Friday, November 22, 2013

Gall v. Exxon Corp. case brief

Gall v. Exxon Corp. case brief summary
418 F. Supp. 508 (1976)

Defendant corporation moved for summary judgment against plaintiff shareholder's suit alleging that a committee of the corporation improperly refused to file an action related to certain illegal payments to individuals.

The corporation's committee determined that it would not be in the corporation's interest to file an action to recover based on the illegal payments. However, the shareholder filed suit, claiming that the decision was improper.

  • Reviewing the record, the court held that the shareholder failed to show the fraud or collusion other wise required to defeat the corporation's decision under the business judgment rule. 
  • However, the court also noted that the shareholder called into question the issue of whether the members of the committee were personally interested in the illegal transactions at issue. 
  • The court noted that resolution of such a matter required discovery and thus, disposing of the action on summary judgment was premature.

The court denied the motion for summary judgment, with leave to refile after discovery.

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