What Does it Mean for Corporate Directors to Act in “Good Faith?”

Pace Law School Distinguished Corporate Law Panel January 16to Discuss Emerging Issues in Pending Delaware Case of Ryan v. Lyondell Chemical Company

WHITE PLAINS, NY (January 9, 2009) – One year ago, the Lyondell Chemical Company’s board of directors agreed to sell the company at a price that was 45 percent above the company’s per share value at the time. At that premium, the deal went through quickly. But did the deal go through too quickly and without enough effort on the part of the board to strike the best deal possible?  If so, was that lack of effort evidence of the board’s lack of good faith?

That is the issue on which the Delaware Supreme Court is poised to hear arguments January 14, in a case that is likely to be influential for corporate directors’ legal liability. Because Delaware is the most important U.S. jurisdiction for corporate law, the outcome of Ryan v. Lyondell Chemical Company could significantly impact the way corporate America does business. The decision is expected to go a long way toward defining a specific level of board involvement that will be required in corporate decision making.

On Friday, January 16, only two days after the court hears arguments in Ryan, and at a time when corporate law is coming under increasing scrutiny, Pace Law School will present a Distinguished Panel on Corporate Law to address corporate directors’ fiduciary duties of good faith and care.

The event, which is open to the public, will take place from 9:30 a.m. to 3:00 p.m. at Pace Law School, 78 North Broadway, White Plains. Media admission by press pass.

The panel’s jumping off point will be the original Delaware Chancery Court opinion in Ryan, which denied summary judgment to directors and incited a flurry of commentary among corporate law commentators.

Pace Law Professor Andrew Lund, the organizer of the panel, explains that Delaware corporate law traditionally has required managers not to act in a grossly negligent way, but has let corporations adopt charter provisions limiting directors’ liability for such gross negligence. According to recent Delaware decisions, that “opt-out” will not be available if a director, beyond being grossly negligent, consciously disregarded his or her responsibilities. According to these cases, such behavior indicates “bad faith.”  These decisions, however, did not specify a framework for courts to evaluate what kinds of behavior indicate conscious disregard as opposed to mere gross negligence. Ryan v. Lyondell is likely to be a decisive case in establishing that framework.

The panelists on January 16 will be:

Stephen P. Lamb, Vice Chancellor, Delaware Court of Chancery

Vice Chancellor Lamb has served on the Court of Chancery since 1997. Before his appointment he practiced for a number of years in the area of corporate and securities litigation in Wilmington, Delaware.

Sean J. Griffith, Professor of Law, Fordham Law School

Griffith is an expert in corporate and securities law who has taught at the University of Connecticut and University of Pennsylvania. Before entering academia, Griffith worked as an associate in the corporate department of Wachtell, Lipton, Rosen & Katz in New York, focusing on public company mergers and acquisitions.

Andrew C. W. Lund, Associate Professor of Law, Pace Law School

An expert in corporate and securities law, Lund joined the Pace faculty from the New York City firm of Sullivan & Cromwell LLP, where he was an associate in the areas of employee benefits and executive compensation, and mergers and acquisitions.

Elizabeth Nowicki, Associate Professor of Law, Tulane University Law School

Nowicki previously taught at Cornell, Washington & Lee, and the University of Richmond. She has published widely on corporate governance, director liability, and securities regulation and her most recent academic publications have addressed director liability reform for acts “not in good faith.”

John L. Reed, Partner, Edwards Angell Palmer & Dodge LLP

Reed is a partner in the Wilmington, Delaware, office of his firm and maintains a practice in national and international business litigation and corporate counseling that covers all facets of corporate law.

Founded in 1976, Pace University School of Law has nearly 6,700 alumni throughout the country and the world and is consistently ranked among the nation’s top three programs in environmental law. It offers full- and part-time day and evening JD programs on its White Plains, NY, campus and offers the Master of Laws degree in Environmental Law, and Real Estate Law, and Comparative Legal Studies, and a Doctor of Laws in environmental law. The School of Law is part of Pace University, a comprehensive, independent, and diversified university with campuses in New York City and Westchester County. www.law.pace.edu

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