The diminishing role of due care waivers in Delaware

The ever-alert Francis Pileggi writes about the recent opinion by VC Noble in Ryan v. Lyondell, in which, as Mr Pileggi says:

The court found that at the procedural stage of a summary judgment motion, it would allow to proceed to trial the issue of whether the independent directors should be exposed to personal liability for their role in the sale of the company--despite selling the company to the only known buyer for a substantial premium.

But, hey, what about 102(b)(7)? Money quote from the court:

With a record that does not clearly show the Board’s good faith discharge of its Revlon duties. . . whether the members of the Board are entitled to seek shelter under the Company’s exculpatory charter provision for procedural shortcomings amounting to a violation of their known fiduciary obligations in a sale scenario presents a question of fact that cannot now be resolved on summary judgment.

It’s increasingly looking like the best and maybe only chance for managers to comfortably avoid liability, or at least a messy trial, is in an unincorporated firm. This makes the Delaware Supreme Court’s recent opinion in Wood v. Baum especially important, as I've written.

Update: My casebook co-author Jeff Lipshaw adds a bit of reality to this decision and brings home some of why this case is troubling.  Here's a taste (but read the whole thing):

My question to all the corporate law professors out there is this: You understand the facts. You understand the risks. You are sitting there advising the board at H-Hour. Do you really tell Lyondell's board it is duty-bound not to take this deal under this agreement, and watch a $48 offer on a $30 stock evaporate? What would you do?