Individual or Collective Liability for Corporate Directors?

Abstract:     
Fiduciary duty is one of the most litigated areas in corporate law, and the subject of much academic attention, yet one important question has been ignored. Should fiduciary liability be assessed individually, where directors are examined one-by-one for compliance, or collectively, where the board's compliance as a whole is all that matters? The choice between individual and collective assessment can be the difference between a director's liability and her exoneration, affects how boards function, and informs the broader fiduciary duty literature in important ways. This article is the first to explore the individual/collective question and suggest a systematic way of approaching it. The article is both descriptive, in examining how some courts have answered this question (often implicitly), and normative, in asking whether the courts' tentative answer makes for good corporate governance policy.

Keywords: Corporate, Board, Director, Disney, Fiduciary Duty, Duty of Loyalty, Duty of Care, Good Faith

JEL Classifications: K22

Accepted Paper Series