Smith v. Van Gorkom
| Smith v. Van Gorkom | |
|---|---|
| Court | Supreme Court of Delaware |
| Full case name | Alden Smith and John W. Gosselin v. Jerome W. Van Gorkom, Bruce S. Chelberg, William B. Johnson, Joseph B. Lanterman, Graham J. Morgan, Thomas P. O'Boyle, W. Allen Wallis, Sidney H. Bonser, William D. Browder, Trans Union Corporation, a Delaware corporation, Marmon Group, Inc., a Delaware corporation, GL Corporation, a Delaware corporation, and New T. Co., a Delaware corporation |
| Decided | January 29, 1985 |
| Citation | 488 A.2d 858 (Del. 1985) |
| Holding | |
| The Board of Directors did not reach an informed business judgment because they did not adequately inform themselves, were uninformed as to the intrinsic value of the Company and were grossly negligent in approving the "sale" of the Company upon two hours' consideration; therefore, the business judgment rule provides no protection. | |
| Court membership | |
| Judges sitting | Daniel L. Herrmann, John J. McNeilly, Jr., Henry R. Horsey, Andrew G.T. Moore II, Andrew D. Christie |
| Case opinions | |
| Majority: Horsey Dissent: McNeilly Dissent: Christie | |
Smith v. Van Gorkom 488 A.2d 858 (Del. 1985) is a United States corporate law case of the Delaware Supreme Court, discussing a director's duty of care. It is often called the "Trans Union case". Van Gorkom is sometimes referred to as the most important case regarding business organizations because it shows a unique scenario when the board is found liable even after applying the business judgment rule. The decision "stripped corporate directors and officers of the protective cloak formerly provided by the business judgment rule, rendering them liable for the tort of gross negligence for the violation of their duties under the rule."