1. Did the court hold that the business judgment rule shielded the directors from personal liability in this case?

2. Upon what facts did the court rely in reaching its decision in this case?

3. State the applicable standard of care for determining whether a board of directors’ decision was an informed one.

On September 13, 1980, Jerome Van Gorkom, as chairman and chief executive officer of Trans Union, Inc., a holding company in the railcar leasing business, arranged a meeting with Jay Pritzker, a well-known takeover specialist and social acquaintance, to determine his interest in acquiring Trans Union. On Thursday, September 18, Pritzker made an offer of $55 per share (a price suggested by Van Gorkom), with a decision to be made by the board no later than Sunday, September 21. On Friday, Van Gorkom called a special meeting of the board of directors for noon the following day; no agenda was announced. At the directors’ meeting, Van Gorkom made a 20-minute oral analysis of the merger transaction, showed that the company was having difficulty generating sufficient income, and discussed his meeting with Pritzker and the reasons for the meeting. Copies of the proposed merger agreement were delivered too late to be studied before or during the meeting. No consultants or investment advisers were called upon to support the merger price of $55 per share. The merger was approved at the end of the two-hour meeting. Certain shareholders brought a class-action suit against the directors, contending that the board’s decision was not the product of informed business judgment. The directors replied that their good-faith decision was shielded by the business judgment rule. From a decision for the directors, the shareholders appealed.

JUDICIAL OPINION

HORSEY, J.… Under Delaware law, the business judgment rule is the offspring of the fundamental principle, codified in 8 Del. C. § 141(a), that the business and affairs of a Delaware corporation are managed by or under its board of directors. In carrying out their managerial roles, directors are charged with an unyielding fiduciary duty to the corporation and its shareholders. The business judgment rule exists to protect and promote the full and free exercise of the managerial power granted to Delaware directors. The rule itself “is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” [Aronson v Lewis, Del. Supr., 473 A2d 805, 812]. Thus, the party attacking a board decision as uninformed must rebut the presumption that its business judgment was an informed one.

The determination of whether a business judgment is an informed one turns on whether the directors have informed themselves “prior to making a business decision, of all material information reasonably available to them.”… A director’s duty to exercise an informed business judgment is in the nature of a duty of care, as distinguished from a duty of loyalty.…

The standard of care applicable to a director’s duty of care has also been recently restated by this Court. In Aronson, supra, we stated: While the Delaware cases use a variety of terms to describe the applicable standard of care, our analysis satisfies us that under the business judgment rule director liability is predicated upon concepts of gross negligence. ………………….