In a posting yesterday, Professor Stephen Bainbridge poses the question "When an acquirer spots red flags: Should Microsoft's board beware?" He points out:
Numerous Delaware cases (mostly arising in the oversight context, of course) hold that independent directors will be liable for acting in bad faith only when they ignore alleged “red flags” that are “either waved in one’s face or displayed so that they are visible to the careful observer.” Rattner v. Bidzos, 2003 WL 22284323 at 13 (Del. Ch. 2003), quoting In re Citigroup Inc. S’holders Litig., 2003 WL 21384599, at *2 (Del. Ch. 2003).
Microsoft, however, is incorporated in the State of Washington, not Delaware. Not being familiar with Washington corporate law, I don't have a view on whether Washington would follow Delaware. However, I could find no reported decision of a Washington state court that cites either Bidzos or Citigroup.