Director Oversight in Florida: Getting the Balance Right

Abstract

This Article responds to E. Paige Williams, The Writing on the [Fire]Wall: Mission Critical Cybersecurity Derivative Litigation is on Delaware's Horizon, and considers whether Williams' suggested approach to director oversight liability should be adopted in Florida. Williams argues that cybersecurity is a mission-critical function for companies like SolarWinds, warranting heightened oversight duties under Delaware's Caremark framework as expanded by Marchand v. Barnhill. While Delaware courts have signaled a greater willingness to entertain director liability claims in industries where oversight failures pose existential threats, Florida's corporate statutory scheme presents significant hurdles to adopting a similar approach. 

The Article offers two original contributions to the underdeveloped scholarship on Florida corporate law. Descriptively, it evaluates the viability of director oversight liability under the Florida Business Corporation Act (FBCA) and highlights how Florida's statutory framework diverges from both the Model Business Corporation Act (MBCA) and the Delaware General Corporations Law (DGCL). While the FBCA lacks an explicit exculpation provision, it still shields directors from liability for both gross and regular negligence. In contrast to the MBCA, however, its unique liability standard presents a potential avenue for oversight claims in extreme cases. Normatively, it critiques the misapplication of Delaware's oversight doctrine by Florida courts and advocates for a jurisdiction-specific approach that aligns with Florida's statutory scheme and policy priorities. It concludes that while oversight liability should remain a viable mechanism for director accountability, wholesale adoption of Delaware's mission-criticality framework would create unintended negative consequences. Instead, Florida courts should develop a distinct oversight liability standard that balances the need for director vigilance with the costs associated with unbridled litigation.

Keywords: non-Delaware corporate law, caremark, Marchand v. Barnhill, Mission Critical, Director Oversight, Board Monitoring