Disney: the case of the decade?

Speaking of Disney.  Will this be, as I opined, the "corporate case of the decade"?

I have been commenting on various aspects of this case, e.g., here. It is a very high-profile case, being tried by one of the best corporate judges in the country and very close on the facts.  So it may make important law under the "business judgment rule" -- specifically, what kinds of business judgments will the court second-guess, and how much care must a board use? 

Certainly this case looks bad for the board on both scores -- a nine-figure payoff for an admittedly bad hire by an autocratic ceo without much input from a supine board, fired soon after he was hired, yet without any effort to reduce the company's outlay by firing for cause. 

Yet the trial has painted a more nuanced picture -- the board was aware of what was going on, and the decision to hire, the terms of the contract, and the decision to fire without cause all seem to have some rational basis. 

I think the case will ultimately turn on the duty of care, since courts are very loathe to second-guess the substance of board decisions. On that score, today's W$J has a useful observation:

Most of the directors described private conversations with Mr. Eisner about the Ovitz situation, rather than boardroom discussions. The directors said on the witness stand that they were informed of the company's analysis that Mr. Ovitz couldn't be fired for cause.

If the court does find for the directors on the duty of care, I predict that the court will reason in part that the board does not necessarily have to deliberate in a particular way -- it is enough that the directors know what is happening, even if this involves side conversations and intuitive judgments rather than meeting as a board and laying out reasoning in a lawyerly way.  In other words, directors can act like business people rather than lawyers. 

This would be a significant shift from the famous Van Gorkom case, in which the Delaware Supreme Court held directors liable for approving a sale of the company at a significant premium over market, partly because they did not deliberate as a board, despite the directors' substantial collective knowledge of and tenure with the company.

The Disney case is also interesting in illustrating the cross-currents of recent corporate history. It was first decided for the board in the pre-Enron era, then allowed to go forward in the post-Enron era, and now may be decided in the post-post-Enron era in which many are having second-thoughts about whether regulation and distrust of business people have gone too far.