In 2013, SDNY judge dismissed the claims filed by the private plaintiffs. According to
the decision, the banks did not violate antitrust laws when they colluded to manipulate
the Libor benchmark interest rate and that the plaintiffs had failed to show harm from
such collusion. The appellate court disagreed. After determining that the plaintiffs had
sufficiently shown harm from the manipulation, the panel sent the case back to the lower
court.
Fundamentals of Corporate Law
2019-20
32
Topic 2:
Corporate Liability vs. Legal Risk Management
Disney
Trouble in the Magic Kingdom
In 1984 Michael assumed the position of Chairman and Chief Executive Officer of The Walt
Disney Company and remained in this position until 2005. In 1995 Eisner recruited his friend
Michael Ovitz, co-founder of the CAA (Creative Artists Agency). Ovitz received the title
“president” and joined the board. Without much consultation of the remaining board
members, Ovitz negotiated a very favorable pay package with Eisner despite the chairman of
the board’s remuneration committee Mr Irwin Russell cautioning that
the pay was
significantly above normal levels and "will raise very strong criticism". Further, a
compensation expert had warned Eisner that Ovitz was getting "low risk and high return"
but his report was not circulated to other board members.
The Eisner-
Ovitz “dreamteam”
did not last long: 14 months later Ovitz left Disney in December 1996 by termination without
cause. Despite alleged poor performance he obtained a severance package of about 38
million USD in cash and 3 million stock options worth about 100 million USD at the time of
Ovitz’s departure.
Shareholders of Disney initiated a derivative suit against the members of the board of the
Walt Disney Company arguing that the board members breached their duties.
Case Reading
Refer to the judgment
In Re the Walt Disney Company Derivative Litigation
, 907 A.2d 693
(Del. Ch. 2005) to answer the Questions.
-
derivative-litig
Questions
1.
Summarize the facts surrounding the hiring of Michael Ovitz.
Fundamentals of Corporate Law
2019-20
33
2.
Why did the relationship between Ovitz and Eisner deteriorate?
3.
Summarize the circu
mstances of Ovitz’s termination.
4.
Who are the plaintiffs and who are the defendants of the litigation?
5.
What is a derivative action?
6.
What is the business judgment rule?
7.
Why did Ovitz not breach his duty of loyalty?
8.
Why did Eisner not breach any duties under Delaware corporate law?
9.
What is the difference between a legal standard of duty and best practices in
corporate governance?
Fundamentals of Corporate Law
2019-20
34
Topic 2:
Corporate Liability vs. Legal Risk Management
Toyota
Toyota Skids on Legal Risk
The following slides are taken from an internal and confidential Toyota document entitled
“Wins for Toyota”, dated July 6, 2009. The presentation is made on behalf of J. Cooper,
Group Vice-President, Public Policy & Government/Regulatory Affairs. It lists Yoshi Inaba,
Toyota's chief executive in North America, on its cover.
Fundamentals of Corporate Law
2019-20
35
Fundamentals of Corporate Law
2019-20
36
