Title: WHAT THE HACK?! REEXAMINING THE DUTY OF OVERSIGHT IN AN AGE OF DATA BREACHES
Abstract: Due to the proliferation of electronic data and advancements in technology, data breaches have become commonplace. Data breaches are a threat to corporations of all sizes and can have devastating impacts. Focusing solely on Delaware law, this Note explores how doctrines such as the business judgment rule, exculpation provisions, and heightened pleading standards have left shareholders with limited recourse in holding directors liable for the catastrophic consequences of data breaches. Recognizing that shareholders have been unsuccessful alleging Caremark-type claims arising out of a data breach, this Note argues that the expansion of bad faith in Walt Disney provides alternative ground for shareholders to hold directors liable for data breaches. Nevertheless, this Note concedes that courts will be unlikely to accept that argument. Courts are too wary of opening the floodgates of director liability. Therefore, this Note argues that there are certain risks—such as cybersecurity risks—to which Caremark can be extended without eviscerating the business judgment rule. This Note finally argues that where Caremark applies, the standard should be relaxed in the context of cybersecurity. In an age of data breaches, the time has come for the Caremark standard to have some teeth.
Publication Year: 2019
Publication Date: 2019-04-15
Language: en
Type: article
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Cited By Count: 1
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