The Exculpatory Clause Defense to Shareholder ... - Sidley Austin LLP

The Exculpatory Clause Defense to 

Shareholder Derivative Claims 

By Richard B. Kapnick and Courtney A. Rosen 

A 

director’s responsibilities in serving on a corporation’s 

board of directors are accompanied by significant 

personal financial risks. When shareholders 

disagree with the director’s actions or believe that the director 

harmed the corporation by inaction, they can assert a 

breach of fiduciary duty claim. Exculpatory clauses—or, in 

the parlance of Delaware law, section 102(b)(7) clauses— 

provide a defense. When properly invoked, exculpatory 

clauses can provide a basis for the dismissal at the outset 

of a case of certain types of breach of fiduciary duty damages 

claims brought derivatively by shareholders. Recent 

Delaware Chancery Court decisions have accepted exculpatory 

clauses as a valid defense for director-defendants 

at the motion to dismiss stage. This article explores how 

exculpatory clauses work to shield directors from personal 

liability for non-intentional breaches of fiduciary duties 

owed to the corporation. 

Background on Exculpatory Clauses 

Directors have always been able to maintain some measure 

of control over the threat of any breach of loyalty claim by 

maintaining their independence vis-à-vis corporate decision 

making. With respect to the duty of care, however, 

following the Smith v. Van Gorkom 1 decision in 1985, 

directors were confronted with the very real possibility 

that courts would second-guess the care with which they 

made corporate decisions. The resulting personal financial 

risk became a serious concern to directors. As a result, the 

legislatures of many states enacted legislation permitting 

exculpation to shield directors from certain lawsuits. 

For instance, Delaware adopted a statute in 1986 that permitted 

the limitation of directors’ personal liability for monetary 

damages for breaches of the duty of care. Specifically, 

section 102(b)(7) authorizes shareholders to include a clause 

in a corporation’s charter eliminating personal liability of a 

director to shareholders for monetary damages for breach of 

fiduciary duty, provided that such clause does not eliminate 

liability (1) for “any breach of the director’s duty of loyalty,” 

(2) “for acts or omissions not in good faith or which involve 

intentional misconduct or a knowing violation of law,” and 

(3) “for any transaction from which the director derived an 

improper personal benefit.” 2 

Many other states also enacted statutes providing similar 

protections for directors. 3 

Some states, like Delaware, protect only directors, while 

others also extend the protections to officers. 4 These exculpatory 

clauses are protections that are adopted only if the 

shareholders, as the owners of the corporation, choose to 

so provide. 5 If shareholders believe that the corporation 

can attract quality directors and officers without such protection, 

they need not adopt an exculpation clause. 6 

For directors, exculpatory clauses are most valuable 

when courts allow the directors and the corporation to use 

the clause to terminate litigation by motion early in the 

case. This carries far-reaching implications. If a directordefendant 

can raise an exculpatory clause in a motion to 

dismiss, the lawsuit can be terminated mere weeks into the 

proceeding—and before the beginning of costly discovery. 

Evolution of the Exculpatory Clause Defense in Delaware 

In 2001, the Delaware Supreme Court enumerated the circumstances 

under which a motion to dismiss based on an 

exculpatory clause will prevail: If a complaint alleges only 

breach of the duty of care, it can be dismissed if the directors 

are protected by an exculpatory clause. 7 However, if the 

complaint alleges a breach of the duty of loyalty or good 

faith—and the complaint cites specific facts, rather than 

conclusory allegations—the existence of an exculpatory 

clause will not warrant early dismissal. 8 

Recent Delaware decisions have steered exculpatory 

clause jurisprudence in a course that is even more favorable 

to director-defendants. In McPadden v. Sidhu, for 

example, the plaintiff-shareholder had challenged i2 Technologies’ 

decision to sell its subsidiary TSC, alleging that 

the i2 directors had first placed TSC management in charge 

of the sale process and then had failed to ensure that the 

sale process was “thorough and complete.” Importantly, 

the court found that the complaint alleged actions that 

were “recklessly indifferent or unreasonable” but fell short 

of alleging that the directors “acted in bad faith through 

a conscious disregard for their duties”; consequently, the 

court found that the directors’ actions were protected by 

their corporation’s exculpatory clause. 9 In drawing this 

distinction between recklessness and bad faith, the court 

emphasized that a certain level of intentionality—a conscious 

disregard for one’s directorial duties, not a merely 

reckless disregard—is necessary for a claim to fall into the 

bad faith exception to section 102(b)(7). 

