Nevadaware Divergence

Wendy Gerwick Couture has posted a thoughtful article entitled, Nevadaware Divergence in Corporate Law.  It's available here.  She presents some new perspectives on Nevada corporate law and emphasizes that Nevada has adopted a different policy balance than Delaware. She does this through three thorough sections analyzing exculpation, appraisal, and freeze-out mergers under both Nevada and Delaware law.  

This detailed focus gives some real insights.  She recognizes that many of the claims about Nevada exculpating for breaches of the duty of loyalty are overstated.  Nevada exculpates for breach of fiduciary duty under a single standard.  To the extent that any breach of the duty of loyalty involves any intentional misconduct, it would not be exculpated under Nevada law. It's a much narrower category--unintentional breaches of the duty of loyalty--that may be exculpated under Nevada law.

She also recognizes that burden of proof differences in exculpation may shift outcomes.  Delaware places the burden of proof on a party seeking exculpation.  Nevada places the burden of proof on the party aiming to impose monetary liability.  This difference undoubtedly shifts litigation costs for many disputes.

If you're interested in TripAdvisor case or other comparative corporate law issues, her work helps bring real light to these issues.  Ultimately, I agree with her that Nevada has struck a different balance than Delaware to prioritize avoiding the negative effects of litigation over maximizing deterrence and ensuring compensation for all possible wrongs.  Depending on what the Delaware Supreme Court does in the TripAdvisor case, I expect that Delaware and other courts might soon look to her work here to help understand Nevada law.