Wednesday, January 1, 2014

Miller v. American Telephone & Telegraph Co. case brief

Miller v. American Telephone & Telegraph Co. case brief summary
507 F.2d 759 (1974)

CASE SYNOPSIS
Appeal from the United States District Court for the Eastern District of Pennsylvania by plaintiff stockholders in a derivative case alleging breach of fiduciary duty by defendants, the corporate officers and directors, and violations of 18 U.S.C.S. § 610.

CASE FACTS
Plaintiffs alleged that defendants had violated 18 U.S.C.S §610. Plaintiffs sought permanent relief in the form of an injunction requiring defendants to collect the debt, an injunction against providing further services to the political party until the debt was paid in full, and a surcharge for the benefit of the corporation against the defendant directors in the amount of the debt plus interest from the due date.

PROCEDURAL HISTORY
A request for a preliminary injunction against the provision of services to the political party was denied by the district court after an evidentiary hearing.

DISCUSSION

  • On appeal, the court ruled directors had to be restrained from engaging in activities that were against public policy. 
  • The business judgment rule did not insulate the corporate directors from liability for breaching §610 prohibiting corporate political contributions.

CONCLUSION
The court reversed the lower court and remanded the case stating that directors must be restrained from engaging in activities that were against public policy.

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