Professor Stephen Bainbridge recently expressed the hope that Caremark liability will not become routine. "Caremark" refers to Chancellor Allen's decision in In re Caremark Int'l. Deriv. Litig., 698 A.2d 959 (1996) in which he found that directors could be liable for failures of oversight. Professor Bainbridge, however, doesn't blame Chancellor Allen for the subsequent efflorescence of Caremark claims:
Although a quarter century has passed, the California courts have yet to adopt Caremark as the standard of liability for directors of California corporations. There are only two reported appellate decisions that mention the case. One, Leyte-Vidal v. Semel, 220 Cal. App. 4th 1001 (2013), applies Delaware law. The other, Robbins v. Alibrandi, 127 Cal. App. 4th 438 (2005), cites Caremark only as to the standard of review applicable to settlements."I blame Leo Strine (in the friendliest possible way). His opinion in Guttman v. Huang recharacterized Caremark as a duty of loyalty case instead of a day of care case. Once the Delaware Supreme Court swallowed that in Stone v. Ritter we faced the potential of a slippery slope in which Caremark could go from being the hardest corporate law claim to prove to a potentially crippling source of liability."
