Assignment Help | Discuss Roger’s duties as a director and any defenses he has to the lawsuit.

Important Guidelines:

Your score will be determined using the Critical Legal Thinking Case Rubric. Please read this rubric thoroughly BEFORE attempting this assignment. You should also consult the Critical Legal Thinking “How-to” rubric and the example case in the Critical Legal Thinking Case Assignments of the Syllabus.
Your score will be determined by evaluation of your substantive content. Your analysis and solutions must be based on the principles of law, ethics, and business – not on your opinions. You MUST describe how application of the principles to the key facts support your determination of the issues, in other words, you need to show the reasoning behind your decision.
Key facts are those facts that determine if the principles of law are met. You must demonstrate that you recognize the key facts in this case. List the key facts individually. Do NOT simply repeat or retype the factual scenario.
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Roger is a director of a major car manufacturer. This is one of the few remaining car companies yet to introduce a sport utility vehicle. Roger convinces the board to investigate forming a new division to design, build and market a sport utility vehicle. Roger also convinces the board that the first sport utility vehicle that the division introduces should be the largest yet sold to the general public.

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The board set up a committee to do some research, and this committee hired a marketing consulting firm. The committee and the consulting firm both had a few reservations about such a large vehicle, but the data showed that the market could most likely support it. After much discussion, the board of directors voted in favor of creating the new division and the huge sport utility vehicle as its first product. The vote was 9 to 6 in favor of the plan.

Shortly before this vehicle was introduced, there was a major oil supply disruption that caused the price of crude oil to nearly triple. Few purchasers were found for the huge new sport utility vehicle and the company lost considerable money. A shareholder files suit against Roger claiming he violated his duty to the corporation by convincing the board to build and market the large SUV.

Discuss Roger’s duties as a director and any defenses he has to the lawsuit.

SAMPLE SOLUTION

Abstract

The mandate of company directors and shareholders is clear cut as per the Federal laws. Under the US laws and the business judgement rule, a lawsuit cannot prevail in a situation where a person acted for the best interest of the company. The scenario hereby presents a conflict between the role of shareholders and directors. The law however may not apprehend the director as it is perceived that he acted in the company’s best interests.

Areas and Principles of Law

Under the US law, shareholders have the capacity to sue corporate directors for any wrongful acts or decisions. Under the shareholder class action and derivative units, such a law suit is applicable. The law however also stipulates that company directors must be left to enjoy the fiduciary …

Key Facts

The case is between an unnamed shareholder who is a major car manufacturer and Roger, one of the directors. Roger convinces the board of the company to come up with a department in charge of designing, building and marketing a sport utility vehicle. He also convinces the board to come up with the biggest sport utility vehicle which they agree to. A research committee was formed but had reservations regarding the idea. The available data however showed a promising market making the board to approve the idea. Before the vehicle was however…

Analysis

Argument: Roger may just be protected by the business judgement rule. The board of directors has the power to make a final decision regarding any suggestions fronted in the company. Even though Roger is one of the directors, there has to be full evidence from minutes and other records to show that indeed Roger…

Counterargument: As much as Roger should not be blamed, the shareholder might be right in the sense that Roger being one of the directors may have influenced others in making…

Conclusion

In conclusion, it is not possible for Roger to be held accountable for the challenges facing the company since the decision was approved by the entire board. Additionally, there is no evidence that he acted in bad faith.