In CASE 20.3 In re Abbott Laboratories Derivative Shareholders Litigation (2003),the shareholder-plaintiffs alleged the corporate directors breached their duty of good faith through their failure to follow up on repeated notices of regulatory noncompliance.How did the court rule?
A) The court ruled the directors were not liable and did not breach any duty of good faith because they were unaware of the issues,and accepted corporate governance procedures did not require the disclosure of the noncompliance notices to them.
B) The court ruled the directors could not be held liable because the corporation's certificate of incorporation exempted directors from liability for breach of the duty of care.
C) The court ruled the business judgment rule applied and that the plaintiffs' allegations could not withstand the protection of that rule.
D) The court ruled the plaintiffs sufficiently pleaded allegations that,if true,constituted a breach of the duty of good faith leading to the directors' actions falling outside the protection of the business judgment rule.

Question

Quizplus · Accepted Answer

The court ruled that the plaintiffs sufficiently pleaded allegations that, if true, constituted a breach of the duty of good faith leading to the directors' actions falling outside the protection of the business judgment rule. Therefore, the case could proceed to trial.