UCLA Law School Professor Stephen Bainbridge recently critiqued the Nevada Supreme Court’s decision to follow Auerbach v. Bennett, 419 N.Y.S.2d 920 (1979) rather than Delaware’s Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981). He concludes:
To be sure, Delaware law in this area could stand a good tweaking. The Aronson/Zapata framework continues to rely unduly on bizarrely worded standards that often fail to grapple with the real issue. The Delaware courts would do well to adopt a simpler standard, which asks whether the board of directors is so clearly disabled by conflicted interests that its judgment cannot be trusted. If so, the shareholder should be allowed to sue. If not, the shareholder should not.
Footnote omitted. For more on Nevada and California’s embrace of Auerbach, see:
Las Vegas Shooting Tragedy
I grew up in Las Vegas, Nevada. When I went East for school, I soon tired of the incessant comment “I didn’t know anybody lived in Las Vegas”. Yes, real people live real lives there. My prayers are with those Las Vegans and visitors now enduring the unimaginable agony of the loss of family and friends. Official information regarding the tragedy is available here.