In re Oracle Corp. Derivative Litigation 824 A.2d 917 (Del.Ch. 2003) Shareholders of Oracle accused some of the directors of insider trading. They began a derivative suit. In general, you can't institute a derivative suit until you either ask the directors to look into the problem, or you convince the court that it would be futile to ask because a majority of the directors were somehow involved in the thing you are suing about. In response, Oracle formed a special committee (aka an independent committee) to look into the shareholders' claims. Under Delaware law, having a special committee look into the issue and find that everything is on the up-and-up almost always results in a derivative suit being dismissed. The special committee consisted of two of Oracle's outside directors that had no financial stake in the insider trading allegations. After the special committee found no wrongdoing, the shareholders sued again. The shareholders argued that the directors on the special committee were not disinterested because they were personal friends of the accused directors. The accused directors argued that friendship didn't matter, and that the only way the directors on the special committee could be found to not be disinterested was if there was "domination and control." The Trial Court found that the special committee was not independent, and so their findings didn't preclude a derivative suit. The Trial Court found that even though the directors on the special committee had no financial stake in the insider trading allegations, they were personal friends of the accused directors. In addition, the Court found that the directors on the special committee both worked at a college that got lots of donations from the other directors. Basically, this case said that when evaluating whether a director is "disinterested" you have to look as broadly as possible. It isn't just a financial connection, or the ability for an interested director to 'punish them' (by firing them for example), you also have to look at non-economic social ties, or anything else that could affect that director's loyalties. Note that ruling is probably limited to situations where there is a director accused of wrongdoing. In situations where an independent committee is required to negotiate a merger or similar transaction that wouldn't cause require a decisionmaker to accuse a friend of wrongdoing, personal friendships are much less likely to be a basis for deciding that a director is compromised.