That's the question before Vice Chancellor Stephen Lamb of the Chancery Court in Wilmington, Delaware.

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On the stand, Malone explained that he and Diller had gotten to know one another "over the years," when Diller was with the Fox network and later when Diller took a job at the QVC network, "and found himself with some spare time." (That would have been when he was fired.) The two bonded over an interest in boating, and their first business relationship began with Silver King Broadcasting.

"We would arrange for him to have our votes," Malone said of granting the voting proxy for Liberty's shares. "I didn't get too much into the legalistic details." He added: "Of course the unstated unwritten positive" in the covenants between them, was that Diller would "be a good steward of our votes."

The fight over Diller's plan to create five spinoffs came to a head at a meeting of the IAC board on January 16, 2008, when Diller and lawyers from Wachtell Lipton Rosen & Katz made a presentation. Malone pressed the Wachtell Lipton lawyers about whose interests they were representing—Diller personally or the interests of the company.

Martin Lipton, Wachtell's lead lawyer, assured the directors they would have "no personal liability" under Delaware corporate law if they voted in favor of the spinoffs. And as to a shareholder vote, Diller said there would be a vote on the spinoffs and he would vote for it. "It was like a cutoff, if you want to call it that, of the discussion."

Malone, not exactly a fount of charisma or emotion on the witness stand, did wax eloquently at the end of his direct testimony: "My opinion is that it's a breach of the stewardship we granted him at the beginning of this relationship," he pronounced. "I'm not a lawyer. To me, it's a breach of faith."

In a court of law, however, those little legal details do matter, as Wachtell's Marc Wolinsky made clear on cross examination. After all, Malone employed "fine" legal counsel to dot all the i's and cross all the t's.

"They would have put down in clear English a checklist of things that Mr. Diller could and couldn't do?" Wolinksy asked.

He then reminded Malone of a colorful description of lawyers he made at his deposition in the case. "You never met a one-handed lawyer; it's always on the other hand, right?"