Warren Pinchuck, et al. 1, derivatively on behalf of State Street Corporation v. State Street Corporation 2, et al. 3, 28 Mass. L. Rep. 37

Summary

The corporation's declarations established the directors who voted on the shareholders' litigation demand were independent within the meaning of § 7.44(c) because those directors had no personal interest in the challenged transaction. The shareholders attempted to rebut the showing of independence on a number of bases, none of which they supported with particularized facts. For example, the shareholders argued the directors were not independent because they faced potential liability for breaches of their fiduciary duties. However, merely being named as a defendant in the derivative proceeding was insufficient to negate the directors' independence, pursuant to § 7.44(c)(2). In addition to being independent, the directors comprised a majority of the board. As such, the business judgment rule applied to the board's rejection of the shareholders' litigation demand. The shareholders failed to meet their burden of rebutting the application of the rule. Their main argument in support of their...