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The Walt Disney Company Derivative Litigation - Delaware Supreme Court Affirms Court of Chancery Decision
June 2006
In re The Walt Disney Company Derivative Litigation
Delaware’s Supreme Court Affirms That The Defendants Did Not Breach Their Fiduciary Duties In The Hiring And Firing of Michael Ovitz
In In re The Walt Disney Company Derivative Litigation, No. 411, 2005 (Del. June 8, 2006), the Delaware Supreme Court (en banc) affirmed the Court of Chancery’s decision, issued following a 37 day, highly-publicized trial, that the directors of The Walt Disney Company (the “Company” or “Disney”) did not breach their fiduciary duties in connection with the hiring, and even more spectacular firing, of Michael Ovitz a mere fourteen months later. With his termination, Ovitz left the Company with a package of benefits valued at more than $100 million. The case had been followed closely both for its Hollywood status and because of its potential implications for director liability and focus on the not well-developed duty to act in “good faith” under Delaware corporate fiduciary law. In its 89 page opinion, the Delaware Supreme Court concluded that Chancellor Chandler’s “factual findings and legal rulings were correct and not erroneous in any respect.”