Cuker v. Mikalauskas
Brief

CitationCuker v. Mikalauskas, 547 Pa. 600, 692 A.2d 1042, 1997 Pa. LEXIS 789 (Pa. Apr. 21, 1997) Brief Fact Summary. The board of directors of PECO Energy Corporation (Defendant) sought to quash two derivative actions initiated by its minority shareholders (Plaintiff).  The minority shareholders of PECO Energy Corporation (Plaintiff) initiated two derivative actions against the board of directors of PECO Energy Corporation (Defendant),which they sought to quash. Synopsis of Rule of Law. A corporation’s board of directors, under Pennsylvania law, is permitted to apply the ...

Subject of law: Duty of Care and the Business Judgment Rule

Brehm v. Eisner
Brief

CitationBrehm v. Eisner (In re Walt Disney Co. Derivative Litig.), 906 A.2d 27, 2006 Del. LEXIS 307, 37 Employee Benefits Cas. (BNA) 2756 (Del. June 8, 2006) Brief Fact Summary. Brehm (Plaintiff) sued Eisner (Defendant) for approving an employment agreement and subsequent non-fault termination of Disney’s president, Ovitz. Synopsis of Rule of Law. A complaint that is mostly conclusory does not meet the rules required for a stockholder to pursue a derivative remedy. ...

Subject of law: Duty of Loyalty and Conflict of Interest

Brehm v. Eisner
Brief

CitationBrehm v. Eisner, 746 A.2d 244, 2000 Del. LEXIS 51 (Del. Feb. 9, 2000) Brief Fact Summary. Disney shareholders (Plaintiff) contended that the corporation’s compensation committee (Defendant) breached its duty of care in approving an employment agreement to Ovitz that had the potential of granting him a severance package worth approximately $130 million in its first year; that the committee (Defendant) and remaining directors (Defendant) breached their duty of care in hiring Ovitz as Disney’s president because they acted in bad faith; and that, in any event, the payment o ...

Subject of law: Duty of Loyalty and Conflict of Interest

Litwin v. Allen
Brief

CitationLitwin v. Allen, 25 N.Y.S.2d 667, 1940 N.Y. Misc. LEXIS 2596 (N.Y. Sup. Ct. 1940) Brief Fact Summary. Stockholders (Plaintiff) brought a derivative action against Trust Company (Defendant), its subsidiary, Guaranty Company (Defendant), and J.P. Morgan & Co. (Defendant) for a loss resulting from a bond transaction. Synopsis of Rule of Law. A director is not liable for loss or damage other than what was proximately caused by his own acts or omissions in breach of his duty. s resulting from a bond transaction. ...

Subject of law: Duty of Care and the Business Judgment Rule

TSC Indus., Inc. v. Northway, Inc.
Brief

CitationTsc Indus. v. Northway, 426 U.S. 438, 96 S. Ct. 2126, 48 L. Ed. 2d 757, 1976 U.S. LEXIS 155, Fed. Sec. L. Rep. (CCH) P95,615 (U.S. June 14, 1976) Brief Fact Summary. Northway, Inc. (Plaintiff), a TSC Indus., Inc. (TSC) (Defendant) shareholder, claimed that material facts were omitted from the proxy statement issued in connection with a liquidation and sale of Defendant’s assets to National. Synopsis of Rule of Law. When there is a significant possibility that a reasonable shareholder would consider the omitted information from a proxy solicitation important in deciding how ...

Subject of law: Control and Management in the Publicly Held Corporation

Studebaker Corp. v. Gittlin
Brief

CitationStudebaker Corp. v. Gittlin, 360 F.2d 692, 1966 U.S. App. LEXIS 6603 (2d Cir. N.Y. Apr. 5, 1966) Brief Fact Summary. Gittlin (Defendant) was a shareholder of less-than-1 percent of Studebaker Corporation (Plaintiff) and was enjoined successfully from using authorizations of other shareholders to access inspection of a shareholder list as the solicitation of such authorizations was made without compliance with the Securities Exchange Commission’s (SEC) Proxy Solicitation Rules. Synopsis of Rule of Law. A “proxy solicitation†is any communicati ...

Subject of law: Control and Management in the Publicly Held Corporation

Stone v. Ritter
Brief

CitationStone v. Ritter, 911 A.2d 362, 2006 Del. LEXIS 597 (Del. Nov. 6, 2006)   Brief Fact Summary. Shareholders (Plaintiff) brought a derivative action against AmSouth Bancorporation (AmSouth) directors (Defendant) contending that demand was excused because the Defendant breached their oversight duty.  Allegedly, the breach caused approximately $50 million in penalties the corporation was required to pay as a consequence of its employees’ failure to file specific reports required by federal banking regulations. Synopsis of Rule of Law. When specified fa ...