Published in Business Torts Journal, Volume 17, Number 2, Winter 2010 • 1 

© 2010 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be 

copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the 

American Bar Association.

In re Lear Corporation Shareholders Litigation 10 reinforced 

this distinction. In Lear, the shareholder-plaintiffs 

alleged that the directors of Lear had acted in bad faith by 

agreeing to pay a $25 million “no-vote termination fee” 

to a potential acquirer in exchange for a $1.25 increase 

in the proposed merger price. Despite the plaintiffs’ characterization 

of their claim as one alleging breach of the 

directors’ duty to act in good faith, the court found that 

the shareholder-plaintiffs had failed to show that the directors 

were not protected by Lear’s exculpatory charter clause 

and, accordingly, dismissed the complaint. In so finding, it 

warned that courts should “be extremely chary about labeling 

what they perceive as deficiencies in the deliberations 

of an independent board majority . . . as not merely negligence 

or even gross negligence, but as involving bad faith.” 

The court emphasized that absent allegations of “an illicit 

directorial motive,” it can be “difficult” for a plaintiff to raise 

a viable bad faith claim. 11 In this way, the court reiterated 

that conscious wrongdoing is a critical element of directorial 

bad faith, just as the McPadden court had done. 12 

Exculpatory Clauses in Other Jurisdictions 

Dozens of other jurisdictions have heard exculpatory 

clause cases, and while many simply follow the Delaware 

judiciary’s lead, others have forged their own 

independent understandings. Pleading around section 

102(b)(7) should be considered a substantive element 

of any claim against a Delaware director whose corporation 

has such a provision in its charter, and for that 

reason, courts in other jurisdictions applying Delaware 

law should consider themselves bound to enforce section 

102(b)(7) at the motion to dismiss stage, just as the 

Delaware courts do. To do otherwise only encourages 

plaintiff forum shopping. 

Federal Courts 

Several federal courts have weighed in on two key interpretive 

issues: first, whether a defendant can base a motion 

to dismiss on the protections afforded by an exculpatory 

clause; and, second, whether directorial acts that are 

merely reckless—but not conscious or intentional—can be 

exculpated by a section 102(b)(7) exculpatory clause. 

First, some federal courts applying Delaware law have 

denied motions to dismiss founded on section 102(b)(7) 

clauses, theorizing that this defense is not properly asserted 

in a motion to dismiss, but is analogous to an affirmative 

defense that may be raised only at a later stage in the proceedings. 

The District Court for the District of Arizona, for 

example, has held that a “statutory liability shield provided 

by a certificate of incorporation . . . is in the nature of an 

affirmative defense” and thus is inappropriate for consideration 

in the context of a motion to dismiss for failure to 

state a claim. 13 The District of Delaware has broken with 

Delaware state courts on this issue, holding recently that 

“[b]ecause a Section 102(b)(7) provision is in the nature of 

an affirmative defense and following the statement of the 

Third Circuit that such defenses will generally not form 

the basis of a Rule 12(b)(6) dismissal, defendants’ motion 

to dismiss the duty of care claims is denied.” 14 

The reluctance of these jurisdictions to grant a motion 

to dismiss based on an exculpatory clause defense contrasts 

with the result in the Delaware state courts, where 

a director is permitted to use an exculpatory clause to 

dismiss a duty of care claim at the outset of a case. These 

federal cases are based on snippets of quotations from 

older Delaware cases implying that section 102(b)(7) is 

in the nature of an affirmative defense and ignore more 

recent Delaware case law that demands the plaintiff plead 

around the requirements of the exculpatory clause as a 

substantive element of a claim against any director of a 

corporation with a section 102(b)(7) charter clause. 15 

Second, in granting defendants’ motions to dismiss, two 

federal courts, applying Delaware law, recently addressed 

the type of directorial behavior that should be labeled 

“in bad faith.” Both of these cases involved allegations of 

directorial bad faith that were found to be inadequate. The 

Northern District of Illinois, for example, recited the bad 

faith standard correctly as requiring “a conscious disregard 

[of] responsibilities” and held that the defendants’ alleged 

failure to act in response to a single communication from 

a regulatory agency did not constitute bad faith where the 

plaintiff admitted that the defendants had set up a reporting 

system for addressing such communications. 16 Likewise, 

the District of Massachusetts, applying Delaware law, 

also correctly stated the bad faith standard as requiring “a 

conscious disregard of a known risk” and held that the 

defendants’ alleged failure to discover a fraud was not 

bad faith where the fraudulent actors had concealed their 

actions and where the board had retained and relied upon 

professional advisors concerning the underlying matters. 17 

These cases shed little light on whether either of these 

courts would rely in an appropriate case on an exculpatory 

clause as the exclusive ground for its decision. 

