A minority shareholder brought suit against the Chicago Cubs, a Delaware corporation, and their directors on...

A minority shareholder brought suit against the Chicago Cubs, a Delaware corporation, and their directors on the grounds that the directors were negligent in failing to install lights in Wrigley Field. The shareholder specifically alleged that the majority owner, Philip Wrigley, failed to exercise good faith in that he personally believed that baseball was a daytime sport and felt that night games would cause the surrounding neighborhood to deteriorate. The shareholder accused Wrigley and the other directors of not acting in the best financial interests of the corporation. What counterarguments should the directors assert? Who will win? Why?

Homework Answers

Answer #1

The directors should put forward the counter-arguments from the ground rules which have appeared in similar cases and have received a ruling in the directors’ favor. One such case would be the Wheeler v. The Pullman Iron & Steel Co. , wherein it was stated that it is fundamental in the law of corporations that the majority of its shareholders would control the policy of the corporation. Everyone purchasing stock in a corporation impliedly agrees that they would be bound by the acts and proceedings done or sanctioned by the majority shareholders or by the agents of the corporation duly chosen by such majority. Similarly another case had stated that the directors are chosen to take the decisions unless shown to be tainted with fraud, their judgment enjoys the benefit of presumption that it was formed in good faith and to promote the best interest of the business.

Looking at the effect of the surrounding neighborhood, the directors can argue that there could be patrons who would not attend the games if the park were in a poor neighborhood ad all efforts would be made to not let the neighborhood deteriorate.

The only cost the plaintiff seemed to be concerned with was that of the installation of the lights, he did not consider the cost of operation and maintenance of those lights or any other increase in operating costs due to the night games.

From the above points, it is evident that the directors have substantial arguments and would win the case in most probabilities.

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