business judgment rule in Nevada

2020In Shoen v. SAC Holding Corp., 122 Nev. 621, 640, 137 P.3d 1171, 1184 (2006), however, we stated that "[w]ith regard to the duty of care, the business judgment rule does not protect the gross negligence of uninformed directors and officers." As a result, some courts, including the district court here, have allowed claims against individual directors and officers to proceed based only on allegations of gross negligence.

2020In Shoen v. SAC Holding Corp., 122 Nev. 621, 640, 137 P.3d 1171, 1184 (2006), however, we stated that "[w]ith regard to the duty of care, the business judgment rule does not protect the gross negligence of uninformed directors and officers." As a result, some courts, including the district court here, have allowed claims against individual directors and officers to proceed based only on allegations of gross negligence.

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017Accordingly, we reiterate that the business judgment rule goes beyond shielding directors from personal liability in decision-making Rather, it also ensures that courts defer to the business judgment of corporate executives and prevents courts from "substitut [ing] [their] own notions of what is or is not sound business judgment," Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971), if "the directors of a corporation SUPREME COURT OF NEVAVA 15 (0) 1947A e, acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

2017See WLR Foods, 857 F. Supp. at 494.

2017See WLR Foods, 857 F. Supp. at 494.

2017This court "cannot consider matters not properly appearing in the record on appeal." Carson Ready Mix, Inc. v. First Nat'l Bank of Nev., 97 Nev. 474, 476, 635 P.2d 276, 277 (1981).

2017This court "cannot consider matters not properly appearing in the record on appeal." Carson Ready Mix, Inc. v. First Nat'l Bank of Nev., 97 Nev. 474, 476, 635 P.2d 276, 277 (1981).

2017Id.; see also Lamden v. La Jolla Shores Clubdominium Homeowners Ass'n, 980 P.2d 940, 945 (Cal. 1999) ("A hallmark of the business judgment rule is that, when the rule's requirements are met, a SUPREME COURT OF N E VA DA 12 PFOA court will not substitute its judgment for that of the corporation's board of directors.").

2017La Jolla Shores Clubdominium Homeowners Ass'n, 980 P.2d 940, 945 (Cal. 1999) ("A hallmark of the business judgment rule is that, when the rule's requirements are met, a SUPREME COURT OF NEVADA 12 (0) 1947A court will not substitute its judgment for that of the corporation's board of directors.").

2017See, e.g., Minn. Inuco of RSA # 7, Inc. v. Midwest Wireless Holdings LLC, 903 A.2d 786, 797-98 (Del.

2017See, e.g., Minn. Invco of RSA # 7, Inc. v. Midwest Wireless Holdings LLC, 903 A.2d 786, 797-98 (Del.

2017See Lewis v. Anderson, 615 F.2d 778, 783 (9th Cir. 1979) ("[T]he good faith exercise of business judgment by a special litigation committee of disinterested directors is immune to attack by shareholders or the courts."); Miller v. Bargaheiser, 591 N.E.2d 1339, 1342-43 (Ohio Ct. App. 1990) (finding Zapata's "degree of scrutiny to be irreconcilable with the spirit of the business judgment rule").

2017See Lewis v. Anderson, 615 F.2d 778, 783 (9th Cir. 1979) ("[T]he good faith exercise of business judgment by a special litigation committee of disinterested directors is immune to attack by shareholders or the courts."); Miller v. Bargaheiser, 591 N.E.2d 1339, 1342-43 (Ohio Ct. App. 1990) (finding Zapata's "degree of scrutiny to be irreconcilable with the spirit of the business judgment rule").

2017Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1055 (Del. 2004) ("Unlike the demand-excusal context, where the board is presumed to be independent, the SLC has the burden of establishing its own independence by a yardstick that must be 'like Caesar's wife'—`above reproach.' Moreover, unlike the presuit demand context, the SLC analysis contemplates not only a shift in the burden of persuasion but also the availability of discovery into various issues, including independence." (internal footnotes omitted) (quoting Lewis v. Fuqua, 502 A.2d 962, 967 (Del.

