Under the business judgment rule, "a director is not liable for a mistaken business judgment which is made in good faith and in what he or she believes to be in the best interest of the corporation, where no conflict of interest exists.” Gaillard v. Natomas Company, 208 Cal. App. 3d 1250, 1263, 256 Cal. Rptr. 702, 710 (1989). Even though the application of the business judgment rule hinges in part on whether a director acted in good faith, the California General Corporation Law nowhere defines "good faith" or its opposite - "bad faith". Indeed, Chancellor Chandler has observed "To create a definitive and categorical definition of the universe of acts that would constitute bad faith would be difficult, if not impossible". In re Walt Disney Co. Derivative Litig., 907 A.2d 693, 755 (Del. Ch. 2005) aff’d, Brehm v. Eisner, 906 A.2d 27 (Del. 2006).

 In Tuli v. Specialty Surgical Center of Thousand Oaks, LLC, 2024 WL 4499271 (Oct. 16, 2024), the plaintiff argued that the alleged extreme animosity of members of a limited liability company board was sufficient to vitiate the business judgment rule. As evidence, the plaintiff cited, among other things, insulting emails from one of the board members. The Court, after acknowledging that "bad faith" has an indefinite meaning, declined to extend the concept of bad faith to a situation in which one decisionmaker, while working for the company's best interests, privately disparaged a colleague.