Alford v. Shaw

BILLINGS, Chief Justice.

The sole issue on appeal is whether, in North Carolina, the business judgment rule may be applied to a special litigation committee’s decision not to pursue derivative claims based upon charges of fraud and self-dealing by a majority of the members of the board of directors of the corporation asserted by minority shareholders. The Court of Appeals concluded that the business judgment rule, “traditionally used by our courts as a defense on the merits to allegations of fraud,” could not be invoked as “a procedural device to dispose of derivative litigation,” 72 N.C. App.…