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D.

loyalty,

as

the

two

concepts

are

closely

interrelated.

See

In

re

Emerging

Communications S’holders Litig., 2004 WL 1305745, at *39 n.184 (Del. Ch.)

(employing the “and/or” phraseology “because the Delaware Supreme Court has

yet to articulate the precise differentiation between the duties of loyalty and of

good faith.”). That is little comfort, however, for disinterested and independent

directors hoping to be dismissed from claims alleging a failure to act in good faith

prior to trial.

In Official Committee of Unsecured Creditors of Integrated Health Servs., Inc. v.

Elkins, 2004 WL 1949290 (Del. Ch.), the Court of Chancery found that a majority

of the Board of Directors who approved certain challenged transactions were

disinterested and independent but that Plaintiffs’ claim that the Board

“consciously and intentionally disregarded its responsibilities” was sufficient to

survive a motion to dismiss for failure to state a claim. Id. at *10.

1.

Vice Chancellor Noble’s commentary was enlightening as to the way the

Court might view good faith claims on a motion to dismiss. The Court

noted that “one may alternatively conceptualize the holding in [Disney III]

as a duty of care claim that is so egregious . . . that it falls within [the good

faith] exception to the general exculpating power of § 102(b)(7)” and

stated that the pleading requirement was a “high bar” but that the facts

plead were sufficient to meet that bar on a motion to dismiss. Id. at *9

n.37 and *12.

16

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