Law Commons^™

Shareholder (And Director) Fiduciary Duties And Shareholder Activism, Paula J. Dalley

ExpressO

Recent attention to shareholder activism in the business and academic press has ignored the legal ramifications of that phenomenon. Under current law, shareholders are neither principals nor agents of the corporation, the board of directors, or the other shareholders; those seeking to increase shareholder power must confront this legal reality. Specifically, proposals for increased shareholder power on the one hand and recent investor attempts to gain actual management control on the other must both be considered in light of the shareholders’ lack of fiduciary responsibility. Moreover, all directors, including those representing “activist” shareholders, are obligated to exercise independent judgment about …

Dishonest Medical Mistakes, Maxwell J. Mehlman

Vanderbilt Law Review

In the medical liability wars, physicians like to think that they are the ones in the trenches. Yet the true soldiers, of course, are the patients. As patients seek to avoid the barrage of malpractice reforms and the spoliation of managed care, one of their key refuges-the fiduciary duty of health care professionals-is being assailed from a number of directions. This Article describes these attacks and suggests how best to thwart them.

Imagine that you are seriously ill and go to a doctor. If you are like most patients these days, you are enrolled in some form of managed care. …

Managers' Fiduciary Duties In Financially Distressed Corporations: Chaos In Delaware (And Elsewhere), Christopher W. Frost, Rutheford B. Campbell

ExpressO

In this article, the authors consider the nature of corporate managers’ fiduciary duties in periods when the company is in financial distress. This matter is important not only to corporate managers, who need clear rules regarding their duties, but also to equity and debt investors, who must understand the nature of corporate fiduciary duties in order to price the capital that they contribute to the enterprise and allocate the financial risks of loss to the most efficient risk bearer from among the investors.

Unfortunately, courts – especially the important Delaware courts – have made a mess of all of this. …

Galactic Stupidity And The Business Judgment Rule, David Rosenberg

ExpressO

The article examines whether the business judgment rule allows courts to review the substantive wisdom of decisions made by corporate directors. Although the conventional view among legal scholars is that the business judgment rule precludes such review, the article concludes that Delaware courts must sometimes examine the substance of directors’ decisions in order to determine whether those directors acted in good faith. Where the evidence shows that a director acted in a rational way (and therefore in good faith) in arriving at a decision, courts will not review the substance of that decision. However, where a director made a decision …

Good Faith, State Of Mind, And The Outer Boundaries Of Director Liability In Corporate Law, Christopher M. Bruner

ExpressO

The Delaware General Corporation Law was amended in 1986 to permit shareholder-approved exculpatory charter provisions shielding directors from monetary liability for certain types of fiduciary duty breaches, explicitly excepting breaches of the duty of loyalty and conduct not in "good faith" – evidently distinct concepts in the Delaware legislature’s view. This paper examines the development of corporate fiduciary duty doctrine in Delaware leading up to and following this statutory amendment, focusing particularly on the Delaware courts' evolving conception of the meaning and doctrinal status of good faith. Specifically, the paper argues that Delaware's statutory exculpation regime and good faith case …

Case For A.U. (Accountable Universities): Enforcing University Administrator Fiduciary Duties Through Student Derivative Suits, Sarah R. Kusiak

American University Law Review

This Comment examines issues of charitable fiduciary enforcement in the context of private universities. Part I reviews the law of charitable entities, the rationale behind attorney general charitable enforcement, and the failures of that enforcement regime. It also examines generally the private charitable enforcement options of special interest standing and nonprofit member derivative suits. Part II examines these issues in the context of the private university, and details why student attempts to enforce the fiduciary duties of university administrators under the special interest doctrine have failed. Part III argues for the judicial recognition of a university student derivative cause of …

Good Faith, State Of Mind, And The Outer Boundaries Of Director Liability In Corporate Law, Christopher M. Bruner

Scholarly Works

The Delaware General Corporation Law was amended in 1986 to permit shareholder-approved exculpatory charter provisions shielding corporate directors from monetary liability for certain fiduciary duty breaches not including (among other things) breaches of the duty of loyalty and acts not in good faith. This article examines the development of corporate fiduciary duty doctrine in Delaware leading up to and following this statutory amendment, focusing particularly on the Delaware courts' evolving conception of the meaning anddoctrinal status of the good faith concept employed in recent cases to permit a non-exculpable cause ofaction for conscious nonfeasance.

The article argues that Delaware's good …

Fiduciary Duties And Unincorporated Business Entities: In Defense Of The "Manifestly Unreasonable" Standard, Mark J. Loewenstein

Publications

This article wades into the debate between contractarians and anti-contractarians over the extent to which statutes on unincorporated business entities should limit the ability of the participants in those entities to contract around fiduciary duties. Statutes enacted in the past several years provide considerable, but not complete, freedom to limit fiduciary duties. Contractarians argue that statutory limitations are inefficient and unnecessary, while anti-contractarians take the view that the statutes provide too much freedom of contract. This article stakes out a middle ground, arguing that the drafters of the statutes got it right and that in the absence of statutory limitations …