After the decisions of the Delaware Supreme Court in 

Lyondell and Disney, there should be no lack of clarity 

on the perennially thorny question of what constitutes 

directorial bad faith. The Delaware courts clearly have 

resolved to treat unintentional recklessness as fully exculpable 

and to require that such allegations be specifically 

made in the complaint in order to state a claim for relief 

against any director whose company has an exculpatory 

clause. There is every reason for the federal courts to 

apply this substantive law in ruling on motions to dismiss 

shareholder claims. 





State Courts 

Some plaintiffs’ counsel apparently believe that by filing lawsuits 

in a corporation’s principal place of business rather than 

in Delaware, they will benefit from ambiguities in those states’ 

less-developed corporate law. A survey of the law in states 

other than Delaware reveals that there are few published 

opinions addressing section 102(b)(7) or similar exculpatory 

clauses. Broadly speaking, this dearth of published 

case law makes it unclear how courts in states other than 

Delaware will interpret an exculpatory clause. In the 

absence of a well-developed body of authority, the courts 

of many states will rely on applicable Delaware authorities 

in appropriate circumstances. 18 Whether this will occur in 

the context of exculpatory clauses remains to be seen. 

The limited case law that exists suggests that state 

courts have an inconsistent record in relying upon or 

enforcing exculpatory provisions. For example, in 

Shaper v. Bryan, the Illinois Appellate Court affirmed, 

under Delaware law, the dismissal of a due care claim, 

but failed to base its ruling on the exculpatory provision 

in the corporation’s charter. 19 In that case, the directordefendants 

argued in their briefs that the section 102(b) 

(7) provision in their corporate charter shielded them 

from liability for the actions challenged by plaintiffs. 20 

Although ultimately ruling in favor of the defendants 

and dismissing the case, the Illinois court based its decision 

on the plaintiffs’ failure to allege sufficient facts to 

rebut the business judgment rule; the court did not even 

mention the section 102(b)(7) provision in its opinion 

affirming the dismissal. 21 

Likewise, in Elloway v. Pate, the Texas Court of Appeals 

affirmed under Delaware law the lower court’s decision to 

direct a verdict in favor of the director-defendants on a 

due care claim, finding that the plaintiff “has not presented 

evidence that the Directors’ conduct constitutes gross 

negligence.” 22 In reaching its ruling, the court did not rely 

upon the section 102(b)(7) clause in the company’s charter, 

which would have set the applicable standard even 

higher. 23 In fact, defendants themselves failed even to raise 

the exculpatory provision at the directed verdict hearing 

in the trial court—even though such an argument would 

have strongly supported a dismissal. 24 Both the courts and 

the lower court litigants displayed some reluctance to rely 

explicitly on a section 102(b)(7) defense. 

In New York, at least one court, applying Delaware law, 

emphasized that the “great deference given to the existence 

and legal effect of the exculpatory provision” seen in Delaware 

cases like Malpiede v. Townson is “highly influential” 

to the analysis dismissing the complaint. 25 Another New 

York court, applying Delaware law, went in a different 

direction, stating that section 102(b)(7) does not protect 

a director against any complaint alleging that the director 

engaged in “misconduct”—an overbroad statement obviously 

at odds with Delaware state courts’ interpretation 

of section 102(b)(7). 26 Nevertheless, the court dismissed 

the complaint, finding the allegations of misconduct to be 

“wholly conclusory” and insufficient to rebut the presumption 

of the business judgment rule. 

