business judgment rule in Minnesota

2003See Drilling, 589 N.W.2d at 510 ; Skoglund v. Brady, 541 N.W.2d 17, 22 (Minn.App.1995); Black v. NuAire, Inc., 426 N.W.2d 203, 211 (Minn.App.1988).

2003See Drilling, 589 N.W.2d at 510 ; Skoglund v. Brady, 541 N.W.2d 17, 22 (Minn.App. 1995); Black v. NuAire, Inc., 426 N.W.2d 203, 211 (Minn.App.1988).

2009In essence, Minnesota’s version of the business judgment rule makes a distinction between “the procedures utilized by an SLC,” which are “well within the expertise of the judiciary,” id. at 559, and the substance of an SLC’s business judgment, which courts “ ‘are ill equipped and infrequently called on to evaluate,’ ” id. at 556 (quoting Auerbach, 393 N.E.2d at 1000 ).

2008In Auerbach v. Bennett , the New York Court of Appeals articulated the deference due an SLC's decision as follows: 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 t

2003See Drilling, 589 N.W.2d at 510 ; Skoglund v. Brady, 541 N.W.2d 17, 22 (Minn.App.1995); Black v. NuAire, Inc., 426 N.W.2d 203, 211 (Minn.App.1988).

1999See Black, 426 N.W.2d at 210 (declaring this court’s interpretation of the application of the business judgment rule to shareholder derivative actions is in line with Auerbach).

2015Minn. 2004) (quotation omitted); see Potter v. Pohlad, 560 N.W.2d 389, 392 (Minn. App. 1997), review denied (Minn. June 11, 1997).

1999Under the business judgment rule, we do not “second-guess the business decisions of corporate professionals.” Potter v. Pohlad, 560 N.W.2d 389, 392 (Minn.App.1997) (citation omitted), review denied (Minn. June 11, 1997).

2008The business judgment rule is a presumption "developed by state and federal courts to protect boards of directors against shareholder claims that the board made unprofitable business decisions." Id. at 882 .

2008The business judgment rule is premised on (1) the notion that "protecting directors' reasonable risks is ... positive for the economy overall, as those risks allow businesses to attract risk-averse managers, adapt to changing markets, and capitalize on emerging trends"; and (2) the recognition that "courts are ill-equipped to judge the wisdom of business ventures and have been reticent to replace a well-meaning decision by a corporate board with their own." Janssen, 662 N.W.2d at 882 .

2003See Drilling, 589 N.W.2d at 510 ; Skoglund v. Brady, 541 N.W.2d 17, 22 (Minn.App.1995); Black v. NuAire, Inc., 426 N.W.2d 203, 211 (Minn.App.1988).

2002The standard for reviewing special litigation committee conclusions adheres to the business judgment rule by limiting review to “whether the committee was independent and conducted its investigation in good faith.” Drilling v. Berman, 589 N.W.2d 503, 507 (Minn.App.1999) (citations omitted), review denied (Minn. May 18, 1999).

2015See D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997).

2015See Wilkes, 353 N.E.2d at 663 .2 Courts do not “sit as super-personnel departments reviewing the wisdom or fairness of the business judgments made by employers, except to the extent that those judgments involve 2 The Wilkes court concluded that there was no legitimate business purpose for the majority shareholders’ removal of a minority shareholder from the payroll and refusal to reelect him as a salaried officer and director. 353 N.E.3d at 663.

2008See Houle v. Low, 407 Mass. 810 , 556 N.E.2d 51, 59 (1990) ("The judge must determine, on the basis of the evidence presented, whether the committee reached a reasonable and principled decision."); House v. Estate of Edmondson, 245 S.W.3d 372, 382 (Tenn.2008) (stating that courts must take into consideration "the soundness of the committee's conclusions and recommendations").

2008See Houle v. Low, 407 Mass. 810 , 556 N.E.2d 51, 59 (1990) ("The judge must determine, on the basis of the evidence presented, whether the committee reached a reasonable and principled decision."); House v. Estate of Edmondson, 245 S.W.3d 372, 382 (Tenn.2008) (stating that courts must take into consideration "the soundness of the committee's conclusions and recommendations").

