holding that upon finding that a special committee 20 CL-2024-0883 of disinterested directors had determined in good faith and after investigation that it was not in the company's best interests to allow shareholder derivative action to proceed, business-judgment rule would not allow court to interfere with committee's determination
How later courts described this case
- holding that upon finding that a special committee 20 CL-2024-0883 of disinterested directors had determined in good faith and after investigation that it was not in the company's best interests to allow shareholder derivative action to proceed, business-judgment rule would not allow court to interfere with committee's determination
- holding that, under the business judgment rule, courts must respect a corporation’s decision made “in good faith and after a thorough investigation” to reject a shareholder-plaintiffs derivative claims
- finding that a “Special Committee consist[ing] of two lawyers with unquestioned reputations for integrity . . . neither of whom were dependent on the Company for their livelihood” was independent
- rejecting Zapata 30 and stating that, “after a thorough and good faith determination [by the SLC] that [the] suit would not be in the best interest of the corporation^ allowing] a suit ... would be to substitute the judgment of the court ... for that of the [SLC,] when it is obvious that the [SLC is] best situated to make such a determination”
Written by the judges who cited it.
The opinion
I concur to affirm the trial court's judgment, but it appears to me that a lot of time and effort of the trial court, this Court, and the lawyers has been misdirected. The reason: Roberts, being a holder of preferred stock, apparently had no standing to bring this suit. A preferred stockholder, generally, has no voting rights in the management of a corporation. If Roberts, as a holder of preferred stock of the Power Company, did have any management rights of the Company, that fact should have been shown by the evidence. It was not