Further, one very recent case indicates that the New York 

courts might be willing to base a decision, applying Delaware 

law, directly on section 102(b)(7). In that case, a court 

confronted with an exculpatory clause dismissed the complaint 

in favor of defendants but did not rely exclusively on 

its protections, finding that the directors’ actions in that case 

“would survive scrutiny” even heightened scrutiny, although 

such heightened scrutiny was “simply not warranted” in that 

case. 27 The court correctly articulated the legal standards 

under section 102(b)(7), but it never had the opportunity to 

determine whether it would rely solely on the exculpatory 

provision as a basis for dismissal of the complaint. 28 

As for the California courts, it is worth noting that they 

have shown themselves inclined to limit the protections 

afforded by exculpatory clauses in general. In at least one 

case, the California Court of Appeals has interpreted a 

California state law clause analogous to section 102(b) 

(7) in a highly limited fashion, holding that “waiver of 

corporate directors’ and majority shareholders’ fiduciary 

duties to minority shareholders in private close corporations 

is against public policy, and a contract provision . . 

. purporting to effect such a waiver is void.” 29 Strangely, 

the court relied on the California Corporations Code 

clause that, like section 102(b)(7), expressly authorizes 

such waivers. 30 The court found that the clause’s various 

exceptions forbidding the exculpation of acts taken 

in bad faith or intentional misconduct—which echo, in 

substance, the exceptions to section 102(b)(7)—indicate, 

in turn, that the state’s overarching policy is to strongly 

disfavor attempts to eliminate liability for any breach of 

fiduciary duty. This reasoning—which smacks strongly 

of a general suspicion of exculpatory clauses—indicates 

that the California state courts, given the opportunity, 

may limit the applicability of exculpatory clauses. 

Some state courts’ failure to base their rulings squarely 

on exculpatory clauses means that it is unclear how those 

courts will interpret section 102(b)(7) or similar provisions 

in the future. On the one hand, this failure may only 

indicate that state courts lack familiarity with the concept 

of an exculpatory clause, or it may indicate a reluctance 

to permit such defenses to be asserted at the dismissal 

stage. Either way, the courts of these states may be far less 

deferential to the shareholders’ decision to adopt exculpatory 

provisions. On the other hand, it is possible that 

some directors’ counsel may have been reluctant to base 

arguments (and courts to base rulings) on the “bad faith” 





exception to section 102(b)(7). Because recent Delaware 

cases have clarified that exception, practitioners and 

courts should come away with one lesson: Neither should 

be reluctant to rely on exculpatory clauses as the basis for 

an early dismissal. 

Using Exculpatory Clauses to Their Fullest Effect 

Exculpatory clauses, such as the type authorized by section 

102(b)(7), can offer protection to directors who find themselves 

defending against certain breach of fiduciary duty 

claims. The scope and usefulness of exculpatory clauses 

are greatly affected by the willingness of the forum courts 

to apply them. To date, a number of jurisdictions have 

failed to recognize the importance of exculpatory clauses 

in ruling on motions to dismiss. Likewise, counsel representing 

directors in jurisdictions outside Delaware have 

not always explicitly raised the exculpatory clause defense 

at the motion to dismiss stage. 

Recent Delaware case law strongly demonstrates that 

it is appropriate to allow such defenses to be asserted at 

the motion to dismiss stage. The existence of the exculpatory 

clause requires that the shareholder-plaintiff satisfy 

an extremely high pleading standard to allow cases 

to go forward. Specifically, a shareholder-plaintiff must 

show that a director must have committed “intentional 

dereliction of duty” or “a conscious disregard for one’s 

responsibilities.” 31 In light of this current trend in Delaware 

case law, counsel representing corporate directors 

should consider raising appropriate exculpatory clause 

defenses at the earliest possible opportunity. n 

Richard B. Kapnick and Courtney A. Rosen are partners 

at Sidley Austin LLP in Chicago, Illinois. This article 

reflects the views of the authors only and not necessarily 

those of Sidley Austin LLP. 

Endnotes 

1. 488 A.2d 858, 893 (Del. 1985) (finding that directors may 

be personally liable if their decision to approve merger was too 

hasty or unsupported). 

2. Del. Co D e An n. tit. 8, § 102(b)(7) (2009). 

3. See, e.g., MD. Co D e An n., Cts. & Ju D. Pr o C. § 5-418(a)(1)- 

(2) (2009); n.Y. Bu s. Co r P. lA w § 402(b)(1) (McKinney 2009); 

805 Ill. Co M P. st A t. 5/2.10(b)(3) (2009). Maryland’s law is particularly 

relevant because Maryland is “by far the most popular 

state in which to organize a REIT [real estate investment trust].” 

