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  • Writer's pictureKirk Hartley

Caremark Duties – Comparing “The Fight Against Medical Monitoring” to GM’s N

One wonders how many tort defense lawyers and/or liability insurance companies talk to lawyers who defend securities cases arising out of breaches of Caremark duties. Questions of that sort arise on reading articles such as this one from the latest issue of Corporate Counsel. It’s a one-sided and incomplete summary of the case law on medical monitoring, and an exhortation to corporate counsel to fight everything that looks like medical monitoring. On the flip side of corporate behavior, consider GM’s new CEO and her comments on the company’s new series of product recalls, and breakdowns in internal processes.

Like it or note, corporations need to accept the realities of modern life. They include 1) modern science is racing exponentially faster than is the law, 2) modern communication makes it possible to more or less instantly lose large parts of corporate reputation, and so honesty and contrition become valuable, and 3) Caremark duties mean that it is short-sighted to act like the proverbial ostrich (or, in legal jargon, that would be willful blindness).

Law to date has been slow, but change does happen. In past decades, the citadel of privity fell, and Restatement section 402(a) was embraced. Thereafter, products improved. In future decades, legal scholars will look back and deride short-sighted thinking about products, and will applaud directors and corporate officials who increased their attention to Caremark duties.

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