2008Block, et al., The Business Judgment Rule: Fiduciary Duties of Corporate Directors 18 (5th ed.1998) (emphasis added)); id. (noting that business judgment rule does not protect a director’s “abuse of discretion”); 2 Brehm v. Eisner, 746 A.2d 244, 264 (Del.2000) (“Irrationality is the outer limit of the business judgment rule.” (footnote omitted)); see also Joy v. North, 692 F.2d 880, 886 (2d Cir.1982); Cramer v. Gen.

2008Block, et al., The Business Judgment Rule: Fiduciary Duties of Corporate Directors 18 (5th ed.1998) (emphasis added)); id. (noting that business judgment rule does not protect a director's "abuse of discretion"); [2] Brehm v. Eisner, 746 A.2d 244, 264 (Del. 2000) ("Irrationality is the outer limit of the business judgment rule." (footnote omitted)); see also Joy v. North, 692 F.2d 880, 886 (2d Cir.1982); Cramer v. Gen.

2008Union of Am., 259 Minn. 257, 266-67 , 107 N.W.2d 226, 233 (1961) ("Ordinarily a demand should be made on the board of directors unless the wrongdoers constitute a majority of the board...."). [6] According to one commentator, courts have ignored the distinction between the business judgment rule, which protects directors from liability for their decisions, and the business judgment doctrine, which protects the decision itself.

2008Union of Am., 259 Minn. 257, 266-67 , 107 N.W.2d 226, 233 (1961) ("Ordinarily a demand should be made on the board of directors unless the wrongdoers constitute a majority of the board...."). [6] According to one commentator, courts have ignored the distinction between the business judgment rule, which protects directors from liability for their decisions, and the business judgment doctrine, which protects the decision itself.

2008Block, et al., The Business Judgment Rule: Fiduciary Duties of Corporate Directors 18 (5th ed.1998) (emphasis added)); id. (noting that business judgment rule does not protect a director's "abuse of discretion"); [2] Brehm v. Eisner, 746 A.2d 244, 264 (Del. 2000) ("Irrationality is the outer limit of the business judgment rule." (footnote omitted)); see also Joy v. North, 692 F.2d 880, 886 (2d Cir.1982); Cramer v. Gen.

2008See Brehm, 746 A.2d at 264 ("Irrationality ... may tend to show that the decision is not made in good faith, which is a key ingredient of the business judgment rule."). [3] *563 Most importantly, two courts that have considered this matter have determined that the business judgment rule does not mandate judicial deference to objectively unreasonable SLC recommendations.

2008See Houle v. Low, 407 Mass. 810 , 556 N.E.2d 51, 59 (1990) (“The judge must determine, on the basis of the evidence presented, whether the committee reached a reasonable and principled decision.”); House v. Estate of Edmondson, 245 S.W.3d 372, 382 (Tenn.2008) (stating that courts must take into consideration “the soundness of the committee’s conclusions and recommendations”).

2008See Houle v. Low, 407 Mass. 810 , 556 N.E.2d 51, 59 (1990) ("The judge must determine, on the basis of the evidence presented, whether the committee reached a reasonable and principled decision."); House v. Estate of Edmondson, 245 S.W.3d 372, 382 (Tenn.2008) (stating that courts must take into consideration "the soundness of the committee's conclusions and recommendations").

2003L.Rev. 425, 427 (1999) (describing a lawsuit by a trustee of an educational organization against another trustee); Miller v. Bargaheiser, 70 Ohio App.3d 702 , 591 N.E.2d 1339, 1341 (1990) (involving a derivative suit on behalf of a nonprofit hospital); Dockside Ass'n, 352 S.E.2d at 714 (involving a suit against a property association). [5] We do not adopt a particular version of the business judgment rule for use with Minnesota nonprofit organizations today.

2003See, e.g., Kaplan v. Wyatt, 484 A.2d 501, 508 (Del.Ch.1984) (explaining that if the court determines the litigation committee failed the minimal review of the business judgment rule, the “court shall deny the motion for such reason and need go no farther, the result being that the shareholder plaintiff may resume immediate control of the litigation”).

2003See, e.g., Kaplan v. Wyatt, 484 A.2d 501, 508 (Del.Ch.1984) (explaining that if the court determines the litigation committee failed the minimal review of the business judgment rule, the "court shall deny the motion for such reason and need go no farther, the result being that the shareholder plaintiff may resume immediate control of the litigation").

