The Impact Of Sutherland V. Sutherland

Law360, New York (April 6, 2009, 12:00 AM EDT) -- In Sutherland v. Sutherland,[1] Vice Chancellor Lamb recently rejected defendant directors' contention that a charter provision effectively allowed them to be considered disinterested for purposes of approving self-dealing transactions.

In denying the defendants' motion to dismiss a derivative complaint alleging breach of fiduciary duty, the vice chancellor wrote that the charter provision, if construed in the manner urged by the defendants, "would effectively eviscerate the duty of loyalty of corporate directors as it is generally understood under Delaware law."

The vice chancellor also noted, in contrast,...
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