The Business Judgment Rule and Shareholders Derivative Suits: A View from the Inside

The term business judgment rule is one of those legal abstractions which take on fresh meaning in new and different situations. While the rule reaches back many years in American legal history, it has assumed a new role in the twilight decades of the twentieth century. These are the years that have witnessed the spate of foreign payments incidents out of which stemmed not only a series of lawsuits seeking to recover the value of such payments for corporations, but also stirrings in Congress, in regulatory bodies such as the Securities and Exchange Commission, and elsewhere. Their common focus was upon the quality of corporate governance in America. In the foreign payments lawsuits, the business judgment rule underwent an ingenious and innovative adaptation. Those corporations that had officers or directors targeted in lawsuits for return of funds allegedly wrongfully paid out established special committees drawn from the board of directors to study whether or not the best interests of the corporation mandated a stockowners\u27 derivative action against such parties. Typically referred to as special litigation committees, they were composed of non-defendant directors who along with special counsel would study the lawsuit, examine papers, documents, and interview persons, and, after careful scrutiny, commonly conclude that the case was not in the interest of the corporation and should be dismissed. The success of this process in a number of celebrated cases moved the business judgment rule to center stage in the corporate law arena. This Article offers a defense of the rule in its more expansive application. Some may feel, as did Kierkegaard, that in defending the faith it is sometimes betrayed, but the pragmatism of this uniquely common-law creation is impressive

On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit, Brief of Product Liability Advisory Council, Inc., National Association of Manufacturers, Business Roundtable, and Chemical Manufacturers Association as Amici Curiae in Support of Respondent, William Daubert and Joyce Daubert, Individually and as Guardians Ad Litem for Jason Daubert, and Anita De Young, Individually and as Gaurdian Ad Litem for Eric Schuller v. Merrell Dow Pharmaceuticals, Inc.

The Federal Rules of Evidence exclude expert scientific testimony when it has been developed without regard for accepted scientific methods. This case focuses on expert scientific evidence. Such evidence plays a vital and often dispositive role in modern litigation. For scientific evidence to be helpful to the factfinder it must meet some minimal threshold of reliability. To hold otherwise would be to allow a system of adjudication based more on chance than on reason