2017Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1055 (Del. 2004) ("Unlike the demand-excusal context, where the board is presumed to be independent, the SLC has the burden of establishing its own independence by a yardstick that must be 'like Caesar's wife'—`above reproach.' Moreover, unlike the presuit demand context, the SLC analysis contemplates not only a shift in the burden of persuasion but also the availability of discovery into various issues, including independence." (internal footnotes omitted) (quoting Lewis v. Fuqua, 502 A.2d 962, 967 (Del.

2017Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1055 (Del. 2004) ("Unlike the demand-excusal context, where the board is presumed to be independent, the SLC has the burden of establishing its own independence by a yardstick that must be 'like Caesar's wife'—`above reproach.' Moreover, unlike the presuit demand context, the SLC analysis contemplates not only a shift in the burden of persuasion but also the availability of discovery into various issues, including independence." (internal footnotes omitted) (quoting Lewis v. Fuqua, 502 A.2d 962, 967 (Del.

2017Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1055 (Del. 2004) ("Unlike the demand-excusal context, where the board is presumed to be independent, the SLC has the burden of establishing its own independence by a yardstick that must be 'like Caesar's wife'—`above reproach.' Moreover, unlike the presuit demand context, the SLC analysis contemplates not only a shift in the burden of persuasion but also the availability of discovery into various issues, including independence." (internal footnotes omitted) (quoting Lewis v. Fuqua, 502 A.2d 962, 967 (Del.

2017See Lewis v. Anderson, 615 F.2d 778, 783 (9th Cir. 1979) ("[T]he good faith exercise of business judgment by a special litigation committee of disinterested directors is immune to attack by shareholders or the courts."); Miller v. Bargaheiser, 591 N.E.2d 1339, 1342-43 (Ohio Ct. App. 1990) (finding Zapata's "degree of scrutiny to be irreconcilable with the spirit of the business judgment rule").

2017See Lewis v. Anderson, 615 F.2d 778, 783 (9th Cir. 1979) ("[T]he good faith exercise of business judgment by a special litigation committee of disinterested directors is immune to attack by shareholders or the courts."); Miller v. Bargaheiser, 591 N.E.2d 1339, 1342-43 (Ohio Ct. App. 1990) (finding Zapata's "degree of scrutiny to be irreconcilable with the spirit of the business judgment rule").

2017See Auerbach, 393 N.E.2d at 996 ("While the substantive aspects of a decision to terminate a shareholders' derivative action against defendant corporate directors made by a committee of disinterested directors appointed by the corporation's board of directors are beyond judicial inquiry under the business judgment doctrine, the court may inquire as to the disinterested independence of the members of that committee and as to the appropriateness and sufficiency of the investigative procedures chosen and pursued by the committee."); see also Curtis, 31 P.3d at 152 (heeding "the cautionary words e

2017See Auerbach, 393 N.E.2d at 996 ("While the substantive aspects of a decision to terminate a shareholders' derivative action against defendant corporate directors made by a committee of disinterested directors appointed by the corporation's board of directors are beyond judicial inquiry under the business judgment doctrine, the court may inquire as to the disinterested independence of the members of that committee and as to the appropriateness and sufficiency of the investigative procedures chosen and pursued by the committee."); see also Curtis, 31 P.3d at 152 (heeding "the cautionary words e

2017See Auerbach, 393 N.E.2d at 996 ("While the substantive aspects of a decision to terminate a shareholders' derivative action against defendant corporate directors made by a committee of disinterested directors appointed by the corporation's board of directors are beyond judicial inquiry under the business judgment doctrine, the court may inquire as to the disinterested independence of the members of that committee and as to the appropriateness and sufficiency of the investigative procedures chosen and pursued by the committee."); see also Curtis, 31 P.3d at 152 (heeding "the cautionary words e

2017See Auerbach, 393 N.E.2d at 996 ("While the substantive aspects of a decision to terminate a shareholders' derivative action against defendant corporate directors made by a committee of disinterested directors appointed by the corporation's board of directors are beyond judicial inquiry under the business judgment doctrine, the court may inquire as to the disinterested independence of the members of that committee and as to the appropriateness and sufficiency of the investigative procedures chosen and pursued by the committee."); see also Curtis, 31 P.3d at 152 (heeding "the cautionary words e

2024See Guzman, 137 Nev. at 132, 483 P.3d at 537 .

