Harry, Hermione and Ron are the directors and majority shareholders of Hogwarts, Inc. a company that markets to teenagers. The three were looking for a new acquisition with the objective that Hogwarts would hire Ron's cousin, who had just graduated from CSUN with a degree in Management, to run a new division for the company. Harry, Hermione and Ron decided to acquire the formula for an acne treatment, Zits Be Gone, for the purchase price of One Million Dollars. Prior to purchasing the Zits Be Gone formula, Harry had seen an impressive presentation for the product on Shark Tank, a show that features innovative new products. Harry, Hermione and Ron did not consult any third-party expert prior to agreeing to purchase the Zits Be Gone formula. However, Harry, Hermione and Ron, each of whom suffered from various stages of acne, tried the product for one month before purchasing it.They each happily reported a significant reduction in their acne.Unfortunately, the acne reduction was only temporary, and about a month after purchasing the Zits Be Gone formula, their acne was worse than when they began using the product. They also developed unsightly facial hair. Hogwarts, Inc. then determined that the Zits Be Gone formula was useless.

Snape, one of Hogwart's current shareholders, who has held shares in Hogwarts, Inc. since it was incorporated, filed a lawsuit against Harry, Hermione and Ron, alleging that they had breached their fiduciary duties to the corporation and seeking damages caused to the corporation as the result of the purchase of the Zits Be Gone formula. Snape did not first make demand on the board of directors before filing the lawsuit.

After learning of the lawsuit, Harry, Hermione and Ron resigned from the Board of Directors and elected their friends, Draco, Neville and Ginny, to serve on the board.Draco, Neville and Ginny then met to discuss whether Snape's lawsuit (in the name of the corporation) should continue.After meeting for 30 minutes, they voted in favor of dismissing the lawsuit, and filed a motion to dismiss in court.

• Did Snape have standing (the legal right) to bring the lawsuit at the time that it was filed? Why or why not?
• After the new Board of Directors met and voted that the lawsuit was not in the best interest of the corporation, did Snape have standing to continue to maintain the lawsuit? Why or why not?
• Did Harry, Hermione and Ron violate their duty of care to Hogwarts, Inc. by purchasing the formula for Zits Be Gone? Was their decision protected by the business judgment rule? Why or why not?