be a bit early for Wachtell, Lipton (for whom I also worked) and other firms to take too much away from yesterday’s Disney directors’ Delaware triumph. To wit, many of us might have a difficult time recalling exactly what valuable information we gleaned initially from the lower courts in the Unocal, Van Gorkom, and Emerald Partners cases.)

In any event, am I alone in my reluctance to wholeheartedly embrace yesterday’s opinion at this juncture?  And am I alone in suggesting that Delaware jurisprudence in this area is a bit… inconsistent, such that I would not bet the farm on any one iteration of the current state of the common law in this area?

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