Blue Bell Creameries, one of the country’s largest ice cream manufacturers, suffered a listeria outbreak in early 2015, causing the company to recall all of its products, shut down production at all of its plants, and lay off over a third of its workforce. . . . Three people died as a result of the listeria outbreak. Stockholders experienced losses because . . . Blue Bell suffered a liquidity crisis that forced it to accept a dilutive private equity investment. A stockholder brought a derivative suit . . . against Blue Bell’s directors claiming . . . that the directors breached their duty of loyalty under In re: Caremark.. . . Under Caremark, directors have a duty “to exercise oversight.” A board’s “utter failure to attempt to assure a reasonable information and reporting system exists” is an act of bad faith in breach of the duty of loyalty. . . . 

Questions 

1. How is bad faith with respect to an oversight duty established under Caremark? 

2. Why did the plaintiff’s complaint survive the directors’ motion to dismiss (as discussed in Chapter 4) with regard to whether they had breached their duty of loyalty?