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The Disney Case

The Disney Case. Professor D. Gordon Smith University of Wisconsin Law School. The Players. Care. Loyalty. Good Faith. “Triad of Fiduciary Duty”. Traditional “Bad Faith” in Corporate Law. Illegal Fraudulent Ultra vires. The Good Faith Thaumatrope?. The Good Faith Thaumatrope?.

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The Disney Case

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  1. The Disney Case Professor D. Gordon Smith University of Wisconsin Law School

  2. The Players

  3. Care Loyalty Good Faith “Triad of Fiduciary Duty”

  4. Traditional “Bad Faith” in Corporate Law • Illegal • Fraudulent • Ultra vires

  5. The Good Faith Thaumatrope?

  6. The Good Faith Thaumatrope?

  7. Good Faith as “Substantive Due Care”? • Allen: “theoretical” possibility of liability for “egregious”decisions • Veasey: “Due care in the decisionmaking context is process due care only”

  8. Good Faith as “Irrationality” • Veasey: “Irrationality may … tend to show that the decision is not made in good faith”

  9. “Conscious and Intentional Disregard” • Chandler: “’We don’t care about the risks’ attitude” • Chandler: “Knowing or deliberate indifference”

  10. Van Gorkom unilaterally negotiated the merger with Pritzker The Resurrection ofSmith v. Van Gorkom? • Eisner unilaterally made the decision to hire Ovitz • No agreements presented for board review before meetings • No agreements presented for board review before meetings • Short meeting, no questions about employment agreement • Short meeting, no questions about price or tax implications • No expert consultant • No expert valuation • No post meeting review and final agreement differed “substantially” • No post-meeting review and docs “considerably at variance”

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