Crossing the Line: Neighboring States Delaware and Maryland 

Are Miles Apart When It Comes to Laws Affecting REITs, re A l 

estAte Po r t f o l I o, Jan./Feb. 2002, www.realestateportfolio.com/ 

portfoliomag/02janfeb/policy.shtml. Other states, such as Nevada, 

allow shareholders to adopt exculpatory charter provisions 

that appear to be even more favorable to director-defendants, 

providing exculpation for a director or an officer “unless it is 

proven that . . . [h]is breach of those duties involved intentional 

misconduct, fraud or a knowing violation of law.” nev. rev. st A t. 

§ 78.138(7) (2009). 

4. See, e.g., lA. rev. st A t. An n. § 12:24(C)(4) (2008); MD. 

Co D e An n., Cts. & Ju D. Pr o C. § 5-418(a) (2009); nev. rev. st A t. 

§ 78.037(2) (2009); n.J. st A t. An n. § 14A:2-7(3) (2009); vA. 

Co D e An n. § 13.1-692.1(A)(1) (2009). 

5. See Emerald Partners v. Berlin, 787 A.2d 85, 90 (Del. 

2001). 

6. Delaware courts have recognized that the exculpatory clause 

exists to “encourage directors to undertake risky, but potentially 

value-maximizing, business strategies, so long as they do so in 

good faith.” See Prod. Res. Group, LLC v. NCT Group, Inc., 863 

A.2d 772, 777 (Del. Ch. 2004). 

7. Malpiede v. Townson, 780 A.2d 1075, 1094 (Del. 2001). 

Raising the exculpatory clause in a motion to dismiss may convert 

the motion into one for summary judgment, but “it does not 

follow that the ‘floodgates of discovery’ have to be opened.” Id. 

at 1091. Discovery, if any, is limited to issues such as the authenticity 

of the exculpatory provision and whether it was properly 

adopted by the shareholders. Id. at 1092. Alternatively, the court 

may take judicial notice of the exculpatory clause. See Khanna v. 

McMinn, No. 20545-NC, 2006 Del. Ch. LEXIS 86, at *130 (Del. 

Ch. May 9, 2006) (the court may “take judicial ‘notice of matters 

that are not subject to reasonable dispute’”) (internal quotation 

omitted). 

8. See Emerald Partners, 787 A.2d at 92; see also Alidina v. 

Internet.com Corp., No. 17235–NC, 2002 Del. Ch. LEXIS 156, 

at *28 (Del. Ch. Nov. 6, 2002) (holding that “when a duty of care 

breach is not the exclusive claim [i.e., the duty of loyalty is implicated], 

. . . the § 102(b)(7) provision cannot operate to negate 

plaintiffs’ duty of care claim on a motion to dismiss”). 

9. McPadden v. Sidhu, 964 A.2d 1262, 1275 (Del. Ch. 

2008). 

10. No. 2728-VCS, 2008 Del. Ch. LEXIS 121 (Del. Ch. 2, 

2008). 

11. In re Lear Corp. S’holder Litig., 2008 Del. Ch. LEXIS at 

*20, 23, 25, 36, 41–43, n.62. 

12. Exculpatory clauses like Delaware’s section 102(b)(7) 

effectively may also be employed in motions to dismiss derivative 

lawsuits for failure to make demand under Rule 23.1. In 

Wood v. Baum, 953 A.2d 136 (Del. 2008), the Delaware Supreme 

Court held that when courts adjudicate the sufficiency of allegations 

of demand futility, they should take exculpatory clauses 

into account and that a derivative complaint should be dismissed 

where, as in that case, there are no particularized allegations that 

the directors “had ‘actual or constructive knowledge’ that their 

conduct was legally improper.” Id. at 141. Wood effectively combines 

Rule 23.1 and section 102(b)(7) at the earliest procedural 

stage to filter out derivative claims that do not allege conscious 

knowledge of wrongdoing. See also In re ITT Corp. Deriv. Litig., 





588 F. Supp. 2d 502 (S.D.N.Y. 2008) (granting motion to dismiss 

on futility grounds); In re Extreme Networks, Inc. S’holder Deriv. 

Litig., 573 F. Supp. 2d 1228 (N.D. Cal. 2008) (same); In re Citigroup 

Inc. S’holder Deriv. Litig., 964 A.2d 106 (Del. Ch. 2009) 

(same). 