2022Op. 13 , 483 P.3d at 537 (holding that merely alleging that a director had an interest in the transaction is not enough to rebut the business judgment rule and shift the burden to the defendant under NRS 78.138); shareholders also bore the burden of showing that genuine issues of material fact existed regarding PhiHippy's concealment of these interests from the Board, thus impacting the Board's overall independence.

2011Cf. Panter, 646 F.2d at 299 ("In the absence of sufficient evidence that the directors acted improperly to overcome the presumption of the business judgment rule, a case cannot proceed to the jury on an interference with prospective economic opportunity theory."). 2.

2011Cf. Panter, 646 F.2d at 299 (“In the absence of sufficient evidence that the directors acted improperly to overcome the presumption of the business judgment rule, a case cannot proceed to the jury on an interference with prospective economic opportunity theory”). 2.

2011If, as the majority concludes, the amended complaint fails to plead sufficient facts to overcome the presumption of the business judgment rule as to the breach of fiduciary duty claims— appropriately, given the broadly exculpatory provisions in AMERCO's organizational documents, see Wood v. Baum, 953 A.2d 136, 140-41 (Del.2008); see also NRS 78.138(7)— the wrongful interference claims also fail.

2011If, as the majority concludes, the amended complaint fails to plead sufficient facts to overcome the presumption of the business judgment rule as to the breach of fiduciary duty claims — appropriately, given the broadly exculpatory provisions in AMERCO’s organizational documents, see Wood v. Baum, 953 A.2d 136, 140-41 (Del. 2008); see also NRS 78.138(7) — the wrongful interference claims also fail.

2017At that point, the legal "question to be decided becomes: When, if at all, should an authorized board committee be permitted to cause litigation, properly initiated by a derivative stockholder in his own right, to be dismissed?" Zapata, 430 A.2d at 785 ; see Auerbach, 393 N.E.2d at 999-1000 ("the disposition of this case on the merits turns on the proper application of the business judgment doctrine, in particular to the decision of a specially appointed committee of disinterested directors acting on behalf of the board to terminate a shareholders' derivative action").

2017At that point, the legal "question to be decided becomes: When, if at all, should an authorized board committee be permitted to cause litigation, properly initiated by a derivative stockholder in his own right, to be dismissed?" Zapata, 430 A.2d at 785; see Auerbach, 393 N.E.2d at 999-1000 ("the disposition of this case on the merits turns on the proper application of the business judgment doctrine, in particular to the decision of a specially appointed committee of disinterested directors acting on behalf of the board to terminate a shareholders' derivative action").

2022Court, 133 Nev. 369 , 376, 399 P.3d 334 , 342-43 (2017) (applying the business judgment rule to the board as a whole); Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1168 (Del. 1995).

2022When self-interest is only alleged as to a single director, plaintiffs must show that the director had a material interest in the transaction and that the director failed "to disclose 'his [or her] interest in the transaction to the [B]oard and a reasonable board member would have regarded the existence of the material interest as a significant fact in the evaluation of the proposed transaction." Cinerama, 663 A.2d at 1168 (emphases and internal quotation marks omitted); .see also La.

2022Telxon Corp. v. Meyerson, 802 A.2d 257, 264 (Del. 2002); see also Orman, 794 A.2d at 25 n.50 (reasoning that a director's self-interest alone is not enough to challenge a director's indepenctence, and a plaintiff must show that such interest compromised the director's independence and valid business judgment when voting on the challenged transaction).

2022Telxon Corp. v. Meyerson, 802 A.2d 257, 264 (Del. 2002); see also Orman, 794 A.2d at 25 n.50 (reasoning that a director's self-interest alone is not enough to challenge a director's indepenctence, and a plaintiff must show that such interest compromised the director's independence and valid business judgment when voting on the challenged transaction).

2022And, as discussed, shareholders fail to provide facts suggesting "that the merger was accomplished through the wrongful conduct of . . . directors . . . or officers of the corporation." See Cohen v. Mirage Resorts, Inc., 119 Nev. 1, 11 , 62 P.3d 720, 727 (2003). - Shareholders therefore failed to rebut the business judgment rule as a matter of law and the board members retain the presumption that they acted in good faith when they approved the instant merger transaction.

