Walter White is on the board of directors of Firm Body Fitness, Inc. (Firm Body), which owns a string of fitness clubs in Florida.

White owns 15% of the Firm Body stock and he is also employed as a tanning technician at one of the fitness clubs.

After the January financial report showed that Firm Body's tanning division was operating at a substantial loss, the board of directors, led by Mike Ehrmantrout, discussed the possibility of terminating the tanning operations. However, White successfully convinced a majority of the board of the directors that the tanning division was necessary to market the clubs' overall fitness package.

By April, the tanning division's financial losses had increased. The board hired a business analyst, who conducted surveys and determined that the tanning operations did not significantly increase membership.

A shareholder, Jesse Pinkman, discovered that White owned stock in Sunglow, Inc., the company from which Firm Body purchased its tanning equipment and with whom it had a monthly maintenance agreement. Pinkman notified Ehrmantrout, who privately reprimanded White.

Shortly thereafter, White and Mandy Vail, another member of the board, who owned 37% of Firm Body stock and also held shares of Sunglow, voted to replace Ehrmantrout on Firm Body's board of directors.

1. Whatethical dutiesdid Walter White, as a director in the board of directors, owe to Firm Body?

2. Does the fact that White owned shares in Sunglow establish aconflict of interest? Explain.

3. Suppose that Firm Body brought an action against White claiming that he had breached the duty of loyalty by not disclosing his interest in Sunglow to theboard of directors. What theory might White use in his defense?

4. Now suppose that Firm Body did not bring an action against White. (A). What type of lawsuit might Jesse Pinkman bring based upon these facts?(B). In what Florida court might Mr. Pinkman bring such action?