In re The Walt Disney Company Derivative Litigation
Disney Stockholders sued Mr. Ovitz and the other members of Disney’s board of directors, alleging that the directors breached their fiduciary duties in entering into that contract and wasted company assets in doing so, and that Mr. Ovitz and the Disney board breached their fiduciary duties in connection with Mr. Ovitz’s termination because Mr. Ovitz should have been terminated “for cause” instead of being given a “non-fault” termination.
Following one of the Chancery Court’s longest trials - 37 days - with testimony from 24 witness and more than 1,000 trial exhibits, Chancellor William B. Chandler III issued a 174-page opinion finding that none of the Disney directors breached their fiduciary duties in connection with Mr. Ovitz’s hiring and termination.
As to Mr. Ovitz, the Court ruled that he acted completely in accordance with his fiduciary duties when he was terminated and that the plaintiffs had failed to prove their claims that his conduct as President merited a “for cause” termination. (The Court had, prior to trial, granted summary judgment in favor of Mr. Ovitz on plaintiffs’ claims that he breached fiduciary duties to Disney when he was hired.)