Many posts on this blog have discussed court opinions in which a directors’ fiduciary duty of loyalty has been breached. This is a fiduciary duty that, when breached, prevents one from enjoying the protections against personal liability afforded by Delaware General Corporate Law Section 102(b)(7) — no doubt due to the policy judgment by the Legislature that the duty of loyalty (and the need to discourage traitors), is so important that it would not be appropriate to allow it to be breached with impunity.
Being disloyal is synonomous in concept with being a traitor–namely, failing in one’s obligation to keep the faith or failing to maintain allegiance to the person or belief or entity to which one owes the full measure of support.
I recently heard a lecture about Dante’s Inferno, part of his Divine Comedy, in which he describes what hell is like. In his famous book, Dante assigns people to 9 different circles in hell, with the 9th level being reserved for those who have committed the most grievous sins. Who gets this less than coveted place in hell? Traitors. Those who have been disloyal to family, friends, country and/or, of course, God. Isn’t that what someone who is disloyal can be called? Traitor may seem like too strong a word in our post-Christian culture where we don’t want anyone to have hurt feelings and we try to sugar-coat acts that formerly were subject to the harshest opprobrium, but in Dante’s world, they did not labor under that form of political correctness. The Inferno is widely accepted as one of the finest examples of Western civilization and according to the above link from Wikipedia, Dante Alighieri’s Divine Comedy is regarded by many as one of the finest pieces of literature in the world.
It was worth a short post to think about its connection to court opinions that discuss directors breaching their duty of loyalty as comparable to residents of the 9th circle of hell who were traitors to those to whom they owed a duty. Fortunately for many directors described in recent opinions summarized on this blog, the Delaware courts do not have the power to assign a disloyal director to any of the circles of hell. Here is how the Wikipedia entry describes residents of the 9th circle:
Ninth Circle. Traitors, distinguished from the "merely" fraudulent in that their acts involve betraying one in a special relationship to the betrayer, are frozen in a lake of ice known as Cocytus. Each group of traitors is encased in ice to a different depth, ranging from only the waist down to complete immersion.
As an aside, I am not sure what circle of hell Dante would have assigned a successful businessman who spent enormous sums of money on fast cars and fast women, shortly before forcing his company into bankruptcy. Here is an example of that not uncommon tale.