Auerbach

What was the business problem facing GTE?

What was the theory of Auerbachs lawsuit?
Would demand be excused in this case?
Who were the members of the special committee?
What were they supposed to determine?
Do you think they hired anyone to help them make the determination?
Did the SLC find that the plaintiffs claims were utterly without merit?
What was the legal effect of the SLCs determination that no proper corporate interest
would be served by continuing the lawsuit against the board?
In light of the SLCs determination, what issues could the plaintiff still challenge in the New
York courts, and which were foreclosed?
Maldonado
Did Zapata Corp. apply the same tactic as GTE did in Auerbach to seek dismissal of this
action?
Did the fact that a majority of the board was interested render the special litigation
committee legally ineffective to bind the board?
Does the legal standard for review of SLC determinations in Delaware differ from that in
New York?
Which standard is more likely to encourage derivative litigation?
Which standard do you think is more appropriate?

Oracle Corp.
What is the procedural posture of this case? What legal standard does the Court apply to
determining whether the requirements for dismissal have been met? Maldonado
Which prong of the two-prong Delaware test was being challenged in Oracle?
What was the alleged nature of Grundfests interest?
Does Grundfest benefit personally from Lucas and Ellisons charity to Stanford?
Was Grundfest a friend of Boskin? An acquaintance? Isnt it likely that anyone appointed
to the SLC will be acquainted with management?
What is the standard of independence for SLCs established in Oracle? Do you think the
same standard will apply in all fiduciary duty cases? Should it?
Hypothetical
Yablon has been friends with a partner at Skadden Arps for many years. Skadden
represents Boracle Corp, whose management has been accused of insider trading. The CEO of
Boracle Corp. is a graduate of Cardozo Law School. She is an active alum, and has donated
about $1000 a year to the law school in recent years at its annual fund drive. Should Yablon agree
to be a member of the special litigation committee organized to consider the suits against Boracle
management?
Hypothetical
You are the lawyer and personal friend of the CEO of Gurgle, Inc., a publicly traded
Delaware corporation that sells high energy drinks. The company is looking for new office space,
and the CEOs uncle, a wealthy real estate developer, has a space the CEO thinks would be ideal
for the company. The uncle is willing to sell the space to Gurgle at market price. The CEO asks
you, from a legal point of view, whether he can simply enter into this transaction on behalf of the
corporation, whether he is taking any risk of personal liability if he does so, and if there is any way
he can protect himself from such potential liability. What is your response?
KAMIN v. AMERICAN EXPRESS
What was the business problem facing the management of American Express?
What were their options for dealing with that problem?

Which option would have a better impact on the books of the company?
Which option would have a better impact on the cash flow of the company?
Which option would have a better impact on the stock price of the company?
What kind of lawsuit did Kamin bring?
Who were the real defendants?
What recovery was sought and who would get it?
Why do you think Kamin brought the lawsuit?
What was the procedural posture of the case?
Were there disputed issues of fact to be adjudicated?
What did the Court say needed to be alleged to state a claim for breach of fiduciary duty by
corporate management?
Was any self-dealing by Amex management alleged? What was it? Why was it insufficient to state
a claim?

Business Judgment Rule

How would the behavior of managers be changed if management were liable for all negligent
errors in business judgment that caused harm to the corporation or its shareholders?
Who are least likely to be held liable for errors in judgment that cause severe harm to people to
whom they owe duties of care: doctors, lawyers or business executives?
Does this make sense?

Bayer v. Beran
Was the companys decision to sponsor a high brow radio program protected by the
business judgment rule?
What findings did the court make concerning this transaction which negated any liability for
breach of the duty of loyalty?
Benihana
At the time of the events giving rise to this lawsuit, who controlled Benihana, Inc.?
What business problem did Benihana face?
Who was Abdo and why was he on the Benihana board?
What are the advantages of financing through preferred stock rather than debt?
Why do you think Abdo and BFC were willing to offer better financing terms than other potential
investors?
Did Abdo have a conflict of interest in this transaction?
What standard of review did plaintiff argue should be applied to this transaction?
What standard does the Court appear to apply?