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Unreasonableness Or Carelessness Is Insufficient to Prove Liability in Nevada
Tuesday, April 8, 2025

Nevada's exculpatory statute, NRS 78.138(7), requires a plaintiff to both rebut a statutory presumption of good faith and prove a breach of fiduciary duty involving intentional misconduct, fraud, or a knowing violation of the law.  In Tsatas v. Airborne Wireless Network, Inc., 2015 WL 973840 (March 31, 2025), the plaintiff brought a derivative action against, among others, the CEO (Warrent) and another officer of Airborne.  U.S. District Court Judge Richard F. Boulware, II's ruling illustrates the high hurdle that plaintiffs' must overcome when suing directors and offices of Nevada corporations:

A jury may find from this that Warren was unreasonable or careless as CEO, but that is not sufficient to show intentional misconduct, fraud, or a knowing violation of law. 

This is a higher standard of care than the gross negligence standard applied by Delaware courts.  See, e.g. Stone v. Ritter , 911 A.2d 362, 369 (Del. 2006) ( ". . . the conduct giving rise to a violation of the fiduciary duty of care (i.e., gross negligence)").

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