Zapata Corp. vs. Maldonado, 430 A.2d 779 (Del. 1981).

A shareholder filed a derivate action lawsuit gainst Zapata Corp. and its directors for breach of fiduciary duties. Zapata appointed new directors, who formed an independent investigation committee (IIC) which recommended the case be dismissed. The Delaware Supreme Court adopted a two prong standard: (1) Court should inquire into the independence of the committee and the basis for its conclusions, and (2) Court should strike a balance between legitimate corporate claim (derivative action) and corporation's best interests (IIC). [Zapata was founded by the elder President Bush].
Robin Mashal
Los Angeles, California
Commercial Litigation
(310) 286-2000

I am a litigation lawyer, licensed to practice law in the State of California. You can reach me by phone at (310) 286-2000.