Chancery Dismisses Claims Against Directors for Backdating of Options
in Desimone v. Barrows, (Del. Ch., June 7, 2007), read opinion here, the Chancery Court yesterday dismissed claims against directors in connection with the backdating of options. This 77-page decision would take more time to analyze and write about than I had today to post about it, but fortunately we have the benefit of the scholarly analysis of Professor Larry Ribstein here (who was also cited by the court in a footnote). Read his post if you want insights into the importance of this case.
SUPPLEMENT: It is noteworthy that in the footnotes of the court's opinion, reference is made to the scholarly writings on the blogs of Professor Ribstein (linked above); Prof. Stephen Bainbridge and Prof. Eric Chiappinelli. Citations to blogs in an important Chancery Court decision such as this, is further support for the view that blogs on legal topics have entered the mainstream of legal scholarship, and are a meaningful part of the national dialogue on key legal issues of our day. This is also a good example of the benefit of a thoughtful analysis via a law professor's blog, the day after a seminal case is published, instead of waiting weeks or months for a law review article or trade publications.
SUPPLEMENT II: There is much "good stuff" in this opinion in the way of hard core public policy analysis of Delaware corporate law jurisprudence, but there are also several practical aspects for the corporate litigator's toolbox. Here are just a few. (i) discussion of demand excusal requirement under Rule 23.1 in light of a "non-decision" of the board, pursuant to Rales v. Blasband, 634 A.2d 927 (Del. 1993); (ii) analysis of the "continuing wrong doctrine" ( to try to reach back in time) in the context of the stock ownership requirement of DGCL Section 327; and (iii) extensive review of the "good faith" aspect of fiduciary duty as well as the oversight role of the board (see Caremark), as described in the recent Delaware Supreme Court decision in Stone v. Ritter. Of course, there is much else to commend the opinion, but those are just a few teasers for now.
