Fiduciary Assignment - Bezirdjian V. O’reilly
Bezirdjian v. O’Reilly
In Bezirdjian v. O’Reilly, the plaintiff (Bezirdjian) files a shareholder derivative complaint on behalf of Chevron Corporation citing that current and certain former member of Board of Directors (BOD) breached fiduciary duties, grossly managed the corporation, were involved in constructive fraud, and wasted corporate assets “in connection with illicit payments Chevron allegedly made to Saddam Hussein in exchange for Iraqi oil from 2000 to 2003.” Bezirdjian has a legal right to bring an action against the alleged party because he believes that harm has been done to Chevron in connection to illicit payments made to Saddam Hussein but the corporation itself has not taken any action against the offenders. The Court applied the Delaware law since “Chevron is incorporated in the state of Delaware, and both parties agree that Delaware law applies this lawsuit.” The Court reasoned that under the General Corporation Law of the State of Delaware the BOD, rather than shareholders, manages the affairs of the corporations, and the decision to bring a suit resides with the corporate management that is subject to the business judgment rule. The Court then relies on the business judgment rule to review the board’s refusal to pursue litigation against Directors other than in an effort to protect them. Business judgment rule creates a presumption that in making sound decision, which does not involve self-interest, the BOD acts on an informed basis, in good faith and in the honest belief that its decisions are in the corporation’s best interests. Under the Deontological theory, some would argue that the appointment of the special litigation committee by BOD to investigate shareholder complaint rarely results in the Board bringing a lawsuit against directors. Questions might arise, such as, “Why were these directors appointed to the special litigation committee and why others were not appointed?” “Why was this method used to appoint
In Bezirdjian v. O’Reilly, the plaintiff (Bezirdjian) files a shareholder derivative complaint on behalf of Chevron Corporation citing that current and certain former member of Board of Directors (BOD) breached fiduciary duties, grossly managed the corporation, were involved in constructive fraud, and wasted corporate assets “in connection with illicit payments Chevron allegedly made to Saddam Hussein in exchange for Iraqi oil from 2000 to 2003.” Bezirdjian has a legal right to bring an action against the alleged party because he believes that harm has been done to Chevron in connection to illicit payments made to Saddam Hussein but the corporation itself has not taken any action against the offenders. The Court applied the Delaware law since “Chevron is incorporated in the state of Delaware, and both parties agree that Delaware law applies this lawsuit.” The Court reasoned that under the General Corporation Law of the State of Delaware the BOD, rather than shareholders, manages the affairs of the corporations, and the decision to bring a suit resides with the corporate management that is subject to the business judgment rule. The Court then relies on the business judgment rule to review the board’s refusal to pursue litigation against Directors other than in an effort to protect them. Business judgment rule creates a presumption that in making sound decision, which does not involve self-interest, the BOD acts on an informed basis, in good faith and in the honest belief that its decisions are in the corporation’s best interests. Under the Deontological theory, some would argue that the appointment of the special litigation committee by BOD to investigate shareholder complaint rarely results in the Board bringing a lawsuit against directors. Questions might arise, such as, “Why were these directors appointed to the special litigation committee and why others were not appointed?” “Why was this method used to appoint