Aronson v. Lewis

Aronson v. Lewis
Citation(s)	473 A 2d 805 (Del 1984)
Keywords
Directors' duties

Aronson v Lewis 473 A 2d 805 (Del 1984) is a US corporate law case, from Delaware concerning the possibility of a shareholder to bring a derivative suit.

Facts

A shareholder claimed that the directors of Meyers Parking System Inc. had improperly wasted corporate assets. The CEO, Mr Fink, then 75 years old, was also a 47% shareholder and its founder. It was alleged he personally selected the other directors. They had given to Mr Fink a generous five year employment contract, a subsequent term as a consultant with a large salary, and an annual bonus equal to 5% of the company’s pre tax profits. The contract also said that this continued regardless of Mr Fink’s continued ability to perform the job.

Judgment

Justice Moore rejected the claim on the ground that the plaintiff had not shown that making a demand on the board would have been futile. He held that the ‘business judgment rule’ was applicable. This meant,

“

a presumption that in making a business decision, the directors of a corporation acted on an informed basis in good faith and in the honest belief that the action was taken in the best interests of the company.

”

Sources on derivative suits

Davenport v Dows, 85 US 626 (1873)

Shaffer v Heitner, 433 US 186 (1977)

Delaware General Corporation Law §141(a)

Delaware Chancery Court Rules, Rule 23.1

Zapata Corp v Maldonado, 430 A2d 779 (Del Sup 1981)

Joy v North, 692 F2d 880 (1982)

Aronson v Lewis, 473 A2d 805 (Del 1984)

In re Oracle Corp Derivative Litigation, 824 A2d 917 (2003)

Meiselman v Meiselman, 307 SE2d 551 (1983)

Notes

References

External links

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