2022And, as discussed, shareholders fail to provide facts suggesting "that the merger was accomplished through the wrongful conduct of . . . directors . . . or officers of the corporation." See Cohen v. Mirage Resorts, Inc., 119 Nev. 1, 11 , 62 P.3d 720, 727 (2003). - Shareholders therefore failed to rebut the business judgment rule as a matter of law and the board members retain the presumption that they acted in good faith when they approved the instant merger transaction.

2022Our review is de novo, Wood v. Safeway, Inc., 121 Nev. 724, 729 , 121 P.3d 1026, 1029 (2005), and we affirm for two reasons.

2022Our review is de novo, Wood v. Safeway, Inc., 121 Nev. 724, 729 , 121 P.3d 1026, 1029 (2005), and we affirm for two reasons.

2021In arguing that she rebutted the business judgment rule, Guzman relies on the following language in Foster: A director is a fiduciary. * * * So is a dominant or controlling stockholder or group of stockholders. * * * Their powers are powers in trust. * * * Their dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the director or stockholder not only to prove the good faith of the transaction but also to show its inherent fairness from the viewpoint of the corporation and those inter

2021In arguing that she rebutted the business judgment rule, Guzman relies on the following language in Foster: A director is a fiduciary. * * * So is a dominant or controlling stockholder or group of stockholders. * * * Their powers are powers in trust. * * * Their dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the director or stockholder not only to prove the good faith of the transaction but also to show its inherent fairness from the viewpoint of the corporation and those inter

2021Though superseded as to directors by NRS 78.138—and perhaps due for refinement as to majority shareholders—Foster v. Arata states the general rule correctly: A majority shareholder is a fiduciary whose "dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the . . . [majority] stockholder not only to prove the good faith of the SUPREME COURT OF NEVADA 2 (CO I947A transaction but also to show its inherent fairness." 74 Nev. at 155 , 325 P.2d at 765 (quoting Pepper v. Litton, 308 U.S. 2

2021Though superseded as to directors by NRS 78.138—and perhaps due for refinement as to majority shareholders—Foster v. Arata states the general rule correctly: A majority shareholder is a fiduciary whose "dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the . . . [majority] stockholder not only to prove the good faith of the SUPREME COURT OF NEVADA 2 (CO I947A transaction but also to show its inherent fairness." 74 Nev. at 155, 325 P.2d at 765 (quoting Pepper v. Litton, 308 U.S. 29

2021Guzman now appeals, contending that she rebutted the business judgment rule by alleging in her complaint that the individual directors were interested parties in the transaction, citing Foster v. Arata, 74 Nev. 143, 325 P.2d 759 (1958).

2021Guzman now appeals, contending that she rebutted the business judgment rule by alleging in her complaint that the individual directors were interested parties in the transaction, citing Foster v. Arata, 74 Nev. 143, 325 P.2d 759 (1958).

2021Though superseded as to directors by NRS 78.138—and perhaps due for refinement as to majority shareholders—Foster v. Arata states the general rule correctly: A majority shareholder is a fiduciary whose "dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the . . . [majority] stockholder not only to prove the good faith of the SUPREME COURT OF NEVADA 2 (CO I947A transaction but also to show its inherent fairness." 74 Nev. at 155 , 325 P.2d at 765 (quoting Pepper v. Litton, 308 U.S. 2

2021Though superseded as to directors by NRS 78.138—and perhaps due for refinement as to majority shareholders—Foster v. Arata states the general rule correctly: A majority shareholder is a fiduciary whose "dealings with the corporation are subjected to rigorous scrutiny and where any of their contracts or engagements with the corporation is challenged the burden is on the . . . [majority] stockholder not only to prove the good faith of the SUPREME COURT OF NEVADA 2 (CO I947A transaction but also to show its inherent fairness." 74 Nev. at 155, 325 P.2d at 765 (quoting Pepper v. Litton, 308 U.S. 29

2019Id. at 641 , 137 P.3d at 1184 (adopting the rule articulated by the Supreme Court of Delaware in Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000) and Rales v. Blasband, 634 A.2d 927, 933-34 (Del. 1993)).

2011See Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983) (stating that directors owe "shareholders an uncompromising duty of loyalty"); see also Jones v. H.F.