13. In re TASER Int’l S’holder Deriv. Litig., No. CV-05-123- 

PHX-SRB, 2006 U.S. Dist. LEXIS 11554, at *59 (D. Ariz. Mar. 17, 

2006) (internal quotation omitted). 

14. Ad Hoc Comm. of Equity Holders of Tectonic Network, 

Inc. v. Wolford, 554 F. Supp. 2d 538, 561 (D. Del. 2008). See 

also Collins & Aikman Corp. v. Stockman, No. 07-265-SLR-LPS, 

2009 WL 1530120, at *20 (D. Del. May 20, 2009). 

15. See Emerald Partners. v. Berlin, 787 A.2d at 92 (“[I]n 

actions against the directors of Delaware corporations with a 

Section 102(b)(7) charter provision, a shareholder’s complaint 

must allege well-pled facts that, if true, implicate breaches of 

loyalty or good faith.”); see also In re Medtronic, 622 F. Supp. 

802, 809 (D. Minn. 2009) (dismissing derivative claim under 

Minnesota law for failure to make a demand and noting that 

exculpatory clause requires “the more difficult burden of pleading 

a non-exculpated claim to avoid dismissal”). 

16. Bronstein v. Austin, No. 07 C 3984, 2008 U.S. Dist. LEXIS 

42881, *14–16 (N.D. Ill. May 30, 2008). 

17. Nisselson v. Lernout, 568 F. Supp. 2d 137, 149 (D. Mass. 

July 25, 2008). 

18. See e.g., In re F5 Networks, Inc., Deriv. Litig., No. C06- 

794RSL, 2007 U.S. Dist. LEXIS 57464, at *7 (W.D. Wash. Aug. 6, 

2007); Shoen v. SAC Holding Corp., 137 P.3d 1171, 1187 (Nev. 

2006). 

19. Shaper v. Bryan, 371 Ill. App. 3d 1079, 1082 (Ill. App. Ct. 

2007). 

20. Brief of Defendants-Appellees at 41, Shaper, 371 Ill. App. 

3d 1079 (No. 1-05-3849). 

21. Shaper, 371 Ill. App. 3d at 1082. Illinois courts are internally 

inconsistent on this. See Sherman v. Ryan, No. 1-07-2944, 

2009 Ill. App. LEXIS 300, at *39–40, *15 (Ill. App. Ct. May 20, 

2009) (relying in part on the company’s section 102(b)(7) clause 

for the court’s dismissal for failure to state a claim). 

22. Elloway v. Pate, 238 S.W.3d 882, 896 (Tex. Ct. App. 

2007). 

23. See also Ind. State Dist. Council of Laborers v. Brukardt, 

No. M2007-02271-COA-R3-CV, 2009 Tenn. App. LEXIS 269, at 

*34 (Tenn. Ct. App. Feb. 19, 2009) (holding that the complaint 

sufficiently alleged bad faith to avoid exculpatory clause defense 

in motion to dismiss). 

24. See id. 

25. See Kensington Int’l Ltd. v. Hiner, No. 602748/03, 2006 

N.Y. Misc. LEXIS 2321, at *14 (N.Y. Sup. Ct. Aug. 22, 2006). 

26. See Potter v. Arrington, 810 N.Y.S.2d 312, 317 (N.Y. Sup. 

Ct. 2006). This statement appears as part of a larger, somewhat 

unclear, analysis in which the court states that “[a] director may 

not exempt himself or herself from acts of misconduct,” but then 

goes on to dismiss certain causes of action that “only alleged misconduct 

and similar improper actions.” 

27. See In re Bear Stearns Litig., No. 600780/08, 2008 N.Y. 

Misc. LEXIS 7075, at *2, 17 (N.Y. Sup. Ct. Dec. 4. 2008). 

28. See id. 

29. Neubauer v. Goldfarb, 108 Cal. App. 4th 47, 57 (Cal. Ct. 

App. 2003). 

30. Id. (interpreting CA l. Co r P. Co D e § 204(a)(10)). 

31. In re Walt Disney Co. Deriv. Litig., 906 A.2d at 62, 67; 

Lyondell Chem. Co., 970 A.2d at 240.

The Exculpatory Clause Defense to Shareholder ... - Sidley Austin LLP

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