Shlensky v. Wrigley

Shlensky v. Wrigley
Wrigley Field
Citation(s)	237 N.E. 2d 776 (Ill. App. 1968)
Keywords
Directors' duties

Shlensky v Wrigley, 237 NE 2d 776 (Ill. App. 1968) is a leading US corporate law case, concerning the discretion of the board to determine how to balance the interests of stakeholders. It represents the shift in most states away from the idea that corporations should only pursue shareholder value, seen in the older Michigan decision of Dodge v Ford Motor.

Facts

The Chicago Cubs’ president refused to install field lights for night games at Wrigley Field. "Plaintiff allege[d] that Wrigley ha[d] refused to install lights, not because of interest in the welfare of the corporation but because of his personal opinions "that baseball is a 'daytime sport' and that installation of lights and night baseball games will have a deteriorating effect upon the surrounding neighborhood."^[1] This meant that night games could not go ahead, and so there would be lower profits for shareholders. A challenge was brought by shareholders against the director's decision.

Judgment

The Court affirmed the director’s decision. The president was not liable for failing to maximize returns to shareholders. It was,

“

not satisfied that the motives assigned to [the directors] are contrary to the best interests of the corporation and the stockholders… [because they] showed no fraud, illegality or conflict of interest in making that decision.

[...]

[Citing Davis v Louisville Gas and Electric Co, 16 Del. Ch. 157 (1928)] ...the directors are chosen to pass upon such questions and their judgment unless shown to be tainted with fraud is accepted as final. The judgment the directors of the corporation enjoys the benefit of a presumption that it was formed in good faith, and was designed to promote the best interests of the corporation they serve.

”

Sources on directors' duties

AP Smith Manufacturing Co v Barlow 39 ALR 2d 1179 (1953)

Shlensky v Wrigley, 237 NE 2d 776 (1968)

Keech v Sandford [1726] EWHC Ch J76

Meinhard v Salmon, 164 NE 545 (NY 1928)

Guth v Loft Inc, 5 A2d 503 (Del 1939)

Broz v Cellular Information Systems Inc, 637 A2d 148 (1996)

The Charitable Corporation v Sutton (1742) 26 ER 642

Smith v Van Gorkom 488 A2d 858 (1985)

Delaware General Corporation Law §102(b)(7)

In re Walt Disney Derivative Litigation, 825 A2d 275 (2003)

In re Citigroup Inc Derivative Litigation 964 A2d 106 (2009)

Pepper v Litton 308 US 295 (1939)

See US corporate law and directors' duties

United States corporate law

Notes

↑ Schlensky v. Wigley, 237 N.E.2d 776, 778 (Ill. 1968).

References

Choper, Coffee and Gilson, Cases and Materials on Corporations (2010)

External links

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