2003In addition to pension funds, these nonprofits may include hospitals, schools, and homeowners associations. 4 We are not alone in reaching this conclusion; two other states have used the business judgment rule when reviewing decisions by nonprofit litigation committees: Finley v. Superior Court, 80 Cal.App.4th 1152 , 96 Cal.Rptr.2d 128, 132 (2000); Miller v. Bargaheiser, 70 Ohio App.3d 702 , 591 N.E.2d 1339, 1343 (1990).

2003In addition to pension funds, these nonprofits may include hospitals, schools, and homeowners associations. 4 We are not alone in reaching this conclusion; two other states have used the business judgment rule when reviewing decisions by nonprofit litigation committees: Finley v. Superior Court, 80 Cal.App.4th 1152 , 96 Cal.Rptr.2d 128, 132 (2000); Miller v. Bargaheiser, 70 Ohio App.3d 702 , 591 N.E.2d 1339, 1343 (1990).

2003In addition to pension funds, these nonprofits may include hospitals, schools, and homeowners associations. 4 We are not alone in reaching this conclusion; two other states have used the business judgment rule when reviewing decisions by nonprofit litigation committees: Finley v. Superior Court, 80 Cal.App.4th 1152 , 96 Cal.Rptr.2d 128, 132 (2000); Miller v. Bargaheiser, 70 Ohio App.3d 702 , 591 N.E.2d 1339, 1343 (1990).

2003In addition to pension funds, these nonprofits may include hospitals, schools, and homeowners associations. 4 We are not alone in reaching this conclusion; two other states have used the business judgment rule when reviewing decisions by nonprofit litigation committees: Finley v. Superior Court, 80 Cal.App.4th 1152 , 96 Cal.Rptr.2d 128, 132 (2000); Miller v. Bargaheiser, 70 Ohio App.3d 702 , 591 N.E.2d 1339, 1343 (1990).

1988See Abbey v. Control Data Corp., 603 F.2d 724 (8th Cir.1979), cert. denied, 444 U.S. 1017 , 100 S.Ct. 670 , 62 L.Ed.2d 647 (1980) (construing Delaware law); Lewis, 615 F.2d at 780 (construing California law); Auerbach v. Bennett, 47 N.Y.2d 619 , 419 N.Y.S.2d 920 , 393 N.E.2d 994 (1979).

1988See Abbey, 603 F.2d at 727 .

1988See Abbey v. Control Data Corp., 603 F.2d 724 (8th Cir.1979), cert. denied, 444 U.S. 1017 , 100 S.Ct. 670 , 62 L.Ed.2d 647 (1980) (construing Delaware law); Lewis, 615 F.2d at 780 (construing California law); Auerbach v. Bennett, 47 N.Y.2d 619 , 419 N.Y.S.2d 920 , 393 N.E.2d 994 (1979).

1988See Abbey v. Control Data Corp., 603 F.2d 724 (8th Cir.1979), cert. denied, 444 U.S. 1017 , 100 S.Ct. 670 , 62 L.Ed.2d 647 (1980) (construing Delaware law); Lewis, 615 F.2d at 780 (construing California law); Auerbach v. Bennett, 47 N.Y.2d 619 , 419 N.Y.S.2d 920 , 393 N.E.2d 994 (1979).

1988See Abbey v. Control Data Corp., 603 F.2d 724 (8th Cir.1979), cert. denied, 444 U.S. 1017 , 100 S.Ct. 670 , 62 L.Ed.2d 647 (1980) (construing Delaware law); Lewis, 615 F.2d at 780 (construing California law); Auerbach v. Bennett, 47 N.Y.2d 619 , 419 N.Y.S.2d 920 , 393 N.E.2d 994 (1979).

1988See Abbey v. Control Data Corp., 603 F.2d 724 (8th Cir.1979), cert. denied, 444 U.S. 1017 , 100 S.Ct. 670 , 62 L.Ed.2d 647 (1980) (construing Delaware law); Lewis, 615 F.2d at 780 (construing California law); Auerbach v. Bennett, 47 N.Y.2d 619 , 419 N.Y.S.2d 920 , 393 N.E.2d 994 (1979).