Friday, November 22, 2013

Miller v. U.S. Foodservice, Inc. case brief

Miller v. U.S. Foodservice, Inc. case brief summary
361 F. Supp 2d 470 (2005)

Plaintiff former director, in the Circuit Court for Baltimore County, Maryland, alleged breach of a benefits contract. Defendant former employers counterclaimed for breach of fiduciary duties of care, good faith, and loyalty, breach of contract, unjust enrichment, mutual mistake, and corporate waste. After removal, the director moved for dismissal or summary judgment, asserting the business judgment rule or a bylaws' indemnification provisions.


  • A Del. Code Ann. title 8, § 102(b)(7), indemnification provision would not protect the director if he violated duties of good faith and loyalty or if the duty of care claim was based on reckless or intentional misconduct. 
  • The employers alleged that despite early warnings that a reporting system was significantly flawed, the director failed to correct it and then intentionally misrepresented that internal controls were being corrected. 
  • His dual role as director and officer magnified the importance of his duties. 
  • The duty of loyalty was not limited to the corporate opportunity doctrine. 
  • It was alleged he put his bonus based on false profits above the employers' interests. 
  • But, the employment contract was sufficiently broad to cover many of the complained of expenses which were reimbursed without question. 
  • The corporate waste claim failed. 
  • To the extent claims were stated for violation of the duties of care, good faith, and loyalty, they also stated a claim for breach of contract. 
  • Damages could be calculated; an unjust enrichment claim failed. Since the employer could not restore to the director the services he rendered, the rescission for mutual mistake claim failed.

The motion to dismiss the counterclaim was denied as to the claims for breach of the fiduciary duties of care, good faith, and loyalty, as well as breach of contract claim. The motion was granted as to the unjust enrichment, mutual mistake, and corporate waste claims.

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