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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

William Stone and Sandra Stone, derivatively on Behalf of Nominal Defendant Amsouth Bancorporation, Plaintiffs Below, Appellants, v. C. Dowd Ritter, Ronald L. Kuehn, Jr., Claude B. Nielsen, James R. Malone, Earnest W. Davenport, Jr., Martha R. Ingram, Charles D. McCrary, Cleophus Thomas, Jr., Rodney C. Gilbert, Victoria B. Jackson, J. Harold Chandler, James E. Dalton, Elmer B. Harris, Benjamin F. Payton, and John N. Palmer, Defendants Below, Appellees, and AmSouth Bancorporation, Nominal Defenda

Headnote

A common good faith claim is that directors violated their duty of good faith the corporation by failing to provide adequate oversight, resulting in avoidable losses to the corporation. These “oversight claims” are also known as Caremark claims after a case where the issue of oversight liability was dealt with in dicta.  In Stone, the Delaware Supreme Court adopts the reasoning of Caremark and applies the standard to facts before it.