Subject of law: Duty of Care and the Business Judgment Rule

Smith v. Van Gorkom
Brief

CitationSmith v. Van Gorkom, 488 A.2d 858, 1985 Del. LEXIS 421, 46 A.L.R.4th 821, Fed. Sec. L. Rep. (CCH) P91,921 (Del. Jan. 29, 1985) Brief Fact Summary. Because Van Gorkom (Defendant) and the other Trans Union directors had three opportunities to reject the merger proposal, the trial court held that they acted with due deliberation and their conduct fell within the business judgment rule. Synopsis of Rule of Law. When making decisions on behalf of a corporation, the directors are bound to exercise good faith informed judgment. ...

Subject of law: Duty of Care and the Business Judgment Rule

Shlensky v. Wrigley
Brief

CitationShlensky v. Wrigley, 95 Ill. App. 2d 173, 237 N.E.2d 776, 1968 Ill. App. LEXIS 1107 (Ill. App. Ct. 1st Dist. 1968) Brief Fact Summary. Shlensky (Plaintiff), a minority shareholder of the Chicago Cubs, filed a derivative suit against Wrigley (Defendant), the majority shareholder, to compel them to install lights at Wrigley Field in order to hold night games after their refusal to do so. Synopsis of Rule of Law. A derivative suit by a shareholder can only be based on directors’ conduct that borders on fraud, illegality, or conflict of interest. ...

Subject of law: Duty of Care and the Business Judgment Rule

Rauchman v. Mobil Corp.
Brief

CitationRauchman v. Mobil Corp., 739 F.2d 205, 1984 U.S. App. LEXIS 20747, Fed. Sec. L. Rep. (CCH) P91,555 (6th Cir. Ohio July 6, 1984) Brief Fact Summary. Rauchman (Plaintiff) brought suit against Mobil Corp. (Defendant), claiming that his proposed amendment to the corporation’s bylaws had to be included in its proxy statement. Synopsis of Rule of Law. A corporation may refuse to include in its proxy statement a proposal to amend its bylaws to prevent a foreign citizen from becoming a board member. ...

Subject of law: Control and Management in the Publicly Held Corporation

Malone v. Brincat
Brief

CitationMalone v. Brincat, 722 A.2d 5, 1998 Del. LEXIS 495 (Del. Dec. 18, 1998) Brief Fact Summary. Malone (Plaintiff) and other stockholders alleged that Brincat (Defendant) and other directors of Mercury Finance Company, a Delaware corporation, overstated the company’s earnings and thereby breached their fiduciary duty of disclosure. Synopsis of Rule of Law. The fiduciary duties of care, loyalty and good faith apply when directors of a corporation distribute information to stockholders when no stockholder action is sought. ...

Subject of law: Duty of Care and the Business Judgment Rule

In the Matter of Caterpillar, Inc.
Brief

CitationSEC Rel. No. 34-30532 (Adm. Proceeding File No. 3-7692, 1992) View this case and other resources at: Brief Fact Summary. In its annual and quarterly reports, Caterpillar, Inc. Defendant’s failed to sufficiently comply with the disclosure requirements of § 13(a) of the Securities Exchange Act of 1934. Synopsis of Rule of Law. Disclosure is required when it is likely that a known trend, demand, commitment, event, or uncertainty is likely to occur, and where such a determination cannot be made, an objective evaluation must be made regarding the consequences of such an o ...

Subject of law: Control and Management in the Publicly Held Corporation

In re Caremark Intern. Inc. Derivative Litigation
Brief

CitationIn re Caremark Int’l, 698 A.2d 959, 1996 Del. Ch. LEXIS 125 (Del. Ch. Sept. 25, 1996) Brief Fact Summary. A managed healthcare provider, Caremark International, Inc., entered into contractual arrangements with hospitals and physicians, often for “research†or “consultation,†before clarifying the unsettled law surrounding prohibitions against referral fee payments. Synopsis of Rule of Law. A board of directors has an affirmative duty to attempt in good faith to make sure that a corporate information and reporti ...

Subject of law: Duty of Care and the Business Judgment Rule

Gall v. Exxon Corp.
Brief

CitationGall v. Exxon Corp., 418 F. Supp. 508, 1976 U.S. Dist. LEXIS 13846, Fed. Sec. L. Rep. (CCH) P95,675 (S.D.N.Y. July 30, 1976) Brief Fact Summary. Exxon (Defendant) motioned for summary judgment during trial of Gall’s (Plaintiff) shareholder derivative suit against Defendant claiming illegal bribes by the corporation, claiming it was in the corporation’s sound business judgment to refuse to sue on Plaintiff’s complaint. Synopsis of Rule of Law. The decision of corporate directors rests within the sound business judgment of management regarding whether or not to as ...

