A shareholder demanded that the company file a claim but the board of directors refused.
The Court held that the business judgment rule, which limits the ability of the Court to intervene in management decisions of the board of directors related to the company's day to day management, also applies to a decision whether the company will file a lawsuit. This rule applies one the board of director’s decision was made in good faith, without a conflict of interest and after collection the required information and applying discretion. In such decisions the board of directs considers business considerations of the benefit of the company and systemic considerations that are not the concern of the Court and thus the Court will usually avoid interfering with the decisions. Thus, the Court rejected the claim.