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best interests of the company. Put differently, all of the alleged facts, if true, imply that the defendant directors knew that they were making material decisions without adequate information and without adequate deliberation, and that they simply did not care if the decisions caused the corporation and its stockholders to suffer injury or loss. Viewed in this light, plaintiffs’ new complaint sufficiently alleges a breach of the directors’ obligation to act honestly and in good faith in the corporation’s best interests for a Court to conclude, if the facts are true, that the defendant directors’ conduct fell outside the protection of the business judgment rule.

Id. at 289. Demand was, therefore, excused.

    • 5.

      The Court also rejected the claim of the directors that the complaint, “at most, [alleged] a breach of the directors’ duty of care” and they were, therefore, protected from personal liability for monetary damages under the corporation’s Section 102(b)(7) provision because the facts pled gave “reason to doubt whether the board’s actions were taken honestly and in good faith, as required under the second prong of Aronson.” Id. at 286.

  • F.

    Disney III left the corporate world wondering:

    • 1.

      was this a new paradigm in corporate jurisprudence that would subject more corporate decisions to the scrutiny of trial in the wake of Enron and other corporate scandals?

    • 2.

      could every breach of duty of care claim be pled as a failure to act in good faith?

    • 3.

      what does the concept of “good faith” mean in practical application?

    • 4.

      what does it take to plead a claim for lack of good faith or have one dismissed?


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