In 1996, the Delaware Supreme Court decided a case, In re Caremark International, Inc., where, for the first time, it recognized what is now called a Caremark claim. In that case, the Delaware Supreme Court recognized a scenario where the directors of a corporation, having failed in some aspect of their oversight duties, might be guilty of a breach of the fiduciary duty of loyalty rather than a breach of the fiduciary duty of care, because that failure of oversight was so egregious that it amounted to bad faith on the part of those directors. This represented a significant decision, because corporations almost universally exculpate their directors from monetary liability for breaches of the fiduciary duty of care. Continue reading >