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Fiduciary Duties - Liability Insulation

  • Charter exculpation (opt-out)
    • statutory authorization
    •  insulation:  damages, not injunctive relief
    •  limits on coverage --
      • "breach ... duty of loyalty"
      • "not in good faith"
      • "improper personal benefit"

Daily Thoughts

Things You Really Don't Need To Know:

  • The average human eats eight spiders in their lifetime at night. 
  • The most common name in the world in Mohamed. 
  • Americans on average eat 18 acres of pizza every day. 
  • Babies are born without knee caps. They don't appear until the child reaches 2 to 6 years of age. 
  • China has more English speakers than the United States. 
  • Humans and dolphins are the only species that have sex for pleasure. 
  • If Barbie were life-size, her measurements would be 39-23-33. She would stand seven feet, two inches tall and have a neck twice the length of a normal human's neck. 
  • If the population of China walked past you in single file, the line would never end because of the rate of reproduction. 
  • In the last 4000 years, no new animals have been domesticated. 
  • Marilyn Monroe had six toes

Problems

Outside directors of Publix, Inc. approve a management buyout in which Publix merges with a Going Private, Ltd., wholly owned by executives of Publix.  The merger price is set at $50, and the Publix shareholders vote to approve.  Later some shareholders realize that Publix was worth at least $80.  They sue on a theory that the directors failed to ask for a fairness opinion from an investment banker and otherwise for engaged in a slipshod and hurried decision to approve the merger.

Party A (shareholders) Assuming the directors breached their duty of care and the court finds causation, outline a theory of liability that avoids the exculpation clause in the corporate charter.

Party B (outside Ds)  Assuming the directors breached their duty of care and the court finds causation, outline a theory of non-liability given the exculpation clause in the charter.

Readings