Monday, November 19, 2018

Teaching Corporate Fiduciary Duties, Again . . . .

Even after 19 years or so of teaching Business Associations courses, I still marvel at how hard it is to teach corporate fiduciary duty doctrine to my students.  A lot of my frustration comes from the amount of (perhaps not-so-useful) judicially instigated labeling involved under Delaware law, as the leading state in the area.  In particular, there is the narrowing of the duty of care to exclude both substantive duty of care claims and Caremark claims.  And then there is the matter of how to best describe the nature of the business judgment rule and how to describe the interaction of disclosure (candor) with the fiduciary duties of care and loyalty. And finally there is a lingering doctrinal question as to whether, in other jurisdictions, good faith, classified as a subsidiary component of the duty of loyalty in Delaware, may be a free-standing fiduciary duty or, in the alternative, foundational, penumbral, etc. to the fiduciary duties of loyalty and care  . . . .  Tough stuff.

Is anyone else out there suffering in the same way I do in teaching fiduciary duties in a Business Associations or Corporations class?  How do you handle the legal complexity/labeling questions?  I continue to want to improve in teaching this material.  I am all ears.

[Postscript:  I failed to note in the original post the helpful comments that I received on a longer-form, less specific post on this issue two years ago.  Feel free to look there for more and for some ideas folks shared about their teaching then.]

Corporate Governance, Corporations, Joan Heminway, Teaching | Permalink


I have been teaching corporate fiduciary duties for years and I can tell you one thing I don't do. Publicly state - in a forum accessible to my students how difficult it is to teach the issue and how I am "suffering." Did it ever occur to you that students can read posts like this?

Posted by: Bob | Nov 20, 2018 4:02:43 AM

Well, I haven't been teaching corporate fiduciary duties for very long, but I can say that I struggle with a lot of the same issues you do - the doctrine itself is fuzzy, and that makes communicating it difficult - I mean, there are countless law review articles debating the nature of the business judgment rule alone. FWIW, I have no problem with your post - I think there's nothing wrong with identifying that some subjects are hard to teach because of the complexity of the material, and law students are mature enough to understand what you meant.

Posted by: Ann Lipton | Nov 20, 2018 4:48:51 AM

Thanks for the comment, Bob. Yes, of course. In fact, I direct them here for information.

As an instructor, I am both confident and humble. I tell my students how frustrating it is to teach this material every day I teach it. We struggle with it together. Knowing the doctrine and why, e.g., labeling is important to it is one thing; explaining it well to others who need to understand it is another.

Your comment makes me wonder whether my students actually may learn differently, or even more, because we dig into this material every year together--ready to fight the good fight that lawyers fight every day in educating courts, directors, fellow bar members, and others about legal complexity and its relationship to specific facts. This is definitely something I will consider.

Incidentally, I hope that readers do not worry about my use of the word "suffering" in the post. While I chose it purposefully, I intended to convey the kind of ongoing hardship that an instructor often feels when teaching is difficult. Any pain that I feel is that kind of pain--no more than that. Moreover, I actually enjoy the enlightenment that results from the struggle.

But I wonder if I am joined by others in believing this task is difficult . . . . And maybe some have felt but resolved in some way the inherent tension. Hence, the post.

Posted by: joanheminway | Nov 20, 2018 4:49:30 AM

Ann, I love the use of "fuzzy" in your comment. I may re-use that and credit you! And thanks for expressing your view on the appropriateness of the post, too.

Posted by: joanheminway | Nov 20, 2018 5:04:21 AM

Joan, I too find it hard, for all the reasons you suggest. For better or worse, one main way I increasingly deal with the problems is to not sweat the small stuff, and to recognize that for purposes of the introductory course, some pretty major items for us as scholars are actually small stuff. For instance, the precise doctrinal location of good faith. I've written about that, and find it interesting. But, even I am not very sure how much practical difference Stone v. Ritter makes. I teach the case, but typically don't spend much time on it, and tell students that understanding why the court places good faith under loyalty and how it matters is not a big concern for them. And I don't discuss how other states might address the issue at all. I don't think students in the beginning course need to get that far, and there's so much they do need to get that I feel that spending time on those issues distracts from my main goals. But I freely admit that students do lose something in that approach.

Posted by: Brett McDonnell | Nov 20, 2018 8:18:55 AM

When teaching a concept such as corporate fiduciary duty, I find it – with my limitations – mandatory to break it down first into bright-lines I find digestible. Then I nibble towards the nuances. Since casebooks tend to emphasize a broad spectrum of concepts across various States, when dealing with these concepts I tend to emphasize the state of Tennessee’s case law. After 20+ years of application, I have to be careful not to try to force 10 lbs. of concepts into – as yet - 5 lb. bags.

Posted by: Tom N. | Nov 20, 2018 8:40:16 AM

Thanks, Brett and Tom, for weighing in on this. I meant to offer those thanks last week. I appreciate the conversation.

Posted by: joanheminway | Nov 27, 2018 11:47:33 PM

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