In Stone v. Ritter, the Delaware Supreme Court attempted to end the debate revolving around good faith’s role in director fiduciary liability. The Stone court finally cleared up some doctrinal issues when it explicitly stated that good faith is not a freestanding duty on the level of care and loyalty. However, the court created a host of new questions and concerns - particularly in director oversight cases - when it included good faith solely as a subsidiary element of the duty of loyalty. The Stone court incorrectly held that the fiduciary duty of loyalty is not limited to cases involving a conflict of interest; loyalty also now encompasses director oversight cases. The court should have recognized that good faith is a necessary subsidiary element of both the duty of loyalty and the duty of care, and left director oversight in the realm of care.

The extent of director oversight liability under Stone remains to be seen. Whether the Chancery can appropriately apply the reformulated Caremark/Disney standard is anybody’s guess. If the recent contradictory decisions in Bear Stearns, Ryan, and Bridgeport are any indication, clarity and consistency in Delaware fiduciary law is a chimera.Fortunately, the Delaware Supreme Court’s cogent analysis in Lyondell, however, should provide some much needed post-Stone guidance.

In the wake of the current economic crisis, the Delaware courts need to recognize that the Stone formulation of good faith is inaccurate. The Delaware courts must also recognize that good faith is the overarching fiduciary goal, and thus, a necessary element of both the duty of loyalty and the duty of care.

This article examines Stone, including the factual basis and rationale of both the Chancery Court and the Delaware Supreme Court. This article then provides a concise history of Delaware’s constant repositioning of directors’ fiduciary duties. The article then analyzes the Delaware Supreme Court’s doctrinal shift regarding good faith and the duty of loyalty. This analysis includes both the conceptual and practical implications of good faith as a component of loyalty. This article also analyzes the Stone court’s improper repositioning of Caremark cases solely into the realm of loyalty. Additionally, this article analyzes the potential changes in section 102(b)(7) after the Delaware Supreme Court’s improper shift of good faith from care to loyalty, as well as the most recent - and inconsistent - post-Stone cases. This article concludes with a glance at the future of director liability and a proposed solution to the new quagmire presented by Stone. In brief, the Delaware courts need to recognize that good faith is the overarching fiduciary goal, and thus a necessary element of both the duty of loyalty and the duty of care. Further, the Delaware courts need to reverse Stone’s reframing of director oversight claims as primarily loyalty claims and reincorporate the appropriate Caremark duty of care framework.

This Article builds upon various scholarly critics of moralistic laws to argue that legal prohibition of drugs and prostitution is inefficient. In so doing, it relies on economists’ scholarship, which has demonstrated that the high costs of regulation are not justified, considering the minimal success of these regulations as well as the harm caused by those regulations. Philosophers, for millennia, have grappled with formulating principles of morality and have attempted to determine which of those principles ought to be codified and imposed as societal rules of law on individuals. Attempts to coerce individuals into adopting certain behavioral patterns or forgo destructive ones have been referred to as “moral dirigisme”. Moral dirigisme manifests itself in “the attempt or tendency to control certain kinds of moral behavior by formal legal means." (See, e.g., Mario J. Rizzo, The Problem of Moral Dirigisme: A New Argument Against Moralistic Legislation, 1 N.Y.U. J.L. & LIBERTY 789, 791 (2005). Moral dirigisme (John Stuart Mill, On Liberty 13 (Stefan Collini ed., 1989) (1859) is an economic term, which describes an economic structure for which the government provides strong direction. (See generally Élie Cohen, Le Colbertisme “High Tech”: Économie Des Telecom et du Grand Projet (1992); David Baker, The Political Economy of Fascism: Myth or Reality, or Myth and Reality?, 11 NEW POL. ECON., 157, 227-50 (2006). The term dirigisme derives from the French word diriger, which means to guide. (see WordReference.com, French to English Dictionary, (last visited Sept. 3, 2009). Moral dirigisme, by analogy, refers to the underlying philosophy which believes that moral behaviors can be changed through formal regulation. It is referred to, by Mario J. Rizzo, as “the attempt or tendency to control certain kinds of moral behavior by formal legal means.” (See Rizzo, supra note 2, at 791). Rizzo views acts by the state to prohibit or authorize certain conduct of individuals in an attempt to force them to act morally as flawed. Id. The laws prohibiting drugs and prostitution serve as perfect examples of implementation of a moral dirigiste philosophy. I contend in this Article that the dirigiste approach to drugs and prostitution is erroneous and inefficient.

From Plato’s Socrates to Kant’s Categorical Imperatives to Hume’s observations, philosophers have confronted the nebulous intersection of absolutely necessary laws and purely beneficence-inducing laws, which cannot be implanted as a product of coercion. While the principles of justice have generally been perceived as capable of inspiring precise laws, other principles such as those guiding beneficence have been viewed by philosophers as more contingent on the individual’s state of mind or circumstances and less likely to be regulated by formal rules. This Article explores the proper role the law should play in regulating behaviors (such as drug use and/or in prostitution) that society deems harmful, but that are resistant to prohibition. Additionally, it considers items deemed harmful to the public, but not subject to any form of prohibition. Furthermore, it re-examines the consequences of U.S. drug and prostitution policy, focusing on the inevitable “black market” effects of the punitive style of enforcement, and initiates serious consideration of policy alternatives to discourage drug use and limit the number of vulnerable women engaging in prostitution.

Consequently, the Article is divided as follows. Part II considers the inefficiency of the prohibition of drugs and prostitution. Part III discusses the underlying legal and philosophical theories that support prohibitory legislation and analyzes why prohibition of drugs and prostitution, although a popular default mechanism, is ineffective at eradicating these behaviors. Part III also identifies the Smithian-Humean view of justice as a basis to evaluate prohibition-based laws. Part IV explores the issues inherent in the prohibition of drugs and considers alternative approaches. Part V explores issues that result from the prohibition of prostitution and Part VI proposes an alternative framework to the prohibition of prostitution. Part VII explores ways of preventing pro-prostitution regulations from strengthening the sex trafficking market. Finally, Part VIII borrows from philosophical frameworks to formulate a standard that helps differentiate between effective and ineffective prohibition. Through an analysis of the unintended effects of prohibition, this Article provides a strong economic and legal argument for the legalization of prostitution and, at the very least, marginal changes in U.S. drug policy.