We know from Elkins that the pleading burden is formidable, from
Guttman that the Court will not hesitate to dismiss a claim that is properly
characterized under the rubric of the duty of care, and from Disney IV that
a “bad faith” claim is not easily proven at trial.
We also know from Emerging Communications and Disney IV that good
faith claims will often overlap with claims for breach of the duty of
Although Disney IV did not significantly clarify the standards or practical
application of the concept of good faith, the Chancellor has provided practical
guidance for directors so that they may avoid being named in these actions in the
first instance and have the evidence that they can use to defend themselves if they
are named in such actions.
Directors should make sure that that board and committee minutes are taken by a skilled professional and that they mention all major topics.
Where appropriate, minutes should reflect the amount of time spent on each issue. This can be particularly important where the board or a committee considers numerous topics, some of which are routine and some of which require greater discussion.
Committee and board meetings should be scheduled so that the directors have sufficient time to complete their business. Avoid simply scheduling committee meetings for 30 or 60 minutes before a scheduled board meeting or risk an inference that the committee was rushed to complete its