Professor Stephen Bainbridge, one the nation’s leading corporate law scholars, who is often cited in Delaware opinions, addresses the titular issue in a blog post today, and invites commentary. Specifically, the good professor begins the discussion as follows:
I’m pondering the relationship between the business judgment rule and Section 141(e) of the Delaware General Corporation Law. As I understand it, the business judgment rule is a broader defense than is 141(e). In other words, it is possible for directors to be unable to rely on an expert opinion, thus losing the statutory defense, but still have made a sufficiently informed to get BJR protection. But is the converse true? Imagine a board that was grossly negligent in gather information, but did get expert advice from a properly chosen expert and the board made sufficient inquiry of that expert to satisfy the requirement that they rely in good faith. Would the board be protected by 141(e) even though the business judgment rule would not protect them? Logically, it would seem that the answer must be yes if 141(e) is to have independent role, but the case law I’ve found provides no clear answer. Thoughts?