Subject of law: Duty of Care and the Business Judgment Rule

Aronson v. Lewis
Brief

CitationAronson v. Lewis, 473 A.2d 805, 1984 Del. LEXIS 305 (Del. Mar. 1, 1984) Brief Fact Summary. The trial court dismissed this derivative suit for failure to meet the prerequisite of making a demand on the board of directors to bring the suit. Synopsis of Rule of Law. A prior demand can only be excused where facts are alleged with particularity that creates a reasonable doubt that action by the director was entitled to the business judgment rule’s protections. ...

Subject of law: Duty of Care and the Business Judgment Rule

J.I. Case Co. v. Borak
Brief

CitationJ. I. Case Co. v. Borak, 377 U.S. 426, 84 S. Ct. 1555, 12 L. Ed. 2d 423, 1964 U.S. LEXIS 2352 (U.S. June 8, 1964) Brief Fact Summary. Borak (P), a shareholder of J.I. Case Co. (D), sought private relief arguing that shareholders approved a merger with another corporation with proxy statements that violated federal securities laws. Synopsis of Rule of Law. The court is free to design an appropriate remedy, and a private civil action will lie, when a federal securities act has been violated, but no private right of action is specifically authorized or prohibited. ...

Subject of law: Control and Management in the Publicly Held Corporation

Cochran v. Dellfava
Brief

Citation136Misc.2d 38, 517 N.Y.S.2d 854 (N.Y. City Ct. 1987) Brief Fact Summary. Two parties were participants in an illegal "chain distribution game".  The Plaintiff brought suit against the Defendant who convinced her to participate in the game. Synopsis of Rule of Law. "[A] party to an illegal contract cannot ask a court of law to help him [her] carry out his [her] illegal object, nor can such a person plead or prove in any court a case in which he [she], as a basis for his [her] claim, must show forth his [her] illegal purpose." ...

Subject of law: Bargains That Are Illegal or Against Public Policy

Singleton v. Foreman
Brief

Citation435 F.2d 962 (5th Cir. 1970) Brief Fact Summary. An attorney entered into a retainer agreement with a client in a divorce matter.  The attorney charged the client a $25,000 retainer fee and a 1/3 contingency fee. Synopsis of Rule of Law. The general rule is "that courts will not aid either party to an illegal contract but will leave them where they place themselves."  However, Florida recognizes an exception to this rule.  The exception applies when "law or public policy requires action by the courts, or where the parties are not in pari delicto." ...

Subject of law: Bargains That Are Illegal or Against Public Policy

Bateman Eichler, Hill Hichards Inc. v. Berner
Brief

Citation472 U.S. 299, 105 S.Ct. 2622, 86 L.Ed2d 215 (1985) Brief Fact Summary. Individuals who received false inside information brought suit against the parties that provided them with that information. Synopsis of Rule of Law. "[A] private action for damages in [an insider trader context] may be barred on the grounds of the plaintiff's own culpability only where (1) as a direct result of his own actions, the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress, and (2) preclusion of suit would not significantly interfere with the effec ...

Subject of law: Bargains That Are Illegal or Against Public Policy

Northern Indiana Public Service Co. v. Carbon County Coal Co.
Brief

Citation799 F.2d 265 (7th Cir. 1986) Brief Fact Summary. The Plaintiff, Northern Indiana Public Service Co. (Plaintiff), brought suit against the Defendant, Carbon County Coal Co. (Defendant), to have its obligations under the contract excused under the force majeure clause of the agreement. Synopsis of Rule of Law. A force majeure clause does not protect against the ordinary risks of a contract, but rather, it excuses performance where something beyond the parties' control occurs that prevents performance. ...

Subject of law: Bargains That Are Illegal or Against Public Policy

In Re James H. Himmel, Attorney
Brief

Citation125 Ill. 2d 531, 533 N.E.2d 790, 127 Ill. Dec. 708 (Ill. 1988) Brief Fact Summary. A disciplinary proceeding was commenced against an attorney for failing to disclose that another attorney was embezzling a client's funds. Synopsis of Rule of Law. The failure of an attorney to disclose another attorney's conversion of a client's assets, and instead initiating an action and entering into a settlement agreement on behalf of that client to recover such assets, violates the rules of professional responsibility. ...

Subject of law: Bargains That Are Illegal or Against Public Policy

Troutman v. Southern Railway Co.
Brief

Citation441 F.2d 586(Ill. 1979) Brief Fact Summary. A company retained an attorney to present their position on an agricultural issue to the President of the United States (the "President").  The company refused to pay the attorney for his services, arguing that their agreement was against public policy. Synopsis of Rule of Law. "[A] contract to influence a public official in the exercise of his duties is illegal and un[ ]enforceable when that contract contemplates the use of personal or political influence rather than an appeal to the judgment of the official on the meri ...

Subject of law: Bargains That Are Illegal or Against Public Policy